Sunday, May 16, 2004
Gordon's employment conjuring trick
Posted by David Smith at 08:58 AM
Category: David Smith's other articles

Frank Hoole, 50, was last in a job 11 years ago. That was the year he was made redundant from his job with TSB, the bank subsequently taken over by Lloyds.

Redundancy, followed by the break-up of his marriage, brought on stress and depression for Hoole, who lives in Wolverhampton. Having chosen not to work for the first two years after he was made redundant “for financial reasons” to do with his divorce, he has found it impossible to take on a job since.

A brief period as a self-employed financial consultant did not work out because, as he says: “I found that even more stressful than working for somebody else.”

Today he is trying to get back into work but is finding it hard. “You get good days and bad days,” he says. “There are certain times when you just can’t go to places because of anxiety attacks.”

Working at home does not provide a way out either. “You get even more depressed when you’re by yourself,” he says. “Things go into a downward spiral.”

He is one of 2.4m people in Britain on incapacity benefit. Add the 311,000 who receive the government’s severe disablement allowance and 2.7m are on health-related benefits, three times the figure in 1979.

An increasing number of people, like Hoole, are suffering stress and other mental health problems. Since Labour came to power in 1997 there has been a 38% rise in those getting incapacity benefit for such reasons. The figure now stands at 718,000.

They are not the only ones excluded from Britain’s apparently booming job market. Official figures show that these benefit claimants are part of a near-record 7.8m people of working age who are “economically inactive”.

This sits strangely with other government figures showing employment at record levels and the number claiming jobseeker’s allowance, the main unemployment benefit, down to a 29-year low of 876,300.

Gordon Brown, trumpeting those figures last week, declared that “Britain is working”. The chancellor, in a deliberate reference to the 1979 election poster that helped propel Margaret Thatcher into power, will be using this apparent success as a key plank in Labour’s re-election campaign.

“With the highest levels of employment and the lowest levels of unemployment in our history, full employment is now closer than ever before,” he said.

Independent experts disagree. “The figures sit very oddly with the idea that Britain is working,” said John Philpott, chief economist at the Chartered Institute of Personnel and Development. “The obvious riposte is that it is working, except for the record numbers of economically inactive people.”

There are many reasons for economic inactivity. Some of it reflects higher numbers of students, or women who were working and have taken time off to have children. Early retirement, particularly among men, and the legacy of the industrial shakeouts of the past, when men were left with obsolete skills, also account for some of the inactivity.

But there are also less explicable developments. Among men aged 25-34, who would normally be thought of as the most employable in a strong job market, employment has dropped by a quarter of a million in the past two years.

Even the record on youngsters, regarded as a success story by the government with its New Deal programme, may not represent quite the achievement it appears. According to the Tories, more than 1m of those aged 16-24 are without jobs, educational qualifications or training. They call it the “lost generation” and point out that Britain’s youth unemployment rate, one in eight, is higher than the 10% in sclerotic Germany.

The apparent good news of a rise in self-employment, up 300,000 to 3.6m over the past two years, is also open to challenge. Critics say much of this reflects “involuntary” self-employment — people who have lost jobs and have had no option but to try, often unsuccessfully, to make it on their own as consultants or tradesmen.

The biggest puzzle of all, however, is the rise in incapacity, particularly the big increase in people who are off work for long periods — more than 80% of those on incapacity benefit haven been claiming for over a year — because of stress and associated problems.

“You have to ask whether people are just less tough than 40 or 50 years ago or whether something else is happening,” says Paul Goodman, shadow spokesman on the disabled.

“There has clearly been a shift, not only in the number of people claiming incapacity benefit for mental health reasons, but also in the numbers claiming the benefit rather than jobseeker’s allowance.”

For claimants, there is a clear financial gain from being on incapacity benefit. The basic rate is £74.15 a week, compared with £55.65 for the jobseeker’s allowance. The government now spends £16 billion a year on incapacity benefit, compared with £4 billion for unemployment benefit.

But claimants lose out in other ways. While the government directs its efforts to getting unemployment benefit claimants back into jobs it is, says Goodman, hopeless at getting people off incapacity benefit. Research from the Royal College of Psychiatrists suggests that for most people affected by stress-related incapacity, the best way back to health is through employment.

The Shaw Trust, a charity that exists precisely for this purpose, has a proven record of success, through counselling, financial support, education and training.

Lindsay Hall, 30, of Blackpool, was doing well with a career in the benefits agency, until stress brought on by the job and the death of her sister forced her to give up. “I went off sick, and I just found it hard to get back to work,” she says. She ended up in a hostel for the homeless. But she has just started work again, thanks to support from the Shaw Trust.

Jan Hunt, a spokeswoman for the trust, said that many of those on incapacity benefit because of stress or depression develop it as a result of being out of work. “There is a pattern that may start with a physical injury but then extends into mental problems,” she says.

Hunt also draws the distinction between the trust, which aims to get the incapacitated back into work, and government offices, which claimants see as only interested in assessing the level of benefits. “We think there are 1.5m disabled people who could work and who want to work,” she says. “Unfortunately we only have the resources to deal with 20,000 of them each year.”

So why isn’t the government doing more to tap into this pool of potential employees? Why does it trumpet its success in the job market when there is such an obvious problem that needs to be sorted out? The answer is political. “My view is that, with certain exceptions, you should place the same sort of job search obligations on incapacity benefit claimants as you do on the unemployed,” says Philpott. “The political problem is that there are all sorts of lobbyists who would say this is grossly unfair.

“The second problem is that if you really tackled this problem, the unemployment figures would go through the roof.”

So the chests of ministers will continue to swell with pride each time the official figures show another drop in unemployment. And alongside that, neglected and forgotten, Britain’s hidden army of the unemployed will continue to fester.

From The Sunday Times, May 16 2004

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