Another decent FT piece - Apols for the format….
Good morning. The big news story today is the latest release of files relating to Peter Mandelson’s appointment as UK ambassador to the US as well as official communications about and with him. However, I don’t anticipate writing much about it this week because in terms of the politics, I think the damage has been done. It has shattered many Labour MPs’ faith in Keir Starmer’s judgment and administrative ability — that is not going to change. Starmer’s initial explanation for why he both appointed and sacked him continues to have a huge hole in it, and sooner or later Kemi Badenoch is going to get him to commit a breach of the ministerial code defending himself. But she’s probably not going to manage to do that before the clock runs out on the Starmer premiership on June 18, when, whether Andy Burnham wins or loses the Makerfield by-election, the prime minister will face renewed and I think fatal pressure.
The more worthwhile thing going on — from an analyst’s perspective at least — is Alan Milburn’s review of youth unemployment. Some initial thoughts on that in today’s note. Inside Politics is edited by Georgina Quach. Follow Stephen on Bluesky and Georgina on Bluesky.
Read the previous edition of the newsletter here. Please send gossip, thoughts and feedback to [email protected]
From review to reform The Milburn review — which really is worth reading in full if you have the time — is a classic bit of New Labour policymaking, and not just because of its author, but because it follows the classic New Labour method of using reviews as an instrument to argue for policy change. The first review scopes out the problem, while the second goes through Milburn’s proposed solutions. He will hope that the intervening period will allow him and others in the political class and civic society to argue for the changes he wants, some of which will cost money, some of which will be controversial and some of which are both. As an early step, that the review has come out to praise from essentially all the key stakeholders and campaigners outside of government, is exactly what you’d want in his shoes. I anticipate that I will spend a lot of the next few months talking about it, but for today I just want to talk about his big picture argument, which is that a combination of policy choice and a changing economy has created a situation where we have higher numbers of young people who are “Neet” (not in education, employment or training) than elsewhere.
On the policy architecture problem: There are schools, colleges, local authorities, strategic authorities, Jobcentre Plus, DWP, integrated care boards, Child and Adolescent Mental Health Services (CAMHS), GPs, Skills England, the Careers and Enterprise Company, youth services, voluntary organisations, Youth Hubs, housing providers, Special Educational Needs and Disabilities (SEND) teams and more. The Local Government Association has identified over 50 different national programmes led by 17 different public bodies holding some responsibility for tackling economic inactivity. In one town, Barnsley, that spaghetti soup comprised more than 70 local organisations doing the same.
Different institutions have different remits. It is inevitable that no single one can hold the ring on everything from early years to benefit payments. The problem is that each part of the system operates within its own funding stream and accountability framework. When a young person begins to struggle, they do not encounter a co-ordinated response. This “spaghetti soup” is further aggravated by a lack of funds. At a time of reducing budgets (which has been the reality for all state services other than the NHS, pensions and social care for a very long time now) your incentive becomes “how do I get this problem out of my budget?” rather than “how do I solve this problem by working across a silo or a department?” And as Milburn notes, AI and the pandemic have accelerated a shift away from the jobs that used to provide the entry-level “scaffolding” into work for young people: What made the pandemic different from a conventional economic shock was its social totality. It removed the informal scaffolding through which young people learn to navigate the adult world: Saturday jobs, after-school clubs, unstructured time with peers, first tentative encounters with workplaces and workplace norms.
Over the two decades before the pandemic, part-time employment among teenagers had already been declining. The traditional Saturday job in retail and hospitality, once a widespread feature of early labour market socialisation, had become less common. The pandemic accelerated this erosion to the point of elimination for an entire cohort . . . Artificial intelligence and automation are likely to add further pressure to the entry-level labour market. Many of the roles most exposed are those that have traditionally provided a foothold for younger workers: administrative support, data entry, routine customer service and clerical work. Early evidence suggests that vacancies in more AI-exposed occupations are falling faster than in less exposed parts of the labour market, and US evidence points to weaker employment outcomes for younger workers in more exposed industries.
That ellipsis of mine really crunches down quite a lot of pages — it really is worth reading the report in full! The policy challenge here is that everything the government has done, has, quite deliberately, gone with the grain of this. Hiking the minimum wage and planning to equalise it for all ages, increasing employers’ NICs with the raise most heavily concentrated on the lowest-paid employees, the Employment Rights Act . . . these are all measures designed to encourage firms to invest in capital not to hire workers. There is some evidence that productivity is increasing and this may be down to the changes Labour has made, it may be a coincidence. However, regardless, it comes with human costs, one of which is a larger number of people who are Neet. This is not the only area where the implications of Milburn’s review go against the grain of government policy, both under this government and previous ones, but it is the one that is potentially the most embarrassing for Starmer’s administration. I’ll have more to say on that topic and others in the review in future newsletters.