Bold measures required to support investment and young people, says TUC. Pre-Budget submission calls on Coalition to guarantee paid work or training for young people out of work for 6 months
The Chancellor George Osborne must acknowledge the economic case for reversing his austerity plans and introduce bold measures to support investment and young people to get the economy up and running again, says the TUC budget submission published today.
The document says that with growth flat-lining, unemployment far higher than expected and the government having to borrow an extra £158 billion as a result, the economic case for a change of direction is overwhelming.
Ahead of George Osborne’s spending statement, scheduled for 21st March and with even senior government ministers admitting they have no coordinated plan for growth, the TUC is calling on the Chancellor to focus his efforts on tackling record levels of youth unemployment and creating incentives to encourage companies to invest more of the £724 billion they are currently sitting on to get the economy growing again.
The submission says that the UK risks losing a generation of talented and highly skilled youngsters to joblessness and stunted careers unless it rapidly increases investment in employment programmes.
The current cut-price, poorly-targeted and unpaid work experience schemes are not helping enough young people back into jobs so the government should introduce a guarantee of paid work or training for anyone young person who has been out of work for at least six months, says the TUC.
The submission says support for young people should not be restricted to those out of work and calls instead for the introduction of a new youth credit for all 16-24 year olds to boost access to training, work placements or progression into better jobs.
The Chancellor must also be far bolder in using the tax system and a state bank to encourage companies to invest, it says.
The current approach of cutting corporation tax is benefitting already highly-profitable sectors but failing in its core purpose of encouraging businesses to spend.
The submission argues that these tax cuts, as well as the reduction in capital allowances, are transferring the corporate tax burden from financial services to investment-led sectors such as manufacturing. The government should stop propping up the City, reverse corporation tax cuts and reductions in capital allowances, and cut taxes on investment and infrastructure development instead.
The TUC supports the Chancellor’s programme of credit easing but wants it doubled to £40billion and its implementation speeded up. The submission also calls for a new state investment bank, similar to those operating successfully in Germany and Scandinavia, which could be modelled on a beefed-up green investment bank with new borrowing powers.
The TUC submission also calls for:
· A new initiative on bank lending with net (rather than gross) lending targets.
· A strengthening of the government’s apprenticeship programme by introducing a minimum three-year duration and the right for trainees to graduate to a level three apprenticeship.
· The introduction of a modern industrial strategy that focuses on procurement and targets support at high growth sectors such as high value manufacturing and pharmaceuticals.
TUC General Secretary Brendan Barber (pictured) said: “Over the last year growth has flat-lined, more people are out of work and government borrowing has risen sharply as a result. The government’s austerity strategy is plainly not working.
“So rather than carrying on with self-defeating cuts, the Chancellor should do what’s right for the economy and prioritise tackling our jobs crisis and getting businesses to invest more of the £724 billion they are currently sitting on.
“Bold new measures such as youth credits and a job guarantee will help get young people’s careers off the ground. A tax system that rewards investment, rather than propping up the City, will help generate growth and jobs in the real economy too.
“The Chancellor must not lose sight of the UK’s long-term growth prospects either. A state investment bank and a modern industrial policy may not gel with his laissez-faire instincts but they will help deliver the rebalancing of our economy that virtually everyone outside of the City accepts we need.”
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