On Friday, the Office for National Statistics raised its estimate of the economy’s growth in the fourth quarter of last year from 0.1% to 0.3%. This is, of course, good news, but the most interesting growth question at the moment is not “Are we up or are we down?” but “How likely is it that the economy will expand enough in 2010 to prevent big rises in unemployment?” Unfortunately, there is no reason to think anything more than “unlikely.”

Since the recession started many firms have asked their employees to work fewer hours or take pay cuts. This bargain has been underpinned by employers hoping that demand for their goods and services would pick-up again, and that their staff needed to take the partial and temporary hit of a poorer job in order to avoid the big hit of not having any job.

In the jargon, someone who is working but wants to do more hours is “underemployed”. There will always be people who want to work more, but there has been a big rise in their number recently. In the year to the third quarter of 2009, 605,000 extra people declared that they were underemployed when the Office for National Statistics asked them about their job status. It is this group that is under threat from growth not being good enough to keep them in work.

This is worrying, not least because many of them will have to claim unemployment benefits when they do fall out of work. As a Policy Exchange report out this week will show, they will fall into a welfare-induced poverty trap that can make working look like a bad idea. Some claimants will, when they see how their benefits are withdrawn when they move into work, realise that they are likely to end up working for less than £1 per hour. Would you work for that?

Lawrence Kay is a Research Fellow in the Policy Exchange Economics Unit. “Escaping the Poverty Trap: How to Help People on Benefits in to Work” will be out this week.

The phoney election campaign continued last week.  The media seems to have decided that the Tory “wobble” is over, after the launch of some pretty good posters and a warm media welcome for their policy announcement on cooperative public services.  With their whole campaign operation now transferred from Norman Shaw South into Milbank as of last week, the Tories are now all set for the vote.

It was a funny sort of “wobble” anyway, as none of the last 24 polls have shown the Conservatives more than 2 points in either direction from 40%.  Given that the statistical margin of error on these polls is plus or minus 3%, none of the them have shown a statistically meaningful shift.  But little things like that don’t affect the Westminster narrative.

One of the incidents in the “wobble” related to a screw-up by the Tories about a decimal point.  They released an otherwise excellent report on how inequality has grown under Labour.  The document shows how the gap between rich and poor has grown in not just in income, but in health, education, housing – you name it.  However, due to a cock up the document initially claimed that in poorer areas 54% of teenage girls in poor areas got pregnant, rather than the real figure of 5.4%.

This was a bad mistake and caused a big Westminster row.  But hang on a minute.  The real figure should give us serious pause for thought.  More than one in twenty teenagers getting pregnant is really, really high. A larger proportion of teenagers in Britain have children than any other EU county apart from Romania and Bulgaria.  The rate is more than double the European average and five times higher than countries like Denmark, Switzerland and the Netherlands.

And teenage pregnancy is very concentrated in poor areas. For example, in leafy Rutland the teen pregnancy rate is 1.4%, while in less leafy Lambeth it has averaged 8.9% in react years. Given the concentration of the problem in poverty hotspots, and the fact that 92% of teenagers who have children are not married, teen pregnancy often kicks off a cycle of intergenerational poverty which can last for many decades.  In the long term, this costs the state a fortune – quite apart from the mass misery involved.

Part of the problem is about poverty, and part of it is about culture.  Hence Cameron’s continuing criticisms of the premature sexualisation of children.  But the bully pulpit alone won’t solve these difficult problems.  I don’t believe that we have the policy answers to them yet – although they are soluble.  For this reason Policy Exchange’s work in this area will continue to grow.

Meanwhile, we are now seeing all the hoopla of an election campaign: student stunts, bizarre poster spoofs, weird viral web trends (e.g. “Dave Facts”) and – God help us - novelty records (cf.“There’s no-one as Irish as Dave Cameron”).

What we aren’t seeing yet is any discussion of the big issues.  It isn’t just the big missing discussion about deprivation and social breakdown. Britain’s media seems generally unable to grapple with the detail of big policy questions, so instead reports on easy-to-grasp personality clashes and Westminster spats.

With such an information-poor public debate, it is sad that James Purnell has decided to step down at the next election.  He was not only one of Labour’s better potential leaders, but also one of the few people on the left really able to step back and question their policies.  There is far too little thinking in British politics, and there will be even less in the Labour Party without Purnell.

Neil O’Brien is Director of Policy Exchange

An audience of around eighty or so gathered at the British Library to listen to Dr Anthony Seldon, biographer of Tony Blair and Master of Wellington College, and Toby Young, author and Swedish-style free school activist, discuss Bright Blue’s second theme of the year, “What are we educating for?”

Young began by bemoaning the rise in vocational qualifications and the dumbing down of traditional academic rigour, leading so it would seem, to a collapse in social mobility and the entrenchment of privilege for those still allowed access to a “proper liberal education”. He spoke of a culture of indoctrination, whereby knowledge is transmitted rather critically digested, and welcomed the prospect of schools being freed up to allow the value of subjects, subject knowledge and subject specialisation to return.

Characteristically, Seldon was controversial and to the point: the great experiment of state education had failed and in such a homogenised system, where teaching to the test was allowed to dominate, we were failing our children. It was time for a new national conversation on education, a freeing up of schools, a move away from central state control, greater choice, the empowerment of teachers as professionals not technicians, and ultimately the restoration of the pursuit of knowledge, and the love of learning, at the heart of what schools are about.

The audience were not completely converted, and there were those keen to point out the progress made in the education system since 1997 brought about by increased investment: renewed and rebuilt buildings, more diverse, more market-appropriate skills being examined and tested, and improved access to higher education.

Others focused on the role of discipline, the failure of the examinations system, the potential for a de-politicisation of the education field, and with it a strengthened role for universities and employers in policy. For some, divisions between state and independent education and the extent to which money drives choice was most important; for others the definition of “success” in education and whether that can be agreed upon. One audience member simply asked the panellists to define education in a single sentence.

But overall, the tenor of the debate was positive, constructive and engaged, with broad agreement on the crucial role that schooling plays in creating opportunity and with that the potential for overcoming inherited inequality. “Would either of the front benches have the balls – forgiving the pun – to do something about improving education after the general election?” Yes, the speakers agreed, Michael Gove would.

James Marshall is part of Bright Blue, committed to promoting a fairer, more socially just Britain in the next Parliament and beyond.

You can also watch some of the discussion:

Anthony Seldon at Bright Blue

Toby Young at Bright Blue

Our friends at Bright Blue held their inaugural public meeting yesterday evening with Polly Toynbee and Theresa May discussing whether inequality matters.

Setting aside the significance of the presence of Polly Toynbee as the first speaker at a newly-launched Tory event, these snowballing events are hugely important for the party. They are not ‘Conservative’ events, they are events for people interested in Tony Benn’s famous isshooos. And that’s how you build my favourite theory of the cascade of trust.

One particularly interesting question concerned whether you should aim to support (heavily) the ‘bottom’ (that’s shorthand, before anyone decides to complain that I’m being insulting) few per cent at the expense of the next bottom 25 or so per cent. Her question was whether boosting the life chances of the worst-off, even if only by a small amount, is more effective and desirable than helping people who have fewer long-term problems and just need a bit of extra help at some things.

I doubt there’s an answer to this. I am horrified by the suggestion today from the government’s anti-social behaviour czar of taking entire families into care. And yet there are clearly some people who simply can’t cope.  I don’t think morally we can write off the very worst-off as being beyond hope. But equally, governments have a duty to maximise the effect of every penny they spend.

Something that was suggested but not really explored was an experiment discussed in a book called The Spirit Level (also mentioned in David Cameron’s speech on Monday).  Bear with me, it sounds a little unlikely but… A number of monkeys who regarded themselves as high-status were removed from their environments and placed in a new one where they became of low status. Nothing else changed, just their social standing. They became depressed, and listless, and more likely to die younger than expected. The conclusion the researchers drew was that it was the lack of control over their lives that caused at least a significant part of the damage.

This has huge implications. I don’t know how applicable it is to humans, or whether this group was a one-off. But it seems obvious to me as a Conservative that people who feel in control of their lives have a better time of it. I’m not saying that money isn’t important, but part of what money can give you IS control – you can choose where you get your public services from, for example.

Perhaps – just perhaps – there is a wider, slightly left-field by-product of social responsibility and devolving power: that by giving people control over their lives, we make them intrinsically healthier as well as socially stronger.

One of the aims of this website, when it was first created, was to be a forum to find conservative methods to reach progressive ends. Taxes should be cut from the bottom up and public expenditure reduced from the top down. Labour has failed to break the UK poverty trap.  It is the duty of a Conservative government not to let the same thing happen again and prove to the country that they are the real progressive force in British Politics.

Raising the personal allowance to £12,000 would take 7 million low-paid workers out of the income tax net altogether. People working full time or less on the minimum wage would pay no income tax at all. This tax cut would put at least £20bn per year back into people’s pockets (according to real life figures), allowing considerable additional spending and investment in the economy.

This is the key to overcoming recession and restoring economic growth. As well as stimulating the economy by giving people more disposable income to spend and invest, raising the personal allowance to £12,000 would strengthen incentives to work, help to eliminate the ‘poverty trap’ and make low-paid jobs more economic – greatly increasing opportunities for the unemployed, and a step towards enhanced social mobility.

Often people find that as they start working, they both pay tax and lose benefits, leaving them little better off than they were before. Indeed, the effective marginal tax rates for people moving from benefits to low-paid jobs can be close to 100 percent. These proposals would change that.

The cost in tax revenue to put in place this proposal into place would be between £20bn and £30bn.  Cuts must be avoided in areas that would otherwise adversely affect the poor in relation to the financial gains due to be made from the substantial increase of the Tax Free allowance, which are as follows:

• Scrap the Bus Service Operators’ Grant. 
• Suspend further orders and upgrades for the Eurofighter. 
• Reduce the government advertising and publicity budget by half 
• Halve public sector spending on consultants. 
• Slim down the Department for Communities and Local Government (DCLG). 
• Rationalise the framework of regional business support.
• Cut 25 per cent from the budget of the Department for Culture, Media and Sport (DCMS).
• Abolish the NHS National Programme for IT (NPfIT).  

I believe that this proposal is genuinely progressive and genuinely Conservative.  It will do more for the poor in twelve months than the Labour Party has done in twelve years

Posted by Administrator on behalf of Thomas Byrne; a more detailed version of this article can be found on his personal blog. Thomas is building on a previous article on this website.