Unemployment is defining test

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THAT Lord Freud, the Welfare Reform Minister, described the latest rise in unemployment as a “sign of stability” – even after the jobless total reached a 16-year high – is a measure of the political and economic difficulties confronting the Government.

There were some crumbs of comfort for the Minister. The increase in the number of additional people in work outstripped the latest rise in joblessness. And unemployment actually fell in Yorkshire, though only London and the North East still have a greater proportion of the workforce on the dole queue.

Additionally Sir Mervyn King, the Bank of England governor who is not renowned for his optimism, indicated that the UK is likely to avoid a second recession as recent industry surveys have pointed towards renewed economic growth. Coming days after Britain’s credit-worthiness was questioned, that appraisal will be welcomed by Chancellor George Osborne.

Yet Sir Mervyn’s wider analysis, coupled with the underlying unemployment trends, intensifies pressure on Mr Osborne to deliver a Budget that kickstarts substantive growth – rather than gimmicks and competitions for individual areas to “bid” for limited funding.

It comes after the Bank governor said the money presses may have to be cranked into gear again, even if this disadvantages savers because of interest rates remaining so low. “Unfortunately there is no easy remedy,” he added.

Likewise, the political uncertainty over the extent to which private enterprise should be taxed is having a deterrent effect as the Government looks to prevent unemployment passing the three million barrier – it could reach 2.8m by the end of the year – by finding suitable, and sufficient, vacancies for the long-term unemployed.

Again this will require inspirational leadership from Lord Freud and his team, especially as young people and women are bearing the brunt of the slowdown. To them, and those families now on the financial brink, unemployment is not a price worth paying – the analysis that did such harm to the Conservatives’ credibility in the 1990s.

As such, the Minister’s message on “stability” is unlikely to convince the jobless that the Coalition is on the right track. What they seek is tangible evidence that growth is being delivered – their futures rest on David Cameron’s government passing this defining test.