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George Osborne makes commitment 'to fight for full employment' in Britain George Osborne makes commitment 'to fight for full employment' in Britain
(about 1 hour later)
George Osborne has moved to bury one of the most toxic Tory legacies from the Thatcher and Major eras by pledging to create full employment in Britain.George Osborne has moved to bury one of the most toxic Tory legacies from the Thatcher and Major eras by pledging to create full employment in Britain.
In a speech at Tilbury Port, hailing tax changes in the budget, the chancellor said that he would like to ensure that Britain had more people in work as a proportion of the population than any other G7 country.In a speech at Tilbury Port, hailing tax changes in the budget, the chancellor said that he would like to ensure that Britain had more people in work as a proportion of the population than any other G7 country.
The chancellor repudiated the famous declaration by Norman Lamont in 1991 that unemployment was a price "well worth paying" to bring down inflation. Osborne said: "Jobs matter – mass unemployment is never a price worth paying."The chancellor repudiated the famous declaration by Norman Lamont in 1991 that unemployment was a price "well worth paying" to bring down inflation. Osborne said: "Jobs matter – mass unemployment is never a price worth paying."
The chancellor added: "Today I'm making a new commitment. A commitment to fight for full employment in Britain – making jobs a central goal of our economic plan. The chancellor added: "Today I'm making a new commitment, a commitment to fight for full employment in Britain – making jobs a central goal of our economic plan.
"There is no reason why Britain shouldn't aim to have the highest employment rate of any of the world's leading economies. To have more people working than any of the other countries in the G7 group. "There is no reason why Britain shouldn't aim to have the highest employment rate of any of the world's leading economies, to have more people working than any of the other countries in the G7 group.
"That's my ambition: the best place in the world to create a job; to get a job; to keep a job; to be helped to look for another job if you lose one." "That's my ambition: the best place in the world to create a job, to get a job, to keep a job, to be helped to look for another job if you lose one."
Osborne did not specify a definition of full employment. Treasury sources indicated that to achieve his G7 ambition the chancellor would focus on having the largest number of working age people in employment. The Labour party has defined full employment as 80% of the working age population in work. Britain is currently in fourth place in the G7 on the numbers of working age people in work behind Germany, Canada and Japan. Osborne did not specify a definition of full employment. Treasury sources indicated that to achieve his G7 ambition the chancellor would focus on having the largest number of working-age people in employment. The Labour party has defined full employment as 80% of the working age population in work. Britain is currently in fourth place in the G7 on the numbers of working-age people in work, behind Germany, Canada and Japan.
The Bank of England and the Office for Budget Responsibility suggest that once the "equilibrium rate" for unemployment is reached, then full employment is achieved. The OBR said in its fiscal and outlook forecast, published at the time of the budget, that unemployment would fall to its equilibrium rate in 2018. The Bank of England and the Office for Budget Responsibility (OBR) suggest that once the "equilibrium rate" for unemployment is reached, then full employment is achieved. The OBR said in its fiscal and outlook forecast, published at the same time of the budget, that unemployment would fall to its equilibrium rate in 2018.
The equilibrium rate is not fixed. In its February 2014 inflation report, the Bank of England said that the medium-term equilibrium unemployment rate was 6 to 6.5%, which means that unemployment remains 0.75 to 1.25% above this. The OBR said it judged that the long-term unemployment rate was 5.25% – with unemployment currently 1.75% above that. The bank says that the medium-term equilibrium unemployment rate will fall as demand recovers. The equilibrium rate is not fixed. In its February 2014 inflation report, the Bank of England said that the medium-term equilibrium unemployment rate was 6 to 6.5%, which means that unemployment remains 0.75 to 1.25% above this. The OBR said it judged that the long-term unemployment rate was 5.25% – with unemployment 1.75% above that. The bank says that the medium-term equilibrium unemployment rate will fall as demand recovers.
Osborne reminded his audience that Winston Churchill made an early commitment to full employment. "Seventy years ago this year; during the second world war, when Winston Churchill was prime minister of a coalition government; they set the first commitment to full employment." Osborne reminded his audience that Winston Churchill made an early commitment to full employment. "Seventy years ago this year, during the second world war, when Winston Churchill was prime minister of a coalition government, they set the first commitment to full employment."
But Osborne said that the prevailing view in the 1940s, adopted by Labour, that the government could guarantee a job, was wrong. "In those days they thought government could micromanage the economy and guarantee a job for everyone. But – as we learnt again recently – you can't abolish boom and bust.But Osborne said that the prevailing view in the 1940s, adopted by Labour, that the government could guarantee a job, was wrong. "In those days they thought government could micromanage the economy and guarantee a job for everyone. But – as we learnt again recently – you can't abolish boom and bust.
"So attempts past and present by governments to guarantee a job to every person are doomed to fail. There are always going to be ups and downs to the economic cycle. And spending billions of pounds creating jobs in the public sector doesn't work either.""So attempts past and present by governments to guarantee a job to every person are doomed to fail. There are always going to be ups and downs to the economic cycle. And spending billions of pounds creating jobs in the public sector doesn't work either."