The labour market is delivering a harsh verdict on the government's flagship employment programme. Today's figures show a jobseeker submitting 400 applications without a single offer, a microcosm of a broader malaise that has economists questioning the efficacy of the New Deal. The programme, designed to 'get Britain working', has so far failed to move the needle on unemployment, which remains stubbornly high at 4.8%.
Make no mistake: this is a supply side problem dressed up as demand side policy. The government is throwing money at training schemes and wage subsidies, but the real issue is structural. Employers are hoarding cash, not hiring. Why? Because the cost of capital is rising, inflation is eroding margins, and the spectre of higher taxes looms. The New Deal's £5 billion price tag is merely a sticking plaster on a wound that requires fiscal surgery.
Let's talk about the numbers. A jobseeker with 400 applications suggests a rejection rate of nearly 100%. This is not a lazy workforce; this is a market failure. The claimant count rose by 12,000 last month, and vacancies are falling. The economy is sending a clear signal: uncertainty is the enemy of hiring. Businesses are waiting for clarity on Brexit, energy costs, and interest rates. Until they get it, the New Deal will remain a noble but ineffective gesture.
The government should pivot. Instead of subsidising demand, it should tackle the supply side bottlenecks. Cut corporation tax, slash red tape, and reform the planning system to boost construction. That would create real jobs, not just temporary placements. The Treasury's obsession with deficit reduction is strangling growth. A balanced budget in a downturn is an act of economic self harm.
Meanwhile, the Bank of England's rate hiking cycle is making matters worse. Higher rates mean higher mortgage costs, which means lower consumer spending, which means fewer jobs. The Monetary Policy Committee is fighting inflation with a blunt instrument, ignoring that the current inflation is cost push, not demand pull. The result is a stagflationary mess.
Capital is already fleeing the UK. Pension funds are allocating more to overseas equities, and foreign direct investment is drying up. The New Deal might help a few, but it won't reverse the tide. The only way to create sustainable employment is to make Britain a place where businesses want to invest and hire. That means lower taxes, deregulation, and a credible plan to reduce the national debt over the cycle.
To the jobseeker with 400 rejections: the system is rigged against you. The government's response should not be more training schemes, but a root and branch reform of the economy. Otherwise, the New Deal will become the New Dole.
