It's growth, stupid!

Friday 14th October

Two grim headlines in two days. First, we don’t care for our youth as a nation with close to one million 16-25 year-olds unemployed. Second, we don’t care for our older people, as shocking stories of neglect emerge. Are these both linked to the state of the economy?

Large scale unemployment – and youth unemployment in particular – places a huge burden on society and communities. This burden carries on well past the time when headline numbers have improved. We do not have to go back very far in our history to see the long-term scars that high unemployment causes, both to individuals and to communities.

The first casualty of mass unemployment is ambition - ambition to play a part in your society, ambition that you can achieve your goals, ambition to see your community thrive. When unemployment erodes the self-belief that drives ambition, it leaves people and their communities without hope. Poverty of ambition is a first step into real, abiding poverty.

Many social enterprises know this from first hand. A recent study has shown that social enterprises in the most deprived communities are often focussed specifically on creating employment opportunities. It is also no surprise that the same study showed social enterprises employing more people relative to their turnover than small business. Yet even the most employment-focussed social enterprise knows that there can be precious little job creation without growth.

Measures proposed to tackle youth unemployment by giving national insurance breaks for hiring young people will likely achieve very little. It is a growthless zero-sum game, shifting the burden of unemployment onto older generations. We should not be looking at the redistribution of poverty.

Public policy must begin to address growth with urgency – and with it sustainable jobs for sustainable growth – if we are to avoid the awful, attritional damage of mass unemployment. We need to focus on interventions that have the greatest chance of achieving growth whilst providing employment.

In the past, there have been two schemes that have had success in kindling ambition, enterprise and, through that, growth and employment - The Future Jobs Fund, and the Enterprise Allowance Scheme.

These programmes were not without justifiable criticism, but where they worked well they had one thing in common – enterprise! For many Social Enterprises, the FJF allowed them to grow their business, either by expanding existing services or creating new ones, and therefore created jobs. The Enterprise Allowance Scheme Allowed people who were themselves are enterprising to get an idea off the ground, to understand business and, where, successful to grow and create more jobs. Policy makers should consider how to take the best elements of these schemes to unlock the growth potential of social enterprises and the communities where they operate.

A social entrepreneur in the care industry told me recently that cuts to public spending had reduced the budget per head for an older person in their care by over 25%. This has caused him sleepless night upon sleepless night over how standards can be maintained. Here lies another reason for growth to be prioritised. From growth comes tax revenue, and hopefully, budgets to provide the level of care that every older person deserves. The solution to both grim headlines could well be one and the same.