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UK needs to spend £90bn on 750,000 new jobs

The UK should spend £90bn on 750,000 new “shovel-ready” jobs to stop the unemployment rate rising to 10pc, according to Bank of England Monetary Policy Committee (MPC) member David Blanchflower. Professor Blanchflower, the only member of the MPC to vote consistently for interest rate cuts, suggested that drastic fiscal stimulus measures were needed to prevent job losses creeping up to 3m. At a speech last night at the University of Stirling, he said that monetary policy measures were not enough and direct intervention into the labour market was needed immediately. He advised the Government to embark on large-scale job creation scheme that could begin immediately, with “particular emphasis on shovel ready projects that can be started quickly”, and many public sector bodies could be given increased funding for two years. Blanchflower also advocates raising the school leaving age to 18 to keep young people out of dole queues.

We have been saying much the same thing for months –

 but with the qualification that is is not mere job creation schemes that are needed. The last time we had job creation schemes, in the 1980s, too many of the projects were useless make-work activities which were expensive to set up, difficult to manage and produced nothing of lasting value. To be put to work on such schemes was little better than a community service sentence and demoralising both to those on the schemes and the people who managed them.

The schemes must be real projects that catch up on the backlog of neglected infrastructure – run-down public buildings, potholed roads and broken pavements – and on new infrastructure that increases people’s capacity to create wealth. Network Rail, for instance, has a long wish-list which at present rates of investment will take till the mid-2020s to implement but which could usefully be brought forward. And since useful infrastructure creates and enhances land value, this work should be paid for out of the revenue from an ad valorem tax on the rental value of land. Otherwise, it will just set off the next boom-bust cycle and give the country a severe dose of inflation into the bargain.

As for raising the school leaving age to 18 – it is not a good start to anyone’s working life to be send out of school into the dole queue but one has to ask what exactly these 18-year-olds would be doing if they stayed in school? One might envisage training schemes of various kinds, for example working with voluntary groups such as working museums and preservation groups where they could learn all sorts of useful skills under the supervision of experienced artisans, often now long past retirement age and keen to pass on their knowledge. But it is unlikely that anything so sensible will happen – though it would be nice to be proved wrong.

Read full Daily Telegraph article