24th November 2011

The latest youth unemployment figures were bad across the country but the statistics are particularly bad for Tynemouth constituency.  Tynemouth is one of four constituencies in the country in which long term unemployment has increased by more than 150% since last year’s general election. Inevitably the fear is being expressed that a generation is being left behind.

The government blames problems in the Eurozone. But unemployment is a lagging indicator, meaning these figures reflect problems before the current Eurozone crisis. They are much more likely to reflect the effect of cuts on the slowdown in the economy. We know the economic theory. Cutting the deficit caused by the global banking crisis needs big cuts in public spending. As government investment is cut back the private sector will step into the breach, investing more and creating jobs. Regions like the North East which relied on higher public spending to counteract the decline of traditional industries would be hardest hit.  According to the then Leader of the Opposition and now Prime Minister the pain would be worth it in the end. That’s the theory but the reality is very different.

As growth falters, unemployment rises and the cost to the government goes up. Bizarrely cutting the deficit faster and more deeply now requires the Government to borrow more money than Labour planned to. It’s a vicious circle and without a plan for growth one which risks getting worse.   We could bring forward investment projects in the pipeline like the new school which was promised for Marden. Demand in the economy could be increased by reversing the disastrous increase in VAT which is making life tougher for families and drivers.  And with growth can come 100,000 new jobs for young people. That really would be something to look forward to.