One moment of political theatre in this PBR was the raid on City bonuses to pay for increased support for unemployed youth. “This additional money will be used to pay for the extra measures, already announced, like help for the young and older unemployed to get back into work,” Darling said. But if you look at the PBR fine print, the pledge is not as simple as it seems.
Bringing forward the “jobs guarantee” for young people from a year to 6 months costs about £355m in 2010. But a footnote in the PBR notes that this is “funded by Department for Work and Pensions underspend”. No mention of the banker tax.
The Treasury have long resisted hypothocation like the plague. But it is worth bearing this in mind when you see a minister claiming the bonus tax is going directly to young people in need.
Another point worth mentioning on the “jobs guarantee” is that it is unlikely to last. The Treasury have pencilled £1.4bn savings from withdrawing recession support for the unemployed. The “guarantee” looks likely to go by 2011.
Jim Pickard
Kiran Stacey