The Tories’ two political bailouts
The government has announced two schemes in the last 72 hours.
The providers will now be able to claim payment under their current contract if they have any involvement in a young person taking up one of the 160,000 six month posts. The current payment schedule is up to £3,800 per job outcome. In effect, the providers are being offered the same money for less work, because these subsidised posts mean employers will have an incentive to take people on.
Second, the government is to underwrite up to £20bn in bank loans to businesses. This is being done because the banks have been failing in their primary purpose, with loans to businesses falling through the year.
This move by Osborne – necessarily an admission that banks are not lending enough to small businesses - comes just three weeks after Cameron incorrectly boasted in the Commons that lending to small businesses was increasing and that everything was fine. I hope Ed Balls/Chuka Ummuna will make that point this week.
Both new schemes have a common thread.
They are political bailouts, with taxpayer money used to subsidise growth and labour market strategies which have clearly not delivered to date, but which are deemed politically too big to fail.