Philip Hammond’s gaffe that “there are no unemployed” is damaging despite his best efforts to explain it away because it feeds into two widely held beliefs: that the Tories don’t care about the unemployed and that the chancellor may be good at the figures but has no wider political vision.
Hammond is already on a yellow card for lacking political nous after his budget shambles in March when he had to withdraw a planned rise in national insurance. He had failed to notice it clashed with a Tory manifesto commitment. A second botched budget on Wednesday could prove politically fatal.
The chancellor asked Andrew Marr: “Where are the unemployed? There are no unemployed,” and then tried to repair the damage by explaining on a later programme that he had been making the point that previous waves of automation had not left millions of people unemployed.
But he had left the clear impression that the 1.4 million people on Britain’s official unemployment figures not only do not count, but they do not exist.
He fed into decades of political dogma that the Tories simply do not care about the unemployed. His remark carried an echo of Norman Lamont’s notorious phrase at the height of the 1991 recession that “rising unemployment and the recession have been a price well worth paying to get inflation down”.
But the impression also goes back to Margaret Thatcher’s own gaffe during the 1987 general election campaign when she described those who criticised her for creating an extra 1 million unemployed as “drooling and drivelling that they care”, and Norman Tebbit’s 1981 appeal to the unemployed “to get on their bikes and look for work”.
The difference for Hammond is that those notorious dismissals of the unemployed by Thatcher, Lamont and Tebbit were in a period when the number of unemployed topped 3 million and the rate was running at 10% and above.
Now there are 1.4 million people unemployed in Britain and the official unemployment rate is at 4.3% – the lowest since 1975, and the fourth lowest in Europe.
In fact Britain could claim to have an economy that is approaching full employment in the terms defined by traditional economists. William Beveridge, the architect of the welfare state, defined full employment not as 0% unemployment but anything below 3%. The OECD puts full employment as anywhere in the range of 4% to 6.4%.
Economists say this is because there will always be people who have quit or lost a seasonal job, known as frictional unemployment, or a mismatch in the economy between skills and available jobs, known as structural unemployment.
This analysis, of course, does not take account of the amount of underemployment in Britain including the million people on zero-hours contracts, many of whom would like to work longer hours.
Thatcher and Lamont were criticised for using higher unemployment as an economic tool for controlling inflation regardless of the human consequence. Nobody is criticising Hammond for doing that, particularly at a time when Britain is the “jobs factory of Europe” and continues to attract skilled European migrants.
But his gaffe does bolster the recent claims, including from Theresa May’s former political adviser Nick Timothy, that “Spreadsheet Phil” lacks a wider political vision and has “no desire or imagination” to improve the lives of struggling Britons. His claim that “there are no unemployed” just leaves people asking: “What world is he living in?”
It will only fuel criticism as he prepares to unveil his budget on Wednesday. In March, Hammond breezed through his Andrew Marr interview as he prepared to unveil the contents of his red box. But this time that optimism is already punctured no matter how much he talks about the prospects for driverless cars or poses as Phil the Builder.