Terry Murden: Osborne must deliver a budget for jobs

A programme of public works would help to boost employment levels

DAVID Cameron and Ed Miliband traded insults in the Commons yesterday, each accusing the other of culpability for Britain’s lengthening dole queues. It made for good theatre, but it exposed the lack of ideas as to how they might resolve the crisis.

Three trends in the latest data stand out: the higher proportion of women on the register, the rise in youth unemployment to almost one million – its highest level since the early 1990s – and the slow growth in private sector work to compensate for the jobs lost in the public sector.

Men were the big losers when manufacturing and finance took the hit in previous downturns. But women account for thousands of public sector jobs now being lost.

Young people are inevitable victims in a slow-growth economy where firms are doing well just to hold on to their staff and where there is little mobility to create opportunities.

The slow growth in private sector jobs is a worrying indictment of the coalition’s optimism to rebalance the economy away from state-provided employment. The private sector was always going to be playing catch-up, but fundamentally it can only fill the displaced public sector jobs if there is growth in the economy and plainly that is not happening.

The Scottish Government takes some comfort in figures that are “less-worse-than-the-UK” and it is delivering through its Plan MacB some form of capital stimulus for the economy within a reduced budget.

It is offering apprenticeships and is trying to keep the lid on the otherwise absurdly-rising cost of getting an education. There have been some recent announcements on job creation – in renewables, car industry research and in finance – that offset losses elsewhere and will provide the foundations for recovery.

But with its limited powers, and against the grim reality of a global downturn, there isn’t much more that the Holyrood administration can do. Scotland relies on an upturn in the wider world and on those holding the real levers of power. In short, it needs Westminster and the eurozone nations to solve their ongoing debt problems and get things moving.

For some months, commentators have noted that unemployment has not hit the heights that had been forecast, but as the public sector cuts begin to bite there is growing evidence that the jobless crisis is beginning to take hold and that private sector job creation is slow, static or in decline.

The coalition is determined to stick to its deficit-reduction policy, but it cannot continue resisting calls for more help for those losing their jobs because of it. Unemployment lags recovery and so even if there is an upturn next year, the jobless rate will remain high for some time.

The situation requires an urgent and decisive response and George Osborne, the Chancellor, will come under intense pressure to deliver a budget-for-jobs when he unveils his autumn statement on 29 November. As construction is particularly hard hit, a programme of public works would be a good place to start.

Jury out on whether it is time to jump back into RBS shares

IS IT time to start buying shares in Royal Bank of Scotland? I wish I had a fiver for every time I’ve been asked that question since the crisis saw them tumble to penny-stock status. But some market watchers are now starting to take the idea a little more seriously.

First, the current price factors in just about every potential catastrophe that could be thrown at it: a chunky “haircut” on sovereign debt defaults, a deep double-dip recession, and a top-of-the-range recapitalisation of its balance sheet. According to analysts at Societe Generale, if all these happen, then the bank sector looks fairly valued.

Much of the (cautious) optimism is based on an assumption that some sort of deal emerges that will save the eurozone from collapse. On that basis, the current price of the banks could offer some upside.

Analysts at Trading Central are upbeat on prospects, putting a 30.75p target on the shares, while in another circular ahead of RBS’s Q3 figures, Ian Gordon of Evolution Securities says it is still just possible that RBS may record a seventh successive quarter of pre-exceptionals operating profit.

Gary Greenwood of Shore Capital does, however, add a note of caution over the yet-to-be-determined capital ratios that the European authorities will impose on the banks. Amid reports that this could be at the top end of expectations there will be pressure for the UK government to inject more taxpayers’ money into RBS in spite of assurances from both sides that the bank is already well-capitalised.

RBS shares tend to swing violently on positive and negative news due to the small size of the free float, so it can exaggerate sentiment either way. But buyers were more in evidence yesterday, pushing the price up 0.51p or 2 per cent to 25.81p.

So, is it time to get back into RBS? Just remember, the value of your holdings can go down as well as up.