Focus on our skills base, not credit agencies

It was Valentine’s Day, 14 February 2012. I awoke to hear George Osborne, chancellor of the exchequer, embracing the threatened downgrading of Britain’s credit rating by the agency Moody’s as proof positive that his policies were working. He seemed to be saying that it was the failure to retrench enough that had caused the lack of growth in those countries which had already experienced downgradings. No, I’m not making it up.

So in two weeks’ time we will have a Budget. The logic of which will surely be that we retrench even further so that growth in the second and third quarters of this year dip even lower than the last quarter of 2011. In that way we could prove to the credit rating agencies that we’d done everything possible to make austerity even tougher and by some miracle, growth would flourish as a result.

Somehow, as part of the historic British disease, we were once again trashing those who develop skills which are crucial to the future well-being of our economy

Now, don’t get me wrong. I’m wishing for nothing better than the figures for the first quarter of this year should respond to the optimism of the director general of the CBI. John Cridland is nothing if not a Pollyanna. He might of course be right. Having not spent enough in the run-up to Christmas, people may in January, February and March have gone out of their way to give the economy a boost. Let us all hope so.

But with the banks falling more than one billion pounds short of their promised lending to small businesses, with housing starts down by 7% last year and with the New Homes Bonus recently announced for 2012 equalling all of £4 this year per head of population in a borough like Knowsley, this year’s Budget is going to have to pull more than a rabbit out of the hat.

As I indicated in my January column, I think Osborne’s idea of drawing down on sovereign investment and pension funds is a good idea. Investment in our infrastructure is obviously a contribution to economic stability and sustainability for the future.

It is one of those paradoxes of life that austerity undoubtedly helps with maintaining record low interest rates (for those who can get someone to lend to them) and above all, with government borrowing.

So, if we could get back on stream in reducing the structural deficit and therefore “balance the books”, long-term investment in the future foundations of our economy and nation would make sense. Distinguishing between consumption on the one hand and investment for economic recovery on the other, is crucial. Perhaps explaining this to those faceless and unaccountable individuals (because of course they are individuals) in the credit rating agencies may be more than the chancellor feels he can achieve. Yet our recovery depends not just on reversing the downward trend in growth and with it growing unemployment, but also the decline in our skills base and therefore unemployability.

We set out to prove to the credit rating agencies that we’d done everything possible to make austerity tougher and by some miracle, growth would flourish

That is why I took umbrage with Michael Gove, education secretary, at the end of January in respect of vocational education. It wasn’t the logical pruning of those vocational qualifications that would lead youngsters down a cul-de-sac with no real definable outcome that I objected to. No, common sense told us that over the last five or six years some qualifications in school and in post-16 colleges required a harsh reality check.

The message, however, was very different to what should have been a carefully prepared and nuanced announcement. Instead, the impression was given that the government really did feel that vocational education and training was second rate. Somehow, as part of the historic British disease, we were once again trashing those who develop skills which are crucial to the future well-being of our economy.

Surely it is time now to develop not only a strategy for competing in the global economy with those who are investing heavily in education, in entrepreneurship and creativity, but alongside this, a renewal of the commitment to provide skills for much needed employment as the economy emerges from the prolonged downturn.

We need to ensure that the best employer will not be undercut by the worst, and the worst undercut by the very poorest - to paraphrase Winston Churchill back over 100 years ago in 1909 in introducing the Wages Act. Oh, and while we’re at it, why not in the Budget agree to subsidise a return to day release from work thereby creating further jobs and investing in training? I should know, as I was a beneficiary of day release all those years ago. And look where that got me.

David Blunkett is MP for Sheffield Brightside and Hillsborough, and a former home secretary