The Conservative Party has launched it's 2015 election campaign with claims that 'under the Conservatives, unemployment is down. Dont let Labour wreck it.'.
In truth, using figures from the ONS, it appears that the opposite is in fact true.
When Labour lost to the Conservatives in 1979, the % of people without a job was just 5.4%. Within a year of Conservative rule, this had risen to 5.9% and continued upwards to reach a peak of 12% in 1984.
The level the dipped to 7.4% in Q1 1997. Labour then took control of the country and those figures continued to drop to a low of 4.7% in 2007.
It then climbed to 8.1% before the 2010 election. After peaking at 8.6% in 2011, it has dropped to5.7%, but this has mainly been attributed to a rise in the number of people becoming self-employed, which has been revealed as 1 million extra people since 2010. David Cameron claims that such an increase shows how much the economy has increased.
However, it has been disclosed by HRMC that 750,000 of those registered a self-employed have registered purely to claim Working Tax Credits and Child Tax Credits, which together are much higher than Job Seekers Allowance. Those on full WTC or CTC are entitled to full Housing Benefits and Local Council Tax Reduction, so are able to claim the same add-on benefits as those on JSA, but without the need to sign-on or hunt for work.
Prior to 6th April 2015, a self-employed person was not subject to prove that they had worked a minimum of 24 working hours or wage when claiming WTC/CTC (unlike directly employed people who had to work at least 24 hours per week and send in their payslips to prove it). This meant that they had no need to actually do any paid work, just claim to work the required number of hours to qualify.
This was down to a quirk in that self-employed people were exempt from the National Minimum Wage Act that governed PAYE people. Someone with 3 children and registered as self-employed could, in theory, get £300 a week BEFORE HB and LCTR. They would also be entitled to free prescriptions and dental care to boot.
This loophole came to light when HMRC started to look a little harder at some of the self-employed claims for WTC. They discovered that 1 person had an allotment and had registered as a self-employed market gardener even though he didn't sell any of the produce he grew. Another told them he was a treasure hunter, but never managed to find any treasure to sell. Yet another claimed to be a journalist just because they had a blog and these are just the ones HMRC has revealed to the public.
The Coalition Govt. finally realized what was happening and have now closed the loophole so that in order to claim WTC, a self-employed person must now provide evidence that they are earning the equivalent of NMW for 24 hours each week.
It is estimated that once the new rules kick-in, unemployment will increase by up to 700,000.