Britain’s surprising unemployment surge may be traced to 1 factor. This is why I now concern we’ll discover it unattainable to flee this doom loop of job market disaster and hovering advantages: ALEX BRUMMER

Labour’s total economic incompetence has once again been exposed by the latest surge in joblessness.

Despite the Chancellor’s promises of ‘backing working people, not making them poorer’, new figures show the number of people out of work and on the welfare payroll is at the highest level since the pandemic.

The country’s unemployment rate has climbed steeply to 5.2 per cent in the three months to December, while those on the payroll fell by 134,000 in the past year, according to the Office for National Statistics.

This shocking record can be directly traced to the enterprise-destroying policies of Rachel Reeves and former deputy prime minister Angela Rayner.

The £25billion annual rise in National Insurance contributions in Reeves’ first budget hit businesses hard, discouraging hiring and leading to a dramatic fall in payrolls.

Meanwhile, it is almost comical to think that Rayner, living high on the hog in her luxury Hove apartment – yes, the one at the centre of a stamp duty tax scandal – should ever be considered for Labour leadership.

Her Employment Rights Act, introduced at the behest of her trade union paymasters, many measures of which begin today, will prove a huge burden on employers even in its most watered-down form.

The most alarming victims of Sir Keir Starmer and Rachel Reeves’ inept policies are the surging numbers of young people, including recent graduates, making up the ranks of the unemployed, writes Alex Brummer

Labour likes to boast that it is the government of working people, growth and ‘change’. The only changes it has brought about are fewer private-sector jobs, a moribund labour market, increasing hardship for aspirational young people and worst of all, bloated welfare bills – which now must be paid by ever-fewer taxpayers.

As Lord Frost, director-general of the free-market think-tank the Institute for Economic Affairs, pointed out yesterday: ‘You cannot regulate your way to stronger employment. 

Higher business taxes and the new employment rights send a clear signal to employers to think twice before hiring.’

The most alarming victims of Labour’s inept policies are the surging numbers of young people, including recent graduates, making up the ranks of the unemployed.

One of the outstanding achievements of past British governments, of all political colours, has been the effectiveness of the nation’s flexible jobs market in absorbing 16 to 24-year-olds into the workforce – avoiding the shameful levels of youth unemployment across the European Union. In the 19 short months that Keir Starmer has been PM that record has been shattered.

The Labour government has stifled the youth employment market through higher taxes on jobs, a rise in minimum wage and new employment rules, wiping out any advantage our young had over the EU.

In October, the Chancellor said: ‘This is a government on the side of our kids, who will back their potential.’

 Lord Frost, director-general of the Institute for Economic Affairs, says higher business taxes and the new employment rights ‘send a clear signal to employers to think twice before hiring’

Yet the latest data shows that youth unemployment has rocketed to 16.1 per cent, the highest in a decade and is now greater than the 15 per cent level in the EU.

The statist approach of Starmer’s government is also having a profoundly negative impact on the shape of Britain’s flexible, deregulated free-market economy.

The ONS report revealed a further blow to the rate at which wages grow, which has seen a reduction from 4.4 per cent to 4.2 in the past three months. 

While this is calamitous for workers, there are big hopes that this will pave the way for the Bank of England to cut the base rate from the current 3.75 per cent to 3.5 per cent at its March meeting. 

That should provide a much-needed fillip to businesses, home buyers and the stagnant economy.

But on every other measure, Labour is doing harm to the workforce – except, of course, when it comes to the public sector.

The contrast in pay for the wealth-creating private sector and government could not be starker. Public-sector pay is soaring: wage levels have climbed by a whopping

7.2 per cent in the three months to the end of December, almost twice as much as those on payrolls in the productive part of the economy.

While Labour policies have brought the private sector to a juddering halt, some 88,000 people have been added to the Government’s payrolls since July 2024 when Starmer swept into office – despite the PM’s repeated proclamation to cut ‘flab’ from the civil service.

Most startling of all are the dramatic rises in the nation’s welfare bill.

Latest estimates show that some 8.4million people are now living on welfare and the number of people claiming health benefits has climbed from 3.5million to

4.2million. This is a catastrophic failure for a government which pledged to bring numbers down.

Rising unemployment comes with damaging costs. Every person added to the welfare rolls is an expense to the Exchequer and, at the same time, the revenue base of the government shrinks since they are no longer taxpayers.

Labour will find it impossible to escape this doom loop of soaring benefits and a catastrophic job market – especially if they continue to devise these crippling economic policies.