Thursday, February 04, 2010

Lord Freudian Slip

Lord Freud, a Conservative spokesman on welfare, has congratulated the government on its handling of the recession, saying it has contributed to 500,000 people not losing their jobs.

He also admitted the British experience of the recession has been much better than during the previous recession of 1992, which was overseen by John Major's Tory government.

Freud, a former businessman who has advised both Labour and the Tories, praised the government's flexible labour market during debates on the government's child poverty bill.

Admitting his remarks might not be "politically correct", he said one of the key differences in the recession was the degree of labour market flexibility in the private sector, adding the British ­government had shown far greater willingness than its European counterparts not to subsidise this flexibility, but instead allow a switch to part-time working.

Freud said: "The process in Europe, including in Belgium and in Germany, is that subsidies are provided by government. This government has not supported that process and I congratulate them on that because it has saved a lot of money. That has happened more flexibly here than in any European country and is a testament to a relatively flexible labour market."

Echoing the view of many independent economists, he went on: "There has been a substantial difference between this recession and other recessions," saying the labour market ­flexibility especially in the higher ­echelons of the private sector in the UK has been substantial.

Asked by startled opposition peers who precisely he was praising, he explained: "I was congratulating the government on not subsidising a process of adjustment but allowing the market and the contract between the employers and employees to hold sway, albeit the employees took a hit.

"In practice what happened economically was that instead of having another half million people unemployed and fully dependent on the state, the misery was spread."

Traditionally the opposition frontbench criticises the government for being too interventionist, but Freud's remarks recognise that Labour has allowed the labour market to perform more flexibly.

Lord Freud praises government's jobs policy during recession | Business |
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