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Time to let bankers sample forced labour?

In the London borough of Camden, 2816 men, women and children – 761 households in all – are about to be kicked out of their homes if they cannot find an extra £90 a week for rent.

No-one says they are bad tenants. These families are simply among the victims of the Coalition's benefits cap.

Camden's council says the households will have to be "relocated" up to 200 miles away, where rents are cheaper. The council, a Labour council, is sorry about that. Schooling, friendships, medical treatments, family bonds and jobs will be disrupted, but it can't be helped. And no-one in a position of power will talk about urban cleansing.

Elsewhere in London, the Minister of State for Work and Pensions, Mark Hoban, has declared it is "ridiculous" to describe mandatory unpaid work and "training" for the unemployed as forced labour. Quite how this graduate of the London School of Economics can find a permutation involving "work", "mandatory" and "unpaid" that allows for choice in the matter remains unclear.

Last week, for all that, Hoban managed a certain insouciance in interviews. Geology graduate Cait Reilly and HGV driver Jamieson Wilson had won their Court of Appeal cases over the regulations under which "back to work" schemes have been created, but for the minister this was a technicality. The Government had been found in breach of its own rules, but the rules had been rewritten instantly. Simple.

Reilly doesn't appear to be the epitome of a street-fighting radical. Wilson has meanwhile kept his opinions to himself since the hearing. The pair have nothing much in common, it seems, beyond the fact they were treated like dirt, exploited by a labour market and a government oblivious to decency, and rebelled.

She had hoped to use her qualifications for a career in museums, and was prepared to work in the sector for the minimum wage. Latterly, she was an unpaid volunteer. He had lost his driving job through no fault of his own, but was quite happy, according to court papers, to consider any sort of employment. No-one suggests that he failed to look hard for a job.

Reilly couldn't see why she should be forced by the Jobcentre to throw over unpaid work suited to her degree just to toil for nothing for the Poundland chain. In his own words, Wilson was given a 30-hour a week placement in November 2011 with "an organisation that collects disused furniture, renovates it and distributes it to needy people in the local community". He claims he was told he would be in a place washing sofas, "and if I didn't like it I would be sanctioned".

Reilly reasoned that her placement was idiotic and unfair. "I came out with nothing; Poundland gained considerably. For me, this unpaid labour scheme lasted only two weeks, but some people, as part of the Government's work programme, will have to do such unpaid work for up to six months – longer than the community service orders handed out to many criminals."

That was Wilson's argument. He had nothing against the furniture reclamation organisation. But he was not prepared to work unpaid for six months. If there had been training leading to "some concrete benefit", he would, according to his statement, have jumped at the chance. No such luck. His money was stopped.

The three judges in the Court of Appeal didn't delve into the morality of any of this. Who does, these days? The judges rejected the claim that the schemes imposed on Reilly and Wilson violated article four – banning slavery or forced labour – of the European Convention on Human Rights. The jurists instead rebuked the secretary of state – the agreeable Iain Duncan Smith – for acting "beyond the powers given to him by Parliament by failing to provide any detail" about his pet schemes.

So this is where we are in 21st-century Britain. A court might duff up a government for acting as a law unto itself by ignoring its own rules, but there is nothing legally wrong, it seems, with forcing people to work in pointless jobs for absolutely nothing. And this – you might even laugh – is deemed a suitable way to prepare individuals for a return to the labour market.

Cait Reilly's generation knows something about that. The number of unemployed young adults is forecast to exceed a million once again this year. Britain's record is not the worst – Spain and Italy take the miserable prize – but is above both the EU and OECD averages. Should a job become available, meanwhile, the lucky candidate will discover that real wages, outstripped by inflation, fell back to 2003 levels last year.

Quite why a generation of young people has been hammered tends to mystify those who are styled experts. If nothing else, youth comes cheap. In a sane world, you could set one million young adults to work on the living wage – £7.45 an hour outside London – and still see change from £15 billion a year, even before tax receipts and consumer spending are taken into account. If that sounds a lot, remember that George Osborne was forced last year to borrow £8.6bn in October alone. And for what?

Mervyn King, governor of the Bank of England, last week reported that inflation will rise again this year and "growth" will remain elusive. The owlish central banker took the opportunity, just for a change, to lay the blame on Coalition policies. Everything from energy bills to increased university tuition fees and a VAT rise had acted on inflation, the governor observed. The effect was to depress real wages still further.

Still, never fear: Ed Miliband is on the case. To be fair, the Labour leader offered decent ideas in a speech last week. The restoration of the 10p tax band would make amends for his party's stupidity in government. A cut in VAT, even temporarily, would help. Something should certainly be done about train fares, bank charges, and interest rates on payday loans. All of these might succour what Miliband calls the squeezed middle.

What they will not do is halt the collapse in earnings, rescue the young unemployed, or restore sanity to a society that treats forced labour as a clever idea. While Miliband rightly attacks a "race to the bottom in wages and skills", Royal Bank of Scotland – 81% owned by the taxpayer – is paying $612 million (£390m) in fines for its part in the Libor fraud. No-one involved in that scam was working unpaid or against their will.

Still, Vince Cable, the Business Secretary, has apparently "made it clear" that the fines should be paid from bonuses. "It is absolutely galling," he said at the start of the month, "for UK taxpayers to be asked to stump up". Then he was forced to admit that the Government could not actually force RBS to do anything.

Threatening bank executives with workfare wouldn't be a bad idea. Taxing them according to the number of spare bedrooms they possess might work. But that isn't the nature of modern Britain, is it? The difference between the few and the rest is a matter not of accident, but design. Reilly and Wilson serve as proof of that.

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