How to turn Thanet into Kendal: Full employment is no chimera: some localities have long had it, says Graham Ingham

MENTION Kendal and the image is of a pretty, somewhat remote town on the edge of the Lake District, harbouring large numbers of tourists, a few retired people and a thriving mintcake industry. But few are likely to be aware of its outstanding economic success - which has little to do with tourism - and its persistently low unemployment.

Of course, Kendal is a nice place: in 1991, a Strathclyde University survey showed South Lakeland (which includes the town) to be the most attractive place in England to live. But that doesn't of itself bring economic success, as the people of Thanet, 350 miles away on the south-eastern tip of England, appreciate.

The contrast between the two places couldn't be greater. Unemployment is 3.6 per cent in the Kendal 'travel to work area' - one of the lowest rates in Britain. In Thanet, the figure is 14.5 per cent. How to turn Thanet into Kendal is the biggest challenge facing politicians committed to full employment.

Kendal seems to be a model for the full employment future envisaged by Tony Blair and John Prescott. Unemployment there has been lower than the national average for decades. (Even in the recession of the early Eighties, it never exceeded three-quarters of the national figure). The local economy has a diverse, thriving manufacturing sector, including big household names and an amazing number of busy small companies. There is also a surprisingly healthy financial services sector, the centrepiece of which is the headquarters of Provincial Insurance.

Kendal's experience seems to turn on its head the prevailing economic wisdom that unemployment cannot be sustainable at rates as low as 3 per cent. Low unemployment and a vibrant economy have not led to a build-up of local inflationary pressures, either in terms of property prices or, more significantly, wages. This is not a high-wage area: one small businessman who has just moved his company to Kendal told me he is paying the same rates he did in Bradford (but could probably have got away with a bit less).

Thanet, by contrast, has for decades suffered from chronically high unemployment. Last August, the area was granted Assisted Area status, making it eligible for British government and European Union funds, and Thanet council is campaigning to secure more inward investment.

Ramsgate's town centre is a prominent symbol of the area's decline, blighted by rows of boarded-up shops. But some of the other effects are less obvious. Despite high unemployment, one of the area's largest employers, Hornby, can't recruit all the skills it needs locally.

Bob Tite, who runs a small clothing company in Margate, expects real difficulties in the coming months as he expands his workforce: 'Twenty-two years ago when we started out, we'd put an advert in, and we had to take the phone off the hook. It's totally different now - we might not get any response. You can ask most of the manufacturers around here - it's the same. The people I've talked to have all had the same lack of response.'

Compare that with the experience of one of Kendal's largest employers, James Cropper, a paper-making company in business for 150 years. The personnel manager, Les Buckle, is inundated with phone inquiries whenever there is even a rumour of a vacancy. People - even those already in work - want to work at James Cropper. Remarkably, the company still aims to offer employees something near to a job for life.

'Our workforce is very good,' says Mr Buckle. 'We've made enormous changes, spent loads of money, and introduced lots of modern equipment that our workforce has been able to operate successfully.'

Some jobs have gone (by natural wastage: there have only been three redundancies in 35 years) but most of the substantial productivity benefits have resulted in higher output.

Michael Hart, chief executive of Provincial Insurance, believes adaptability helps a company offer something close to jobs for life - not the same job, but different roles within the same company.

He also thinks the high motivation among Kendal's workers reflects a strong work ethic and 'family values' in the town. It may also be the result of living in an area with no real history of long-term unemployment, where companies can recruit committed workers from a high-calibre labour force.

Industrial diversity, dynamism, motivation, a high skills base - these are qualities lacking in Thanet - and they need tackling simultaneously. Kent TEC (Training and Enterprise Council) is trying hard to improve Thanet's unusually low skills base - a 1990 study suggested seven out of ten long-term unemployed had no vocational or educational qualification.

But there are not enough jobs. The council's drive for inward investment has so far been slow to produce results. And Kendal's economic development officer, Audrey Taylor, is wary of relying too much on new employers to create jobs. One large employer can unbalance the local economy by making too many people reliant on it; a better source of expansion in jobs is new and existing small businesses - too many of which in Thanet seem to have little interest in growth.

The political challenge facing Thanet, however, is repeated across the country. Even South Lakeland's council needs to spread Kendal's success to the much weaker areas of its local economy. And strategies will only be effective if national politicians can produce convincing practical initiatives for achieving full employment.

Malcolm Allan, chief executive of Kent TEC, believes it needs money and a government willing to look beyond the lifetime of one Parliament: 'It will take 10 years of well-planned, well-funded economic development strategy, at the end of which government funds going into the benefit system would be significantly reduced. I think, morally and economically, we have to aim to reduce unemployment to 3 per cent - nothing less than that should be our objective.'

The writer is BBC economics correspondent. His film about the search for full employment can be seen tonight on 'Newsnight' on BBC2 at 10.30pm.

(Photograph omitted)