We have still have too many going on at too high a rate. I am one of those who believe there is much more to be done. Pilot schemes have started to try to check the flow. You don't expect people to move out of work and straight into incapacity benefit for ever. However, he admits it may still be a long term agenda to start tackling the 2m pool of unemployed on incapacity benefit.
People are very jumpy about the issue.
Overall though he argues the supply side policies have transformed the relationship between employment and inflation. Traditional economic thinking would have said tight labour market pressure on inflation - therefore you cannot be optimistic about growth in the labour market. Well, that has not proved the case.