I suspect that Nick Cohen is somewhere in the same age group as I am, which means that the edgy and tough popular music of his youth was, without a doubt, fuelled in part by the willingness of some to layabout on the dole playing with guitars. But this statement from Nick isn't true:
If you want to know why British pop has lost its rough energy, you should blame the Department for Work and Pensions, not a plot by the record label executives.
I know this because arguably the greatest age of British pop music wasn't in the 1970s but was in the first half of the 1960s (it pains me to say this as a teenager of the 1970s but it's true). Those bands and performers weren't created by kids on the dole but by kids at school or college - John Lennon set up The Quarrymen while still at school and Paul McCartney and George Harrison joined the band as a 15 year old and 14 year old respectively. The same story can be told for the Rolling Stones, for Fleetwood Mac, Pink Floyd and a host of others - most were, in effect, professional musicians who made money from performing - not a great living but not the myth of 'kids on the dole making music'.
I'm sure there are examples of bands that started because the members could take dole money and muck about in dad's garage but mostly bands started because kids wanted to make music. If British pop has 'lost its rough energy' (and I'm not so sure it has, unless you deem the X-Factor manufactury as definitive of current pop) it's for reasons other than the availability of benefits. When those British bands that changed popular music in the 1960s started out there wasn't much in the way of unemployment - even in Liverpool. So it is odd that this myth persists - music is created by musicians and, much of the time, those musicians worked as musicians before getting famous.