HC Deb 26 January 1978 vol 942 cc1584-6
9. Mr. Madden

asked the Chancellor of the Exchequer what is the latest estimate of the total cost to his Department of unemployment over the last year.

Mr. Healey

I take it that my hon. Friend is interested in the total cost of unemployment to public funds. The estimated cost of social security benefits payable because of unemployment in the financial year 1977–8 is about £1,460 million. Special labour market measures are expected to cost some £400 million over the same period and to support the equivalent of 375,000 annual places. The most important other costs are the loss of tax revenue and national insurance contributions, for which it is not possible to provide a reliable estimate.

Mr. Madden

Does my right hon. Friend agree that the figures that he has given represent a scandalous waste in human and economic terms? As the representative of a constituency with clothing interests, does he agree that the continuation of the temporary employment subsidy is crucially important to combat unemployment? Will he tell the Common Market Commission and others opposed to the continuation of the subsidy to take a running jump and that the Government intend to continue the subsidy in order to combat unemployment?

Mr. Healey

I take it from the last part of my hon. Friend's question that he does not think that this expenditure is a waste but would much rather that it were not necessary. We can be proud of the level of unemployment benefit that we pay and the measures that we have introduced to protect jobs. I hope that my right hon. Friend the Secretary of State for Employment will be in a position to make an announcement in the near future about the use of further measures-of this nature.

It is true that some members of the Community have raised objections to some aspects of the temporary employment subsidy, but I am confident that we shall be able to negotiate adjustments in the way in which we handle this problem that will enable us to protect as many jobs without creating the difficulties that some of our friends in the Community see.

Mr. Welsh

Will the Chancellor bear in mind not so much the cost to his Department, which is well able to afford it, as the cost to individual Scots, men and women, who are facing increased levels of unemployment because of the failure of United Kingdom economic policy in Scotland? The Government have given Scotland its highest unemployment level since 1939. Does not that make the Labour Party's slogan "Back to work with Labour" seem hollow, sickly and wizened?

Mr. Healey

I am deeply conscious of the impact in human as well as financial terms of the present levels of unemployment, but the House will know as well as I that the number of young men and women coming on to the labour market is increasing by 200,000 a year. Last year, employment in Britain increased by well over 100,000, although unemployment increased by almost as much. The employment measures to which reference has been made have done a great deal to soften the impact, and if the Government continue to develop their present policies we shall see a steady fall in the unemployment rate starting this year.

Mr. Skinner

Does my right hon. Friend accept that, if one takes into account the loss of tax revenue, the tax rebates that are paid—the total level of which he refuses to specify—the loss of industrial production and the other benefits to which he has referred, the total cost of having 1½ million people unemployed throughout the year is £4,000 million? Is it not also worth recalling that he is the same fellow who told us that, if we had a £6 a week pay policy to reduce consumer purchasing power and another pay policy after that, unemployment would be reduced and none of these problems would arise? That is why we cannot afford another pay policy.

Mr. Healey

I do not think that that is a compliment to the overwhelming majority in the trade union movement which has supported pay policies for the past two years and is supporting this year's policy. My hon. Friend's passionate devotion in these matters is fully appreciated, but he must not show disregard of the views of his fellow trade unionists who are supporting the pay policy, because they know that its contribution to the conquest of inflation is of vital importance to the conquest of unemployment.