Unemployment (Hansard, 30 July 1981)

§ 14. Mr. Hooley
asked the Chancellor of the Exchequer what is his current estimate of the total cost in 1981–82 of unemployment benefit, special schemes for jobless boys and girls, employment subsidies in industry and other related expenditure, in the light of the rising trend of unemployment.

§ Mr. Brittan
The current estimate for the cost in 1981–82 of unemployment benefit is £2,004 million. The total cost in 1981–82 of all special employment and training measures is estimated at £1,100 million. Of this total, some £490 million is for schemes specially designed for young people.

§ Mr. Hooley
Would not it be more sensible to employ that money in expanding the housing programme, on capital expenditure in the public sector generally, by giving a boost to the National Enterprise Board and on investment in public industry? Does the right hon. and learned Gentleman agree that that would have the effect of not simply reducing unemployment benefit but of both providing a greater revenue for the Chancellor of the Exchequer and reducing the public sector borrowing requirement?

§ Mr. Brittan
I do not agree with the hon. Gentleman. If he is referring to a direct effect on the unemployment figures, there is no doubt that the special measures have a more direct and substantial effect on the number of jobs in relation to the amount of money spent. If he is talking about a general reflation of the sort that appears to be foreshadowed, the objections are that that would fuel inflation and lead to higher interest rates. It would not achieve the results that the hon. Gentleman favours.

§ Mr. Richard Wainwright
In view of the vast figure for unemployment benefit that the Chief Secretary has given to the House, are the Government reconsidering the present system whereby the whole increase in the cost of unemployment benefit is borne by even higher contributions from those still in employment and their hard-pressed employers?

§ Mr. Brittan
I am not quite sure whether behind that question the hon. Gentleman has some alternative that he wishes the Government to consider. If he does, I shall be happy to consider it.

§ Mr. Nicholas Winterton
Does not my right hon. and learned Friend admit that the amount of money spent on unemployment benefit and the special schemes announced by the Government is wasteful? Would not it be better to pump that money, one way or another, into capital projects that would provide meaningful work, which in turn would create genuine wealth? Will he give some consideration to the concern felt by industry about the rapid rise in energy prices, especially oil prices, that will have a further adverse effect on unemployment?

§ Mr. Brittan
My hon. Friend must decide whether he is asking that the same amount of money be spent on his proposal or that more public money should be spent. If he is asking that the same amount should be spent for different purposes, he must accept that fewer jobs would be produced. If he is asking for a higher total of public money to be spent, he must accept the consequences on interest rates and inflation.

§ Mr. Shore
I am sure that the Chief Secretary does not wish to mislead the House. Was not he asked what was the total cost of unemployment benefits and other matters? He gave the House the figure for unemployment benefit but not for supplementary benefit paid to the unemployed, which is an equal sum. It is another £2,000 million.
Is it not remarkable that he should have omitted that figure from his reply? The figures do not include the loss of income tax and national insurance contributions that the unemployed would make if they were in employment. Are we not talking not of £3,000 million but of at least £6,000 million, and more probably £7,000 million? The Opposition believe that that money could be put to a more useful purpose if more of our people were back of work.

§ Mr. Brittan
The right hon. Gentleman was incorrect to suggest that there has been any misleading of the House. If he cares to look at the question and answer later, he will find that he was wrong. He is operating under a fallacy in suggesting that employment can be switched on and off like a tap and that the money that is currently spent on the sort of measures that I have described can be simply diverted instantly into productive employment without any consequences on inflation and interest rates. If it were as easy as that, the right hon. Gentleman knows perfectly well that any Government would have resorted to that simple solution. The problems are very much monk: complex than he is prepared to admit.