HC Deb 11 February 1982 vol 17 cc1099-100
4. Mr. Andrew F. Bennett

asked the Chancellor of the Exchequer what is the cost to public funds of the current level of unemployment, including benefits that have to be paid out and money that is not collected, such as national insurance, income tax, and so on, and what is the average cost per unemployed single man, per unemployed single woman and per unemployed married man with two children, respectively.

Mr. Brittan

Payments of unemployment benefit and supplementary benefit to people registered as unemployed are expected to total about £4 billion in 1981–82. A comparable figure cannot be given for revenues that were not collected—that could be only hypothetical. The average cost of benefits paid to unemployed people depends upon a number of assumptions. On the basis of the assumptions detailed in the answer I gave to a question from the hon. Member for Harlow (Mr. Newens) on 16 December, the public expenditure cost of benefits paid to an unemployed married man with two children is £3,191 a year. On similar assumptions, the public expenditure cost of benefits paid to a single person, male or female, is £1,110 if a non-householder and £1,826 if a householder.

Mr. Bennett

Does not the Chief Secretary accept that the sums involved are close to the wages that many people would be prepared to accept for working? Is he aware that 250,000 people have been out of work for two years or more and that many of them expect the Government to create jobs with the money that they are spending on benefits?

Mr. Brittan

I do not accept that the hon. Gentleman is right. In a speech last weekend I tried to explain the figures. It is apparent that at nil net cost the amount of money that could be spent on providing employment is such that people would have to work for levels of pay substantially below the current benefit level. Although we may be tempted to follow the hon. Gentleman's reasoning, the figures do not support such a line.

Mr. Renton

Is my right hon. and learned Friend considering the proposal of Professor Layard that, along the bold lines of the youngsters in a work scheme, a substantial wage subsidy might be payable for a year to employers for each net addition to their labour force involving people who have been out of work for more than six months?

Mr. Brittan

That is a different proposition, which must be considered on a different basis because it involves additional expenditure. In considering whether that is desirable, we must take into account the long-term effect on the labour market of doing so and whether alternative uses for that money would play a better part in assisting the recovery of British industry.

Mr. Cook

Will the Chief Secretary at least take the credit for his Government's having reduced the cost of unemployment by reducing unemployment benefit? Does he realise that during the past three years his Government have reduced unemployment benefit by a 5 per cent. abatement, a 2 per cent. error in calculation and, finally, the abolition of earnings-related supplement? Does he not appreciate that there is a grotesque contrast between that mean penny-pinching on the level of benefit and the ridiculous squandering of money by doubling the numbers of unemployed? If he find cannot find a way to give the unemployed jobs, will he at least give them the benefit to which they are entitled?

Mr. Brittan

I do not accept the hon. Gentleman's figures, and I certainly do not accept his analysis of the causes of the current levels of unemployment. He knows perfectly well that the reason for the present unemployment is a combination of the world recession and the past lack of competitiveness of the British economy.

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