HC Deb 20 February 1986 vol 92 cc489-97

4.7 pm

The Paymaster General and Minister for Employment (Mr. Kenneth Clarke)

With permission, Mr. Speaker, I should like to make a statement on changes to unemployment figures.

I announced yesterday that at the request of our Department's statisticians, and in order to ensure greater accuracy, I have agreed that the compilation and publication of the monthly unemployment statistics will take place some two weeks later than at present. This is not a major change in presentation, but the improved estimates will allow a more complete and accurate picture to be given of the latest labour market developments. I have placed further details in the Library.

Mr. John Prescott (Kingston upon Hull, East)

While the Opposition welcome the fact that the Government have at last been forced to make a statement about what they are doing, this eight-line statement is an insult to the intelligence of hon. Members. We are forced to read the Library statement to see the real intent and impact of this further fiddling of the unemployment figures. I am forced to ask several questions to establish the true intent of the so-called adjustment, which has more to do with the political intentions of the Department than with the economic statisticians' request.

Does the Paymaster General accept that the change in the presentation of the monthly employment figures means that they are now to include monthly figures for earnings and monthly figures for industrial disputes, which were previously issued on different days, to distract attention away from the single announcement of the unemployment figures? Does the Minister accept that, if he wished to adopt that rationale, he should have included the inflation figures with the earnings and employment figures, or does he want separate treatment of the inflation figures?

Can he confirm that the new method of calculation will reduce unemployment figures in absolute terms by more than 60,000 people, making it the eighth adjustment, effecting a reduction of more than 500,000 in the unemployment figures, since 1979?

Is the Minister aware that the changes — [Interruption.] I hope that hon. Members will listen, because the accusation against the Government is that they are not giving a clear picture of the position. Is the Minister aware that the Department's claims that the changes are consistent with international practice are not entirely correct, as they involve including the self-employed in the labour figures of the percentage unemployed? That will have the direct effect of reducing the percentage of unemployment figures, which, according to the Library, would reduce the January figures of 14.1 per cent. down to the new Tory international standard of 12.4 per cent. — a 20 per cent. cut at a stroke.

Can the Paymaster General confirm that the method of calculation is not consistent with the international OECD standard and that his Department on 14 January 1985 in a written answer to the hon. Member for Bolton, North-East (Mr. Thurnham) stated that such a calculation would have an unfair effect on the figures? Why did the Department change its decision?

The reason for the change is not only to fiddle the figures ever downwards, but to include the new survey that the Department is to launch in June this year, which will show inflated figures for the self-employed, which by definition will reduce the percentage of unemployment in the figures. Is it not a coincidence that the new figures to reduce the percentage of the unemployed coincide with the new public relations campaign that the Government have launched at a cost of £1 million to improve their image on employment, which the Secretary of State for Employment has called "compassion in action"? Let the Minister understand that these policies do not kid the electorate, or the unemployed, or the additional 1,000 people who are made redundant by Lucas in Birmingham.

Mr. Clarke

I ask the hon. Gentleman to take the unlikely step of imagining himself, for a moment, in my position or in that of my right hon. and noble Friend the Secretary of State for Employment. The statisticians in our Department said, "We have discovered that a high and unacceptable error is being made in our monthly unemployment figures," and they asked for our permission to correct the error. We gave permission. That was the basis of yesterday's announcement. Is the hon. Gentleman saying that if he were the Secretary of State for Employment he would say to statisticians "No, no—do not correct this mistake. Carry on making what you regard as an error, and carry on turning in each month unemployment figures that are higher than they ought to be."? We know that the hon. Gentleman would not say that, because this morning on breakfast television he was asked that question and he had to agree that he would have made the self-same statement if, as he put it, he had been faced with a reasonably justifiable point of the kind that was put to him.

Mr. Prescott


Mr. Clarke

I do not want to advise the hon. Gentleman about how to behave towards civil servants, were he ever to take office, but he has provoked, without my knowing that the person in question was going to do this, the senior statistician in my Department to go public and to make it clear that he asked for this correction to be made. The hon. Gentleman will be able to imagine that my statisticians must privately agree from time to time that they have enough trouble with arguments from me about their figures. I shall go back to my Department and quote the old Hilaire Belloc adage: And always keep a hold of Nurse For fear of finding something worse. We are producing, with professional advice, more accurate figures than we were before. The hon. Gentleman is making a ludicrous fuss about it. He wound up on breakfast television by comparing my right hon. and noble Friend and me to President Marcos of the Philippines because we accepted our statisticians' advice.

Then we get to the question why, when removing this error means that the figures are to appear a fortnight later, we are combining the figures with those for the rate of unemployment and the growth in new employment. The answer is because, a fortnight later, they will come out, in most months, either on the same day or the day before. It is therefore sensible to present them together as one picture of the labour market.

The hon. Gentleman asked about the rate of unemployment that we used. I assume that most right, hon. and hon. Gentlemen know that the rate of unemployment is the number of people who are unemployed at any given time compared with the number of people who are in work. It is true that, for years, that figure has not included the self-employed and the armed forces. However, because the number of self-employed is increasing, it is becoming steadily less realistic as a figure. The hon. Gentleman says that this is not the international figure. Nor would the one that we should otherwise put out be an international figure. However, there is an Organisation for Economic Co-operation and Development figure which he can have. That is available and the hon. Gentleman can cite it, if he wishes. All these figures are available, as are all the other changes that we are making.

Mr. Robert Maclennan (Caithness and Sutherland)

On a point of order, Mr. Speaker.

Mr. Speaker

I will take the point of order after the Minister has completed his reply.

Mr. Clarke

I believe that we should have a sensible and continuing debate about the policy issues that affect self-employment, unemployment, new employment and the way in which we should deal with these problems. The idea that we should have a debate or an oral statement on the statistics is, frankly, to worry about the footnotes and the methodology of the Department's experts. The hon. Gentleman entirely misses the point of the debate.

Several hon. Members


Mr. Speaker

I shall take the point of order from the hon. Member for Caithness and Sutherland (Mr. Maclennan).

Mr. Maclennan

I wonder, Mr. Speaker, whether you received notification from the Minister that he was introducing his Budget speech this afternoon.

Mr. Jerry Hayes (Harlow)

I congratulate the hon. Member for Kingston upon Hull, East (Mr. Prescott) on turning hypocrisy into an art form. Will he come to the Dispatch Box this afternoon and deny what he told a television interviewer this morning: that, had he been confronted with the same figures from the Government statistician, he would have done the same? [Interruption.]

Mr. Speaker

Order. Before these exchanges get out of control, may I ask hon. Members please to ask questions of the Paymaster General, not questions about the reactions of the Opposition?

Mr. Michael Foot (Blaenau Gwent)

If the right hon. and learned Gentleman had such a good case for the new statement of figures that he is introducing, why did he not come and state it himself? Must we attribute it to the bashfulness of his nature that he did not come forward immediately? Since this surreptitious publication of the change, to use no harsher word, and since there was so much objection to the earlier change in the published figures that was introduced by the chairman of the Conservative party when he was Secretary of State for Employment, may we have a guarantee from the Government and the Minister that there will be no further changes in the way that the unemployment figures are presented—at least not before the next general election?

Mr. Clarke

I have come to make an oral statement because of my genuine respect for the House. There was a demand yesterday for an oral statement and I have made an oral statement. The complaint now is that the statement contains only eight lines. I regarded this, and I still regard it, as written answer stuff. A technical change is being made, at the behest of technical and professional advisers in the Department, in the way that the figures are compiled. I am not responsible for the fact that a political row is being built upon it.

In a debate last week, I challenged the shadow Chancellor to say whether a Labour Government would reintroduce the system whereby the unemployed had to register both at the jobcentre and at the unemployment benefit office simply in order that the unemployment figures could be increased. I challenge the Opposition to say whether they would go back to a system whereby retired schoolmasters and retired bank managers would have to sign on, simply in order to increase the unemployment figures. Of course not. The changes have been made in the interests of accuracy and the figures are more accurate than the previous figures. I do not believe that any Opposition Member would take a different step from that taken by the Government.

Several Hon. Members


Mr. Speaker

Order. I have to take account of the fact that later this afternoon there is to be an important debate on public expenditure. I have now received notice of a Standing Order No. 10 application and I propose to bring the exchanges on the statement to an end at 4.30.

Sir Dudley Smith (Warwick and Leamington)

When my right hon. and learned Friend next takes into account possible changes in the unemployment figures to reflect the position even more truthfully, will he also take fully into account the many thousands of people who are merrily working away but who at the same time are drawing unemployment benefit and social security benefit? Is he aware that, despite what the Opposition say, the real fiddling is in that sector?

Mr. Clarke

The labour force survey, the result of which will appear later this year, will reveal another clear picture of the labour market. If past surveys are anything to go by, it will reveal that quite a lot of people who appear in the unemployment count as claimants are not seeking work. The last labour force survey showed that about one third had not sought work in the previous week, either because they were not available for work or because they already had a job. On the other hand, about 800,000 who would probably take a job if one was available do not appear in the count. When we make those corrections, they still produce a lower figure for unemployment than that which the Government normally use.

Mr. James Hamilton (Motherwell, North)

Will the Minister recognise that, no matter how much he fiddles the figures and no matter how hard the statisticians work to give him acceptable figures, Scotland still has the highest unemployment in its history? Will he bear in mind the fact that in Motherwell in two local elections recently the Tory candidate was at the bottom of the poll, with the Communist party candidate defeating the Tory candidate in one case? Will he come clean and give us the true figures?

Mr. Clarke

The hon. Gentleman has accused me with less vehemence than his hon. Friends of fiddling the figures. I hope that sooner or later one Opposition Member will point to the inaccuracy which the Opposition say is taking place and which lays the foundation for the allegation of fiddling. The fact is that they do not make any allegation of inaccuracy but just make wild allegations. The hon. Gentleman went on to the more serious subject of the problem of unemployment in parts of Scotland and elsewhere. That is why our main activities are devoted not to the blessed statistical arguments about figures, but to producing new policies of assistance to the long-term unemployed, the young unemployed and the others.

Mr. Hugh Dykes (Harrow, East)

Is the Paymaster General aware that he has completely demolished the absurd position about this entirely technical change? Since he himself referred to the real debate and the real figures of unemployed, is he aware that there is a House of Commons research note in the Library which presumably is objective and which says that, allowing for some double counting, the true figure tots up to 4.9 million? If one knocks off 1 million, one gets 3.9 million unemployed. As it now seems that the public sector borrowing requirement will be about £5 billion instead of £8 billion or £9 billion when the Budget is announced, when will the Government take significant expansionary action to reduce unemployment?

Mr. Clarke

I have not seen that research note. My reaction at this stage is that I do not see how one can remotely and sensibly get anywhere near a figure of 4.9 million as the total unemployed. I shall try to study that and challenge with the Library the methodology, with the assistance of those who advise the Government and who compile our figures. I have never heard of such a figure and I regard it as fanciful. I agree with my hon. Friend that we should he devoting our efforts to what we can do to speed up the rate of job creation and tackle the real problem. Last year's Budget contained significant measures which will boost employment. [HON. MEMBERS: "When?"] The changes in national insurance contributions, which were a major step last year, did not even come into effect until October. I am sure that last year's Budget for jobs is still working through. This year's Budget is the next significant step which we are all awaiting.

Mr. James Wallace (Orkney and Shetland)

Will the Paymaster General accept that the House was annoyed yesterday not just because the information was given by written answer but because there was a press briefing before the answer was available to hon. Members? As the right hon. and learned Member has said that he does not approve of that practice, can the House assume that that shoddy contempt of the House arose because the decision was taken by his boss, Lord Young, who is not even accountable to this place? If there is such great zeal for accuracy in the Department of Employment, will it seek to give us regularly an estimate of the number who are unemployed but not registered for benefit?

Mr. Clarke

My right hon. and noble Friend and I know nothing of any briefing that may or may not have taken place yesterday and we knew nothing about it at the time. I think that the whole fuss would not have taken place but for the fact that the information was given on the television news yesterday at lunchtime and various Opposition Members got hold of the wrong end of the stick.

Mr. Michael Latham (Rutland and Melton)

Is my right hon. and learned Friend aware that, having heard his statement and the hot air from the Opposition, his hon. Friends who sit behind him think that this whole matter is a complete waste of time?

Mr. Clarke

I agree.

Mr. Bob Clay (Sunderland, North)

Since the Minister has refused to give an undertaking that he will not fiddle the figures again before the next general election, may I suggest what the next fiddle might be? He might save a lot of work in his Department if, instead of getting his statisticians to estimate the figures, he asked the Metropolitan police, who estimate the numbers on nuclear disarmament demonstrations in London, to do it. In that way he would probably crack the problem completely.

Mr. Clarke

The hon. Gentleman repeats the allegation of fiddling. Although he cannot reply, I ask him what he would do when faced with the statistician's position. Is he really saying that we should put back into the figures 55,000 phantom people whom we know are not unemployed so that we may inflate the figure to what it was previously?

Mr. Christopher Chope (Southampton, Itchen)

Will my right hon. and learned Friend agree that it is a grave insult to the record number of self-employed to insinuate that they do not work and that they do not count? Does he agree that the significant statistics are the net increase in new jobs each month and the proportion of the population in work? Will he ensure that when the statistics are published there will be simultaneous publication of our favourable record compared with our European partners?

Mr. Clarke

I am grateful. I agree that we must accept that more and more people are becoming self-employed. That has been the trend for many years; it will be increasingly the trend in future and it is wholly desirable. Therefore, any unemployment figure that takes no account of the self-employed is not realistic or useful. I think that in due course the Opposition will realise that.

Mr. Terry Davis (Birmingham, Hodge Hill)

Will the Minister confirm that the last time the Government dared to publish a labour force survey the figures showed that the Government's statistics exaggerated by 110,000 the number of people employed? Since there is a strong possibility that the present statistics exaggerate the number of people who are self-employed, as well as the number who are employees, why have the Government postponed the publication of the 1984 census of employment which they originally promised to publish before Christmas?

Mr. Clarke

We do not postpone these things. It is not a question of when we dare to produce things like the labour force survey results. We publish them when they are ready and when the statisticians are prepared to put their professional reputation on the line. I quite accept — [Interruption.] Before Opposition Members start to make false points again, they should remember that, when we produce figures for the number of new jobs and the number of self-employed month by month, they are the best estimates that can be made on past trends and on the last labour force survey. When we get the results of the next labour force survey we will know what the figure is; it may be more or it may be less. I assure the House that we publish the figures and stick to them; we stick to the best professional estimates that can be made on them thereafter.

Mr. Tony Baldry (Banbury)

Will my right hon. and learned Friend agree that the important criteria when considering unemployment statistics are that the methodology should be consistent month by month and that the figures should be as accurate as possible? Do not the changes mean that the figures will be more rather than less accurate? As there seems to be some doubt among the Opposition about the alleged fiddle, will my right hon. and learned Friend arrange for a briefing from his statisticians to be placed in the Library to show exactly the methodology adopted so as to give the Opposition a chance of identifying where the alleged fiddle takes place? Clearly, a fiddle does not exist.

Mr. Clarke

I am quite happy to say that my Department will continue to make available as much information as is wanted about the methodology that is used. There is a publication known as the Employment Gazette which sets out in copious detail exactly how the figures are produced. I agree with my hon. Friend that it would be a courtesy to the House if the Opposition would specify exactly the error or mistake that they claim gives rise to a fiddle. The methodology of the Opposition appears to be to think of a figure which might be the number of unemployed and double it.

Mr. Terry Lewis (Worsley)

Is the Minister aware that the country will see this as the fourth cosmetic attempt — [HON. MEMBERS: "Eighth."] — the eighth cosmetic attempt to drive down the unemployment figures? Will the Minister address himself to the problem of the 7,000 people who are without jobs in my constituency? Will he tell them that they are phantoms and that they are hypothetical?

Mr. Clarke

The people to whom I referred as phantom unemployed are the extra number who, as it turns out, were counted in error. The Opposition spokesman, the hon. Member for Kingston upon Hull, East (Mr. Prescott), has agreed so far that he would have made the change that we have made. I am still waiting to hear what change in what we are proposing the Opposition would make. If they came to office, I do not believe that they would tell the statisticians to start inflating the figures.

Mr. Richard Alexander (Newark)

Is it not clear from the Opposition's reaction that they are far more interested in making political capital out of the unemployed than in the accuracy of the figures?

Mr. Clarke

I am not sure what they are making, but I believe that they think that they are making capital, or they did when they started on this tack.

Mr. Bruce Millan (Glasgow, Govan)

Is the Minister aware that the effect of this further manipulation of the unemployment figures, added to recent Government behaviour over Westland and British Leyland, will be that hardly anyone will believe any Minister on anything?

Mr. Clarke

The right hon. Gentleman has considerable experience — far more than I have — of being in government and playing a responsible role in government. Is he asserting that when in office he has told his statisticians to to perpetuate an error, which appears to be the suggestion of some Opposition Members?

Mr. Tony Marlow (Northampton, North)

I am sure that my right hon. and learned Friend is aware that the House and the country want the truth. I am sure also that he is aware that there are 774,000 unemployed in the south-east, including 400,500 in Greater London. I am told, and I am sure that my right hon. and learned Friend is as well, that there is a shortage of people looking for work and that there are too many jobs and not enough people taking the work. Obviously there is an element of voluntary unemployment. The truth that the country wants to know is how many of the members of the permanent labour force cannot get jobs. It seems to be a far lower figure than the figure that we have now.

Mr. Clarke

I agree with my hon. Friend. The position varies greatly in different parts of the country. I was in Peckham yesterday, and within Southwark there are more jobs than residents. There are many unemployed in Peckham, partly because they do not have the necessary skills and training to enable them to apply for jobs that are taken by others living outside the area. In the south and the midlands especially, there are those who appear in our count as unemployed, and when we hold a labour force survey they turn out to be already in work or not currently searching for work. The position is complex and we should address ourselves to helping those who really matter—those who are genuinely unemployed—when considering these figures.

Mr. John Evans (St. Helens, North)

The number of questions following the Minister's statement reflect the fact that we should have been presented with a proper statement from the right hon. and learned Gentleman instead of an eight-line statement. Will he inform the House and the country why he has introduced a change in the statistics which 12 months ago the Department refused to accept on the ground of unfairness? Will he deny that the changes that he has introduced will reduce the percentage from 14.1 to 12.4 without creating one job? Will he confirm that this is the eighth adjustment of the unemployment figures that has taken place since the Government took office, and that if this method of producing statistics had been used by the previous Labour Government there would have been fewer than 800,000 unemployed in 1979?

Mr. Clarke

Some of the changes that we have made have increased the number who are regarded as unemployed. The change that affected the severely disabled increased the total by about 23,000, and the change which led to signing on in unemployment offices once every fortnight instead of once a week increased the total by about 20,000. However, these changes have been made for the sake of accuracy. As for the rate of unemployment, the hon. Gentleman can have the old figure which excludes the self-employed and those in the armed forces if he wants it, or he can have the new figure, which includes them. In my opinion, the new figure is better. It strikes me as entirely artificial to have a rate of unemployment which ignores the fact that there is a rapidly growing number of self-employed.


Mr. Greville Janner (Leicester, West)

On a point of order, Mr. Speaker. The House has heard with concern a Minister's statement which has a profound political effect and which related to the change in the way in which unemployment figures and statistics are to be produced—

Mr. Speaker

Order. It sounds as if the hon. and learned Gentleman is about to complain that he was not called when questions were asked following the statement.

Mr. Janner

No, Mr. Speaker. I ask that you be kind enough to consider, Mr. Speaker, whether it is in order for a Minister in such circumstances to blame civil servants for the change in the methodology used to produce the figures rather than himself. It is almost unknown for a Minister to say that upon the advice of his statisticians and at their request a change has been made, rather than taking the blame himself. It is a matter of privilege if not one of order.

Mr. Speaker

If it is a matter of privilege, the hon. and learned Member knows what he must do about that. I am not responsible for what is said from the Front Bench or even from the Back Benches.