HC Deb 17 July 1986 vol 101 cc1155-7
1. Mr. Boyes

asked the Chancellor of the Exchequer what is his latest estimate of the annual cost to the Exchequer of the present level of unemployment.

The Chief Secretary to the Treasury (Mr. John MacGregor)

The overall cost to the Exchequer of unemployment and supplementary benefit paid to the unemployed is estimated to be £5.6 billion in 1986–87. In addition, it is estimated that £1.15 billion will be paid in housing benefit, a benefit which can continue to be paid if the claimant finds employment.

Mr. Boyes

Will the Minister accept that my constituency will find that figure shocking, outrageous and wholly abhorrent because it has a large number of people unemployed, including skilled building workers, when we desperately need a new hospital in Washington, new council houses in the borough of Sunderland and new factories in Hetton and Houghton? Is this not just another example of the fact that the Government simply do not care?

Mr. MacGregor

Not at all. The hon. Gentleman referred to new hospitals.

Mr. Boyes

Not in my constituency.

Mr. Speaker

Order.

Mr. MacGregor

The hon. Gentleman will know that the Government have a record on hospital building that is far better than under the previous Government and that expenditure on the Health Service is well up in real terms. He will also know that if we followed a prescription of very high public expenditure programmes, well beyond the ones that we are pursuing at the moment, the effect on real jobs in the economy, given the precarious situation we are in now with the massive fall in oil prices—

Mr. Hoyle

Precarious?

Mr. MacGregor

Let me explain. There is a precarious situation in the world economy where, with a fall in oil prices, if one does not pursue prudent economic policies, we could easily have higher levels of unemployment. That is what is precarious. If the hon. Member for Houghton and Washington (Mr. Boyes) pursued very high public spending policies, such as the Labour Opposition are suggesting, it would undoubtedly lead to a much bigger increase in unemployment and a loss of real jobs.

Mr. Neil Hamilton

Is it not infantile for hon. Members, such as the hon. Member for Houghton and Washington (Mr. Boyes), to imply that unemployment can he reduced overall by expanding public spending, because public spending has to be paid for by increases in taxes, by interest rates, or by inflation? Every one of those will increase unemployment, not reduce it.

Mr. MacGregor

My hon. Friend is quite right. In a world in which conditions can fluctuate very quickly, it has been our prudent economic policies which have enabled us to come through the massive fall in oil prices unscathed and which have also enabled over 1 million new jobs to be created in this country since the last election.

Mr. Meadowcroft

Will the Minister give us the full figures, not just the three he has given for unemployment, which include the loss of taxation, the loss of national insurance and increased health costs? Does he agree with the House of Lords Select Committee figure, confirmed by Professor Adrian Sinfield and others, that the true cost of unemployment is at least double what he says, and that it costs about £6,000 per year for each adult?

Mr. MacGregor

I do not agree at all. It is difficult to make any calculations of that sort. It depends on what levels of earnings are assumed for those who come off the unemployment register to take jobs. It depends on a number of other factors, including the effect that increased public expenditure, and therefore increased taxation or increased borrowing, have on real jobs in the economy. It depends on a whole range of things.

Mr. Nicholls

Is not the basis of this question even dafter than my hon. Friend the Member for Talton (Mr. Hamilton) suspected? If the hon. Member for Houghton and Washington (Mr. Boyes) had his way, either the people working on job creation schemes would have to be paid realistic wages, in which case there would he a truly massive increase in public expenditure, or the same amount of money would have to go round, and that would mean that some people would wind up without unemployment benefit.

Mr. MacGregor

Far too many simple assumptions are made about the relationship between unemployment benefits and how one can get people off the unemployment register. The prudent economic policies that we have been pursuing, which include £2.4 billion of expenditure on employment and training measures this year, is the right way to ensure steady progress and steady economic growth, and therefore an increase in real jobs.

Mr. Blair

Will the Chief Secretary comment on the latest unemployment statistics today, which show, on his own Government's figures, an underlying rise of 10,000 to 15,000 people every month on the unemployment register? Why does he not admit that after seven years in government his party has nothing to offer the unemployed except pious hopes and fiddled figures?

Mr. MacGregor

The hon. Gentleman will know that unemployment has been rising in nearly every country—certainly, every advanced industrial country. He will also know that the levels of youth unemployment here are well below the average in Europe, and that 1 million extra new jobs have been created in this country since the election. We are all extremely concerned about the level of unemployment, but it is necessary to get the right policies to ensure that it comes down.