HC Deb 15 May 1986 vol 97 cc838-40
3. Mr. Kilroy-Silk

asked the Chancellor of the Exchequer what is his latest estimate of the effect of the Budget on unemployment; and if he will make a statement.

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

While it is impossible to isolate the direct effect of the Budget, or indeed of any Budget, on unemployment, the hon. Gentleman will welcome the fact that nearly 1 million additional new jobs have been created since the last election.

Mr. Kilroy-Silk

Is it not a disgrace that with more than 4 million people unemployed so little attention was given to job creation in the Budget statement? Does that now show the Government's callous and uncaring nature? I can point to hundreds of people in my constituency and on Merseyside who have lost their jobs since the Budget statement. How many people can the Minister point to who have found jobs?

Mr. MacGregor

The hon. Gentleman knows perfectly well that the figures is not—

Mr. Kilroy-Silk

How many?

Mr. MacGregor

I shall answer the hon. Gentleman's questions. The hon. Gentleman knows perfectly well that the figure is not 4 million. The figure could amount to that only if he included the people in employment through various job creation measures. The Budget added considerably to the already very high total of expenditure being incurred on job creation, employment and training measures. When we took office the figure was under £400 million. By the end of these three years it will be £3 billion, which is a clear indication of the priority that we give this subject.

Mr. Forman

Is not the level of unemployment, both now and in the future, affected at least as much by unit labour costs, as was pointed out by our right hon. Friend earlier? Therefore, would it not be sensible to press ahead as rapidly as possible with schemes to make pay more profit-related, since that might help to redress some of the problem?

Mr. MacGregor

My hon. Friend is entirely right to draw attention again to the problem of unit labour costs, where the position is, if anything, deteriorating. I hope that employers and employees will take into account that very important part of job creation—the Budget measures which reduced income tax for employees, which in many cases considerably increases their take-home pay.

My hon. Friend knows that we are engaging in discussions on profit sharing. I hope that that, too, will help to reduce unit 'about costs.

Mr. Wigley

Does the Minister recall that it was to encourage entrepreneurs to create jobs that the top rate of income tax was reduced from 84 to 60 per cent.? Will he set up a study to investigate whether a single job has been created by that?

Mr. MacGregor

It is clear that the whole series of tax measures, not just the one referred to by the hon. Gentleman, designed to encourage job creation and small business development have worked. The number of new businesses starting up and expanding has been very creditable under this Government compared with the record in the past, and is a major contributor to jobs.

Mr. Heathcoat-Amory

Will my right hon. Friend take up with employer organisations his disappointment over the fact that many firms prefer to increase the wages of existing employees by more than the rate of inflation, rather than take on additional staff? Does he agree that, by international standards, our performance in that respect is poor and is making unemployment worse?

Mr. MacGregor

My hon. Friend is putting the unit labour cost argument in another way. I agree with him that this practice does not help unemployment. It is important that all employers take note of the arguments. I pay tribute to the work of the CBI, which is tryng to get across that message, as we do in everything that we say.

Mr. Mason

Will the Minister answer the simple question embodied in the original question? What figure can he give for a reduction in the dole queues as a result of the last Budget?

Mr. MacGregor

The last Budget was not very long ago—[HON. MEMBERS: "Answer."] The right hon. Gentleman must recognise that there have been increases in net new jobs in this country on a scale greater than in the remainder of western Europe put together as a result of the last three Budgets and the policies that we have been pursuing.

Mr. Nicholls

Does my right hon. Friend agree that the effect on employment cannot be considered in isolation from the basis on which the unemployment figures are calculated? For example, the severely disabled and single-parent families can be included in unemployment figures, as can people over 60, who sign on simply to obtain their national insurance tax credits. Figures that include such people cannot be treated as an accurate reflection of unemployment.

Mr. MacGregor

It is clear that some people are included in the unemployment figures—and there have been various calculations of the number—who are not actively seeking work.

Mr. Terry Davis

Will the Chief Secretary confirm that his figure of 1 million new jobs since 1983 includes about 250,000 second jobs—second jobs obtained by people who already have jobs; second jobs that are often part-time jobs? Is it not true that there are still 1 million fewer people in employment today than there were in 1979, even allowing for everything that has happened since 1983?

As the Minister has referred to the rest of Europe, will he confirm that, under this Government, Britain has not only lost more jobs since 1979 than any other member the Common Market, but has lost more jobs than all the other countries in the Common Market added together?

Mr. MacGregor

There are some people in the figures—we do not know yet how many, but the number will be small and not on the scale suggested—who have two jobs. We shall eventually discover the number when the surveys have been completed. That does not diminish the fact that there has been a substantial increase in the number of people—the figure is close to the number of net new jobs—who are new to the work force. I do not know why the hon. Gentleman keeps criticising the Government for the number of new jobs that are part-time jobs. Part-time jobs will always have a major contribution to make to the economy. It is interesting to observe that part-time jobs contributed to more than half the increase in the number of jobs under the previous Labour Government.