HL Deb 04 June 1992 vol 537 cc1026-8

3.29 p.m.

Earl Russell asked Her Majesty's Government:

Why they do not attempt to estimate the loss of revenue to the Treasury as a consequence of unemployment.

The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)

My Lords, we do not estimate such a figure because it would depend, for example, on projecting for those who are currently unemployed what their tax liabilities and earnings would be once they had found a job.

Earl Russell

My Lords, I thank my noble kinsman for that Answer. I appreciate that this is a difficult area, but does he agree that for Ministers, as for motorists, poor visibility provides no excuse for not looking? Does he agree that since the Government have no estimates of their own they are not in a good position to challenge other people's? Is he aware that the Unemployment Unit has calculated the cost of unemployment to the public sector borrowing requirement at £24.8 billion a year? Will the Government accept that figure until they can come up with a better one?

Lord Henley

My Lords, I totally disagree with my noble kinsman. Merely because we recognise that it is impossible to make such guesses as to the costs does not mean that we have to accept other people's assumptions. Many different assumptions have to he made, as I said in my original Answer, about what any individual might earn and spend after obtaining a job. Because those assumptions can range so widely, the result is likely to produce a figure which, in the end, is pretty meaningless.

Lord Desai

My Lords, will the Minister agree that while it is not possible to give a single figure, a variety of figures may be given, allowing for the Treasury's usual range of errors? We should still have a better idea of what the minimum and maximum costs could possibly be. Will the Minister also agree that even the minimum may turn out to be not less than about £15 billion?

Lord Henley My Lords, I shall neither agree nor disagree with any figure. My feeling is that even if one tried to produce minimum and maximum figures, the range would be so wide as to render them entirely meaningless.

Lord Monson

My Lords, will the noble Lord agree that as long as our currency is tied rigidly to the deutschmark—a policy much favoured by the political party to which the noble Earl, Lord Russell, belongs —there will he high and continuing unemployment, as the unfortunate unemployed millions in France can testify?

Lord Henley

My Lords, the noble Lord makes an interesting point but it is another Question.

Lord Donoughue

My Lords, will the Minister accept that the range of figures given by respectable economists is quite narrow? One of the most respectable sources is the House of Commons' own statistical unit model. Will he also acknowledge that not surprisingly these figures closely coincide with the public sector deficit which mainly arises from unemployment?

Perhaps I may help the noble Lord with the figures. Basically, the loss of revenues are believed to be about £11 billion a year. The cost of direct benefits is believed to be about £9 billion a year, giving a total cost of about £20 billion a year at the low unemployment figure that the Government publish. Will the noble Lord agree that that financial and human cost is not a price worth paying?

Lord Henley

My Lords, again I neither accept nor disagree with the figures put forward by the noble Lord. It may be that respectable economists, as the noble Lord referred to them, have put forward certain figures. However, respectable economists have been wrong in the past. There is no particular reason why they should be right on this occasion. As I said when I originally answered the Question, one has to make too many assumptions to produce any reliable figures at all.

The Countess of Mar

My Lords, perhaps I may pose the same question to the noble Lord as I asked previously. Why is it that departments seem to be unable to speak to each other and to make calculations rationally, when every other human being on the planet can see that one cost must be set against the other?

Lord Henley

My Lords, if the noble Countess had been listening to my Answer, she would now know exactly why we cannot give the figures for which she asked. However, I assure her that all departments speak to each other.

Earl Russell

My Lords, is my noble kinsman telling us that because the figures are difficult to discover, they really do not matter? Is that argument compatible with the prudent stewardship of public money?

Lord Henley

My Lords, I have not said that at all. I said that the figures which we could produce would be meaningless, and that therefore, there is no point in producing them. Obviously, we accept that the costs of unemployment, both personal and financial, are great. But as I said earlier and repeat, the figures we may produce would be meaningless.