§ Dr. McDonaldasked the Chancellor of the Exchequer if he will estimate the total increase in unemployment which will result from all the cuts in public expenditure announced in 1976 affecting 1977–78, indicating the basis of his estimates.
§ Mr. Joel Barnett,pursuant to the reply [Official Report, 20th December 1976; Vol. 923, c. 73], gave the following information:
The following cuts in public expenditure affecting 1977–78 have been announced during 1976.
Cmnd 6393—£1.6 billion at 1975 Survey Prices (equivalent to approximately £2 billion at 1976 Survey Prices).
July 22nd—£1 billion.
December 15th—£1 billion.
Total—£4 billion.
According to the Treasury's Macro-Economic Model, cuts in public expenditure of this order of magnitude are likely to increase unemployment by around 100,000 on average in 1977–78, although the industry and employment measures announced on 15th December, which are additions to public expenditure, will partially offset this effect. Calculations of this sort do not, however, take adequate account of the impact of the various sets of measures on domestic and foreign confidence.
§ Dr. McDonaldasked the Chancellor of the Exchequer if he will estimate the total cost of increases in unemployment and other benefits, together with redundancy pay, of the rise in unemployment expected as a result of the expenditure cuts announced in 1976 and affecting 1977–78.
§ Mr. Joel Barnett,pursuant to the reply [Official Report, 20th December 1976; Vol. 923, c. 73], gave the following information:
I estimate that the total cost in 1977–78 of increases in unemployment and other social security benefits resulting from a rise in unemployment of the magnitude 515W quoted in my answer to my hon. Friend's earlier Question would be about £100 million at 1976 Survey Prices. It is not possible to say what calls there would be on the Redundancy Fund, since these would depend on such additional factors as the reduction in recruitment and the length of service of the workers laid off.
§ Dr. McDonaldasked the Chancellor of the Exchequer if he will indicate the basis of his estimates of the rise in unemployment in 1977–78 resulting from public expenditure cuts announced in 1976, including the extent to which his estimates take into account the multiplier efforts of the immediate loss of jobs' caused by the cuts in public expenditure in that year.
§ Mr. Joel Barnett,pursuant to the reply [Official Report, 20th December 1976; Vol. 923, c. 73], gave the following information:
My estimate of the rise in unemployment in 1977–78 resulting from the public expenditure cuts announced in 1976 are produced with the aid of the Treasury's Macro-Economic model. They take full account of multiplier effects.