§ 25. Mr. KhabraTo ask the Chancellor of the Exchequer if he will make a statement on the revenue consequences of the changes in unemployment levels since May 1997. [135976]
§ Miss Melanie JohnsonThe extent to which higher employment affects Government revenues will depend on a number of assumptions, in particular the extent to which higher employment reflects permanently higher output growth. Research published by the Treasury indicates that a 1 per cent. increase in output relative to trend increases the ratio of Government receipts to GDP by about 0.2 per cent. after one year. This is equivalent to an increase in receipts of about £6 billion.