§ Mr. Kaufmanasked the Secretary of State for the Environment, pursuant to the supplementary answer on 8 July by the Minister for Housing and Construction to the right hon. Member for Manchester, Ardwick, if he will now set out the calculations which led him to inform the Housing Consultative Council on 15 June that it is by far cheaper in public expenditure terms to keep building workers on the dole.
§ Mr. Heseltine[pursuant to his reply, 13 July 1981, c. 321.]: My remarks at the Housing Consultative Council did not bear the connotation that the right hon. Member seeks to ascribe to them.
A suggestion was made at the council's meeting on 15 June that the Government should divert resources from the 593W payment of unemployment benefit to an expansion of the public housebuilding programme. In commenting on that suggestion I pointed out that a transfer of resources between the two programmes could not be achieved without an increase in the public sector borrowing requirement, since the cost per job created would exceed the saving in benefit.
It has been estimated that for every worker joining the unemployment register the Exchequer loses about £3,500 per year on average in benefit and in tax and national insurance contributions forgone, 1980–81 prices. This is significantly lower than the average wage of a worker in the construction or building materials industry. Even before non-wage costs are taken into account, therefore, it is clear that a net public expenditure cost would arise from any programme of creating jobs through new public sector housebuilding. The estimate of £3,500 was made in Economic Progress Report, February, 1981 page 6—a copy of which is in the Library.