§ Mr. Joel Barnettasked the Chancellor of the Exchequer what are the factors which account for the difference between his estimate of the average annual cost per unemployed person and the recent estimate of the Manpower Services Commission; and if he will make a statement.
§ Sir Geoffrey Howe[pursuant to his reply, 17 November 1981, c. 76]: The main differences between the Treasury and the MSC estimates of the direct Exchequer costs of 100,000 additional unemployed in the private sector are as follows:
- The MSC's latest estimates refer to 1981–82. The Treasury estimate published in the February 1981 Economic Progress Report refers to 1980–81.
- The MSC estimates include loss of receipts from indirect taxes. These, along with other indirect effects, are not taken into account in the Treasury figures.
- The Treasury figures include an estimate of additional expenditure on rent and rate rebates and on additional administrative costs, neither of which are allowed for in the MSC estimates.
I stress that these calculations depend inevitably upon the precise assumptions made about the characteristics of the increase in unemployment. Given the stylised nature of the sums, there can be no uniquely "right" figure.