§ Mr. Malcolm BruceTo ask the Chancellor of the Exchequer what is his estimate of the savings to the Exchequer in each of the next five financial years which would result from unemployment being 100,000 lower during that period than assumed in the "Financial Statement and Budget Report 1997–98"; and what proportion of the savings would reflect(a) higher tax revenue and (b) lower Government spending [12769]
568W
§ Mr. Waldegrave[holding answer 28 January 1997]: The effect of lower unemployment on public sector borrowing is extremely uncertain. For example, the effect on tax receipts in particular will depend on the extent to which lower unemployment reflects changes in the labour force and/or changes in the level of gross domestic product and, to the extent that it reflects higher GDP, the effect on tax receipts will vary according to the sectoral effects on incomes and expenditure. It is not possible, therefore, to give even approximate estimates of the type requested.
Within public expenditure, the largest direct impact of lower unemployment will be seen in social security spending. The Department of Social Security estimates that a 100,000 reduction in unemployment might reduce benefit expenditure by around £350 to £400 million per annum.