Unemployment (Hansard, 9 July 1998)

§ Dawn Primarolo

The average level of unemployment-related benefits per unemployed person per year, and the direct taxes paid by (or on behalf of) people with average earnings are provided as follows. These figures are not, however, a complete assessment of the exchequer costs of changes in unemployment. Such an assessment will depend upon the reasons for the change, and the extent to which it affects the sustainable level of employment. This in turn requires an analysis of the direct and indirect effects on the wider labour market and the economy as a whole—including the effect on inflationary pressure and the policy response to it. It also needs to reflect the fact that unemployed people do not, on average, move into jobs with average earnings.

The average cost of unemployment-related benefits per unemployed person per year, in 1998–99 benefit levels is around £3,850, with the entitlement of individuals around this average depending on their particular circumstances. For the purposes of calculating this figure, unemployment-related benefits are defined as Jobseeker's Allowance (JSA), and Housing Benefit and Council Tax Benefit payments to people in receipt of JSA.

In 1998–99, a single person in employment for a full year on median earnings (£337 per week) would pay £4,400 in income tax and employee National Insurance Contributions (NICs). In 1998–99, a married couple with one member of the couple in employment for a full year on median earnings (£337 per week) would pay £4,100 in income tax and employee NICs. These figures assume that the individual has no income other than earnings from employment, is not eligible for Mortgage Interest Relief, and that they pay contracted-in employee's NICs. The figures ignore indirect taxes. An employer would pay £1,800 in employer NICs in respect of an employee on median earnings.