Economics: How to create 1 million jobs

A million high-quality jobs could be created using only "modest" increases in taxation or borrowing, according to academic research published yesterday. Cambridge University economists found that a large proportion of cash spent by the Government on creating jobs would be paid back in extra tax receipts and lower social security bills.

The report said that a pounds 17bn programme, for example, would lead to savings of pounds 10bn, leaving the Treasury with a pounds 7bn bill.

The introduction of a new 60 per cent top rate of tax, biting at pounds 40,000 would alone cover half of that net cost, by bringing in pounds 4.2bn a year.

Much of the rest could come from the release of money earned over the years from selling off council homes, said the report, published in the Cambridge Journal of Economics. It added that the majority of the new jobs should be in education, housing, the health service, care in the community and the environment.