Labour seized on the claim, accusing the Government of fiddling the figures in 'the biggest conjuring trick since Houdini' and demanding the creation of an independent body to compile unemployment statistics. A minister replied that Labour was slandering officials who compile the figures.
The study argues that the true number of unemployed is about 3.68 million, and could be calculated at close to 5 million by including those not actively seeking work. The Government's latest figure is 2.82 million.
The new calculation is based on publicly available statistics, including those from the International Labour Organisation, a United Nations body which has been monitoring world employment since 1919.
The study's author, John Wells, a lecturer in economics at Cambridge University, last week drew attention to the rising number of people in Britain who are deemed unemployed by the ILO but are unable to claim benefit.
Yesterday John Prescott, Labour's employment spokesman, launched one of his most outspoken attacks on the Government, which he accused of committing 'one big fiddle'.
He said: 'They have carefully planned a programme of a decline in those registered while the real level of unemployment contines to rise. Our statistics are a disgrace. You can no longer believe them. There are lies, damned lies and Tory statisics.'
The ILO's internationally agreed definition of unemployment encompasses those without jobs, who are available to start work within two weeks and have looked for work during the previous four.
By this definition, the number of unemployed who are unable to claim benefit in Britain - and are therefore not counted in the Government's figures - now stands at 1.08 million. This total rose by 130,000 between the spring and summer of last year, when official figures suggested that unemployment was falling. About half of this number may be school leavers unable to claim benefit, but that still leaves 60,000 to 70,000 people unaccounted for.
Many of these may be people who have lost eligibility for unemployment benefit because they have been out of work for a year, and are unable to claim income support either because their spouses are working or because they have savings.
Dr Wells's article, which will appear in a book called Political Economy of Full Employment, says: 'In recent years men have increased rapidly amongst the ILO unemployed non-claimants almost to the point of parity with women.'
His figure of 3.8 million unemployed is reached by including not only this category, but 'discouraged' workers (those who want work but have not actively sought it in the previous four weeks, because they believe that none is available) and - more contentiously - 306,000 people on government programmes that are related to work.
The Government yesterday dismissed the study's significance, arguing that it ignored the crucial fact that the trend in unemployment, by most measures, was now downward.
Ann Widdecombe, a junior minister at the Department of Employment, said: 'The methods we use for counting are very clear. No phenomenon that Dr Wells describes is new. Their effects will always have been taking place. Nothing can alter the fact that there is a fall in unemployment. The trend, both ILO-wise and government-wise, is down.'
But Mr Prescott indicated his determination to campaign over the issue of the jobless statistics. He said: 'You cannot hide unemployment from the people who are living it. I intend to make this year one of anger.
'There is an alternative, and the first step is to stop fiddling the figures and recognise the true nature of the problem. It is time there was an independent source of data. The compilation of government statistics at the moment should carry a government health warning.'
Since 1979 there have been at least 29 changes to the way in which British unemployment figures are calculated, most of which had the effect of reducing the number of people registered.
But Ms Widdecombe, rejecting the claim that statistics had been fiddled, said: 'If Mr Prescott is serious about getting into power, he should consider that he would have a lot of civil servants around him whom he has slandered.'
Leading article, page 18
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