Costs of unemployment equal to half NHS hospitals budget

UNEMPLOYMENT is costing the taxpayer more than pounds 12.7bn this year in social security - well over half the pounds 19bn cost of hospital and community health services, writes Nicholas Timmins.

In the year from April, when unemployment will be above 3 million, the cost will top pounds 15bn, the Department of Social Security's annual report shows.

The figures now separate the costs to social security of the economic cycle, and, according to the department, give a 'rough and ready' guide to the cost of unemployment. They cover not just unemployment benefit and income support paid to the long-term unemployed, but the impact of the lack of jobs on benefits paid to many others, including lone parents, those retired early and some disabled people.

These latter groups, the report says, 'although not required to register as unemployed in order to gain benefit, would work rather than receive benefit if suitable work were available'.

The department is undertaking research to further quantify such indirect effects of uemployment which the report says 'could be significant'. Each extra 100,000 on the unemployed total will add pounds 350m to spending - a sum sufficient to expand the city grant programme six times over.

The report also shows a large increase in housing benefit following the Government's de-regulation of private sector rents. The bill for rent allowances - which covers housing association and private sector rents - has almost trebled, from just over pounds 1bn in 1988-89 to pounds 2.89bn this year, while the numbers claiming it at any one time have risen by only 62 per cent, to 1.29 million.