The Jobless Crisis: Ministers at odds over prospects for recovery

THE GOVERNMENT will succeed through economic growth in getting unemployment down again to the levels of the late 1980s, Gillian Shephard, Secretary of State for Employment, said yesterday.

But her promise of further help for the unemployed in next month's Budget - and optimism from the Prime Minister's office that high unemployment will be reversed faster than in the 1980s - contrasted with a bleak assessment of the limits to government action from Michael Heseltine, President of the Board of Trade.

'We are beginning to see recovery,' he said yesterday on BBC Radio's World at One, but the unemployment figures would be one of the last items to respond, he said. There was no 'short-term palliative called public expenditure' which would reduce the dole queues, and the harsh reality was that in a world in recession, competition was forcing firms to employ fewer people.

More borrowing would threaten a rise in interest rates which in turn would threaten jobs, he said. And if money was redeployed from other programmes 'to do something more constructively to help the unemployed, and there are good arguments for that', then 'you are going to take money from some other programme and that will mean less expenditure and less jobs there.

'No one can show that there is anything other than greater expense in concentrating more help, more training and more education on people out of work. It is obviously a very desirable social thing to try to do, but there's not a cost-free way of doing it.'

With the recovery beginning, with more business confidence, improved retail sales and the falls in interest rates and inflation, 'any change we make in the decisions of Government that prejudice those things can worsen the situation for jobs, not improve it'.

Also, companies looking forward to increased sales were 'having to face the fact that they can do it with less people. To remain competitive, we are faced with the position that we cannot find jobs for as many people as we would like in industries that have been forced to improve their competitiveness'.

Mr Heseltine's grim assessment came as John Smith, the Labour leader, accused the Government of 'abandoning' the jobless. Unemployment, he said, was 'the biggest social problem Britain faces. It is a cancer reaching right into the heart of our society and I think it is an utter disgrace that the Government doesn't care about it.'

Mr Major's office, however, argued conditions were right for speedier improvement than in the 1980s. This time, unemployment was 'skewed' more towards the South, where the skills of those out of work were more adaptable. Nominal average earnings were lower than in the last recession, unit labour costs were virtually flat, the pound was highly competitive, mortgage rates were the lowest for first-time buyers since 1956, and days lost through strikes and stoppages were the lowest since records began in 1891.

Taken together, the economy was ripe for recovery, and that was the way in which jobs would be created.

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