The Unemployment Debate: Jobless gloom remains in key Tory seats: Government optimism tempered by warning of slower recovery rate in 50 most marginal constituencies

AS MINISTERS and party managers seek to convince each other that the Tories' fortunes will improve steadily along with the economy, there comes a sharp warning from the heart of the City.

Yesterday's fall in unemployment is certainly cheering for the Tories, but the message of a Kleinwort Benson analysis of the 50 key marginal constituencies is that unemployment has risen more sharply, and is falling more slowly, in the seats the Tories must hold to guarantee victory.

Put another way, the impact of the recession has been deeper and more resistant to overall recovery in just those constituencies where the party would least like it to be.

There is also evidence - admittedly more modest - that the strengthening of house prices, needed to help mortgage payers recover from negative equity, is less marked in marginals than in other constituencies.

The survey calls sharply into question the conventional wisdom that the Tory-held marginals, particularly those in the South, are ideally placed to benefit politically from economic recovery. In some cases, that is certainly true; but the figures showing a 6.6 per cent rise in the marginals compared with 3.6 per cent elsewhere suggest that generally it is not.

In only 7 of the 50 marginals did unemployment fall rather than rise during the period surveyed. And while unemployment has begun to fall across the country, it has done so more slowly in the marginals - by 5.9 per cent - rather than the 6.7 per cent elsewhere.

Eight of the constituencies have seen the unemployment totals rise by more than the size of the Tory majority - strikingly so in the case of Walter Sweeney's seat in the Vale of Glamorgan, where the jobless total rose between April 1992 and February 1994 by 441 and the majority is only 19.

The other constituencies are Hayes and Harlington, Ayr, Brecon and Radnor, Portsmouth South, Norwich North, Edmonton and Dover. The picture is not uniform even in the closer marginals. Philip Oppenheim, MP for the Midlands constituency of Amber Valley, will be especially relieved, given he is the Parliamentary Private Secretary to Kenneth Clarke, the Chancellor, that unemployment fell by 265. Simon Coombs's Swindon constituency has also weathered the recession better than any of the other Tory held marginals, to judge by the fall of 626 in unemployment.

It is a curiosity that of the five ministers with constituencies among the top 50 marginals, only one is in England. Tom Sackville, the Englishman, has seen unemployment fall in his constituency, but the rest - Ian Lang, the only Cabinet minister, Michael Forsyth, and Lord James Douglas- Hamilton (Scotland) and Sir Wyn Roberts (Wales) - have all seen unemployment rise over the surveyed period. So too have John Watts, chairman of the Treasury Select Committee, and Graham Bright, John Major's Parliamentary Private Secretary.

All this should be treated with some caution. Assuming the economy continues to behave as expected, most if not all the marginals should show net falls in unemployment before the next general election - the biggest unemployment rise in a marginal since the general election, in David Shaw's Dover constituency, is only just over 1,000.

Also, the fear of unemployment - which many pollsters regard as a more potent determinant of voter behaviour than actual levels - could be reasonably expected to be much less in 1996 than during 1992 or 1993. Quite modest recoveries in employment helped swing voters back to the Tories before both the 1983 and 1987 elections.

So why should the Tories worry long-term? One factor, pointed out by the Kleinwort Benson analyst David Owen, is that the fall in unemployment may owe more than in previous post-recession periods to a growth in part-time employment. In other words, coming off the unemployment register may not be as closely matched by political satisfaction with the Government as in the past.

Second, voters may be more inclined to punish the Government for the combination of recession and tax rises, even if the pain is alleviated by the general election. Certainly, it is less easy for the Government to blame either the failures of Labour economic policy or a necessary shake-out of unproductive industry than it was in 1983 or even in 1987.

Downing Street and Conservative Central Office will note Kleinwort Benson's conclusion that from the Government's point of view the figures favour a late rather than early election. Mr Major - assuming he is still leader - may yet go to the wire.

Leading article, page 19

City's inflation fears, page 35

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