How much unemployment?

Predictions as to what level the unemployment figure may reach in the coming year or two seem to be between two million and three million. "You pays your money and you...."

What is abundantly clear is that the true figure is much much higher:

There are signs that immigrant labour, especially that from Europe, is beginning to return home. Their jobs may not be filled, and the workers generally will not register as unemployed.

Since well before the time of Gordon Brown's chancellorship many unemployed have not registered but instead have received (bigger) benefits through other channels. In the peak period of registered unemployment, of about 3 million in 1982/83, there were also about 800,000 receiving benefit under incapacity allowance, and about 600,000 receiving loan parent allowance.

There were recently over 3 million on incapacity allowance, about four times as many as in 1982, and there were about 1 million on sole parent allowance.

Including those on job-seekers allowance now, there were upwards of 5 million out of work and on benefit. Benefits are not over generous, it could be argued, although where there are several dependent children thousands of pounds monthly are involved. If we add another 1.5 million to these figures, it is not difficult to see what will happen to the government's budget.

In place of income tax income from 1.5 million workers - if their average incomes were at average levels then their tax contribution could have been as much as £4,000 each year, and so upwards of £6 billion will be lost to the Exchequer. In addition, as they have less spending power taxes on purchase will fall dramatically. I have taken no account of the effect of reduced national income contributions, and other factors.

The conclusion has to be that welfare benefits will rise dramatically, and government tax income will fall dramatically. It's not rocket science to predict a massive hole in the Government budget.

How will they fill this hole? Not by increasing taxation, I suggest, at least until after the next general election - higher taxes on income will be resented and higher taxes on expenditure will tend to be inflationary. The likely recourse is to borrowing, - which is really deferred taxation. If banks make calls on money offered and the Government comes clean on off balance sheet borrowing, then Brown will have vastly exceeded his rule of thumb. In any cases, with gold plated bloated public sector pensions, there will be an increasing spending liability.

Brown has mortgaged the UK economy.