Select Committee on Education and Employment Minutes of Evidence

Examination of Witnesses (Questions 140 - 149)




  140. That is very, very important. I was about to raise that question myself, before bringing Richard in. You estimate that the net effect on the GDP is half a billion pounds a year?
  (Dr Young) Yes.

  141. That is over and above the other benefits of the New Deal?
  (Dr Young) That would include all of the benefits.

  142. That would include all the benefits?
  (Dr Young) That is right.

  143. We are trying to pursue two different things at once here, are we not? Because, politically, any suggestion of a figure per job is really quite important, that is a kind of headline figure that people want to pursue, whether it is £4,000 or £7,000. Now the half a billion extra to the GDP, is that subsumed within those figures, or is that external to those figures?
  (Dr Young) Those other figures are subsumed within that half a billion.

  144. Within the half a billion?
  (Dr Young) Yes.

  145. So the half a billion is the headline figure, really, in a sense?
  (Dr Young) In a sense, it is.

Mr Allan

  146. So just to follow up, while you are here, this may be outside your remit, but while we have expertise here, it would be helpful to test it, is whether or not you have any idea of what cost per jobs are for other things, we can think of things like the development corporations in the cities, or other programmes that have been put in place at various times over the years, and I have heard some large figures for that?
  (Dr Young) I think it is difficult to make comparisons, and I think other programmes have not been evaluated in the same way as this. We have looked at the overall GDP effects, and it is from that that you can calculate how much extra taxation the Treasury has got because of the programme. Unless you do that then you cannot really make the comparison on the same basis. So I think part of the answer is that there has not been any evaluation which has been quite as broad as this one; but, generally, I think, the reaction, of some people anyway, has been that that is quite a low figure for cost per job, £7,000.

  147. Yes; and that was my reaction. So just hearing of some of the other things under SRB, or development corporation, whatever, they often seem to quote a much higher figure.
  (Dr Young) Yes.


  148. I seem to remember a figure from UDCs, or for development corporations, some years ago, upwards of £10,000 per job, something like that. I am still not absolutely clear about the half a billion; has that got to be reduced by the net cost of the programme, £150 million?
  (Dr Young) The figure is coming from the fact that we are getting more people in employment, and so more people in employment are producing things, and it is really all of that that is encapsulated within that figure. So the increase in employment that we have identified is about 0.1 per cent of total employment, and the effect on GDP is actually slightly lower, but it rounds to 0.1 per cent as well; so the GDP effect is broadly in line with the increase in employment.

  149. I still do not know the answer to my question, and it is probably my fault. We have got a plus of half a billion, through the effect upon employment; but, if we were being fair, ought we to deduct the net cost, the £150 million, to the Exchequer, or am I talking about different things?
  (Dr Young) I think, generally, the fact that GDP is higher suggests that there is half a billion pounds more than you started with; so, in a sense, anyone who has gained from the programme can compensate anyone who has lost from the programme and still be better off. That would be the way I would look at it. So, in a sense, it is over and above that cost.

  Chairman: Thank you. We are getting rather near to Christmas, the sort of fairly exhausting short burst—

  Judy Mallaber: It is more the rigour of the analysis, I find.

  Chairman: The rigour, yes; well I was going to say that, but I think we are all getting a bit tired as well. Thank you very much indeed. These are very complex things. I think it is so important that we get them right, because figures can be bandied about and used to beat either Governments or Oppositions by the head; and very often it is the kind of figures that you come up with which are used, because you are recognised as an authoritative, independent source, which is extremely valuable. Thank you for the work that you have been doing, and thank you for the way you have addressed our questions this afternoon.

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