Examination of Witnesses (Questions 140
WEDNESDAY 20 DECEMBER 2000
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
(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.
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
(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.