Rising unemployment will cost the government £1.5bn more than expected in welfare benefits
Tim Worstall:
Numbers, lovely numbers!
Rising unemployment will cost the government £1.5bn more than expected in welfare benefits, according to official forecasts that reveal the hidden cost of the coalition’s austerity drive.
As big increases in VAT are due to bite from Tuesday, analysis from the Office for Budget Responsibility shows slowing economic growth will make it harder to reduce the deficit by forcing more people to seek state support.
The Treasury watchdog calculates the government will have to pay out £700m more in unemployment benefit than previously forecast. Similarly, a higher number claiming jobseeker’s allowance as well as falling into lower wage brackets will see the government needing to pay out another £700m more in housing assistance over the next four years.
You see what’s been done there?
Yes, you’re wandering along thinking, hmmm, £1.5 billion, that’s, even by government numbers, real money.
Then you get that “four years” bit.
They’re actually saying that there’s going to be £180 million (ish) more in unemployment pay and £180 million (ish) more in housing benefit each year.
Yes, still real money, but these are projections of course: that predicting the future thing is very difficult. And in the context of predicting the housing benefit bill (circa £20 billion a year) four years out, a 1% rise is really a rounding error. In fact, I would rather hope that the margin for error in the estimate is larger than that: if it isn’t then someone is guilty of spurious accuracy.
Absolutely no four year forecast of government finances survives contact with the real economy and a 1% variance from previous plans is simply too entirely trivial to get excited about.
Won’t stop
Danny (see comments. How the hell am I supposed to keep track of the various flavours of odious Scots?) Douglas Alexander and the like leaping about shouting “£1.5 billion!” but that’s just spurious politics, nothing real or serious.