ABSTRACT
According to an ex-Chancellor of the Exchequer of the UK, Norman Lamont, unemployment is ‘a price well worth paying’ to keep down inflation. This was echoed by the comment from the Governor of the Bank of England in 1998 that unemployment in the North of England was a necessary cost of keeping down inflation – hence his being dubbed the Governor of the Bank of the South of England. 1 The free-market policies pursued by successive Conservative Governments in Britain between 1979 and 1997 involved an additional price – as well as that of high unemployment – namely, growing inequality with a concomitant increase in poverty for many of those in work as well as out of work. In this chapter we make an attempt to calculate just how great this price has been – the price of high unemployment and increased inequality. The price involves a number of different costs, some more hidden than others. Other work has evaluated the impact of unemployment on health and crime, but the main focus of this chapter is on the fiscal costs. These costs derive from the unemployed and the working poor receiving various forms of benefit payments and at the same time paying less tax than they would were they in reasonably paid employment.
