True jobless total 'is now four million'

Report undermines Tory boom claim

Unemployment is probably more than twice as high than the Government says, according to a new study approved by one of Chancellor Kenneth Clarke's "wise men".

The study, which severely undermines John Major's election slogan "Britain is booming" was carried out by the HSBC, parent company of the Midland Bank. It suggests the true rate of unemployment in the UK is 14 per cent - or four million people, and higher than in Germany.

Labour strategists were quick to seize on the report last night, arguing that it explained the Government's "voteless recovery". "The truth is that so-called booming Britain simply doesn't match up with people's experience," said a senior source.

The findings, disclosed by HSBC's chief economist Roger Bootle, who advises the Treasury, could not have come at a more embarrassing time for the Conservatives, who plan to move the general election campaign on to jobs this week. Jobless figures due on Thursday will show another sharp fall - likely to be more than 50,000 - as the Government replaces unemployment benefit with the more restrictive job seeker's allowance.

But the investigation carried out by HSBC's economist Dharshini David and published in the bank's Greenwell Gilt Weekly (edited by Mr Bootle), identifies widespread "hidden unemployment".

According to the Government, the UK has 1.7 million jobless, or 6.2 per cent of the working population. But the HSBC report argues that the Government has ignored inconvenient categories such as those working part-time because they cannot get a full-time job, young people on training schemes who do not expect to get a job, and those who have gone on to sickness or disability benefit rather than the dole.

The official figure puts the UK at the bottom of the European Union jobless league, which ministers claim is the result of Conservative policies: deregulating the labour market, opting out of the Social Chapter and rejecting a minimum wage.

However, the HSBC report argues that when definitions set by the International Labour Organisation are used, and the impact of hidden unemployment is taken into account, unemployment in all three nations could be greater "but especially so in the UK". Despite labour market reforms in recent years, the UK jobless rate could be "as much as 14 per cent - greater than Germany".

The HSBC report says that it is much harder to qualify for the dole in Britain than in France or Germany, and students and those under 18 are not counted. Differences in the treatment of part-timers - 800,000 of whom in the UK would like a "proper" job - also understate the rate. Seventeen changes in the claimant count since 1982 have "cut" unemployment by about 500,000 or 2 percentage points.

Conservatives hit back last night warning that Labour'swindfall tax, designed to take 250,000 young people off welfare into work, faces serious legal delays. This is the conclusion of a report by Maurice Fitzpatrick, senior tax consultant at Chantrey Vellacott, that argues: "Challenges may clog the Wintax [sic] up in successive legal disputes lasting years or even decades."