Has anyone else prodded the sums on the 45,000 new jobs promised in the Building Britain's Future document as a result of the £1.5 billion pledged to stimulate building of 20,000 social and 10,000 private homes?
I would have had a poke at them earlier but I was sunning myself for a week. Anyway I found the pledge of £1.5 billion encouraging, but the spin on jobs irritating in the extreme. Here's why.
When interpreting the words in the document, most people will reasonably assume there will be 45,000 more jobs for three years. That is that roughly 45,000 people will be spared the dole queue for three years.
At least, that was my reading of the sentence in Chapter 2, paragraph 54 that says: "This housing investment package will also create an estimated 45,000 additional jobs in the construction and related industries over the full three-year construction period."
Well I did some sums a few weeks ago to suggest that the cost to the Treasury of having a construction worker on the dole rather than building a home is about £20,000 a year in terms of lost taxes and extra benefits.
So what is the benefit of having 45,000 fewer on the dole and in work for three years?
Well I make it 3 x 45,000 x £20,000. That comes to £2.7 billion. So a net gain to the Treasury of £1.2 billion. It's a massive winner, better than printing money surely.
And that doesn't take into account the tax take from corporation tax, the extra VAT from the extra spending of those spared the dole, stamp duty on some of the homes sold and a host of multiplier effects.
On that basis the Government could spend a few billion more and the massive debt would start to melt away.
Sorry to let you down, but sadly, if I am right, the implications in this document have much in common with those in the "Dodgy Dossier", misleading at best and downright disingenuous at worst.
Editing appears to have led to meanings changed and logic lost.
Here's my take.
On average it takes 1.5 people years to build a house.
30,000 homes equates to 45,000 job years. Drop that inconvenient "years" and you get 45,000 jobs.
But unfortunately in reality what you really get over three years is on average 15,000 jobs.
So let's do the figures again with the 15,000 and we get a gain to the Treasury of £900 million from increased employment taxes and reduced unemployment benefits.
Still not bad. And then throw in some tens of millions for other benefits and the programme is still pretty light on the tax payer.
So spend a little more Mr Brown, sorry Mr Darling...
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