Budget Debate, Third Day: Fall in unemployment given cautious welcome: Shephard sees cause for hope as Dobson talks of 'either a freak or a fiddle'

THE UNEXPECTED fall in unemployment was either a 'freak' or another 'statistical fiddle', Frank Dobson, Labour's employment spokesman, told the Commons as the figures brought some relief for the Government on the third day of the Budget debate.

Mr Dobson said he welcomed the 22,000 fall in the February jobless total 'without reservation'. But he added that if it was the start of a trend it had better accelerate, otherwise it would take 11 years to get everyone back to work.

Gillian Shephard, the Secretary of State for Employment, said recovery was under way and hailed the seasonally adjusted fall as 'good news for unemployed people, good news for us all. A fall in unemployment, especially one so early in the recovery cycle, will of itself help boost confidence.'

She warned against placing more weight on one month's figures than they would bear, but said there were, none the less, reasons for optimism. The number of unemployed people placed in new jobs was up on last year while the number becoming newly unemployed and joining the register was down.

Earlier, John Major criticised John Smith, the Labour leader, for not mentioning the fall at Question Time. Mr Smith has seized on past rises to attack the Prime Minister, but yesterday he focused on the imposition of VAT on domestic gas and electricity. 'The country may have noticed that on this occasion Mr Smith made no mention and gave no welcome to the fall in unemployment,' Mr Major said.

He refused a call from Ann Winterton, Conservative MP for Congleton, to publish a report by the Department of Trade and Industry which found that Britain's manufacturing base was 'weak and deteriorating'. Repeating his reply to a similar demand last week from Mr Smith, the Prime Minister said: 'The paper was private advice to ministers and will not be published.'

He pointed out that the Budget had extended the Export Credit Guarantee scheme and said the Chancellor had also, over the last few months, cut premiums by 27 per cent to help exports. Over recent weeks a range of policies had been announced that were 'specifically geared to improve the prospects for manufacturing', improving efficiency and widening the base, Mr Major said. Mrs Winterton said many MPs felt a growing concern at the 'erosion' of Britain's manufacturing base.

Opening the debate, Mrs Shephard said the Heathrow Express Line would create 2,000 jobs during construction. An investment of pounds 300m, the line is due to open in 1997. Her department estimates that the Channel tunnel rail link - an investment of pounds 2.5bn - will create 15,000 jobs during construction.

She repeated that Budget measures to help the unemployed would provide an extra 100,000 opportunities at a cost of pounds 230m. But she was pressed by David Nicholson, Conservative MP for Taunton, and Labour MPs over the limited nature and payments of the 'workstart' scheme.

Four workstart pilot schemes are planned in which employers will be paid about pounds 60 a week for each person they take on from the long-term unemployed. Mrs Shephard said she had not yet finalised the 'design' of the pilots or their location. But she dismissed the belief of one the architects of workstart that a subsidy of pounds 150 a week would be needed to create jobs.

Mr Dobson said that the best thing that could be said about workstart at the moment was that it had not started and they did not know if it would work. 'The great danger of this proposition is the danger of job substitution whereby somebody moving into a job with a big subsidy is cheaper than keeping on somebody who is already working there. So they get pushed out to make way for the new, cheaper, subsidised worker. That problem needs to be addressed.'

Mr Dobson said everyone on the Labour side was delighted if there were fewer people officially out of work. 'It is undoubtedly the only bit of good news on unemployment in the last three years and it's welcome.'

But he feared it was 'a freak' and added: 'There are many around the country who will fear that besides being a freak it may be another of the Department of Employment's statistical fiddles. I plead in justification for that, the fact that they have done 27 fiddles prior to this one, all of which have reduced the total.'