Blow to Brown as unemployment hits 2.5m; Yorkshire jobless tally nears 10pc

Official figures showed that unemployment increased by 43,000 in the three months to February to the worst total since 1994. Yorkshire's jobless tally hit 253,000 – an increase of 13,000 - and now stands at 9.6 per cent.

The number of people classed as "economically inactive" reached record levels.

Long-term unemployment, counting those out of work for over a year, increased by 89,000 to 726,000, the highest since Labour came to power in 1997.

The number of 16 to 24-year-olds out of work increased by 4,000 to 929,000, the highest since last autumn.

Economic inactivity, including students, people looking after a sick relative or those who have given up seeking work, soared by 110,000 in the latest quarter to 8.16 million, the worst figure since records began in 1971.

More than one in five people of working age are now classed as economically inactive, today's data from the Office for National Statistics revealed.

The number of people claiming jobseeker's allowance fell last month by 32,900 to 1.54 million, the fourth time the figure has fallen in the last five months.

The number of people in work slumped by 89,000 to 28.8 million, the lowest since the end of 2005.

The UK's employment rate is now 72%, the lowest since 1996, following the latest quarterly fall of 59,000 full-time and 30,000 part-time employment.

Public sector employment rose by 7,000 between September and December to 6.1 million, while private sector employment was 61,000 down at 22.7 million.

There were 30.75 million jobs in the UK in December, down by 119,000 over the quarter and by more than half a million on a year earlier.

Job vacancies increased by 9,000 to 475,000 in the three months to March.

The number of people claiming out of work benefits such as incapacity benefit or jobseeker's allowance increased by 675,000 from August 2008 to reach a record 5.08 million last August.

Average earnings increased by 2.3% in the year to February, up from 0.8% from the previous month, largely driven by the financial sector where bonuses were higher than last year.

Average weekly pay was 443 in February.

Paul Kenny, general secretary of the GMB union, said: "The latest figures for jobseeker's allowance confirm that the economy has started to recover from this bankers' recession but the unemployment data shows how long there is to go before the economy returns to the level it was at in 2007.

"Recovering this lost output is the key to getting down the deficit in the public finances. Any shift in policy to slash public spending will threaten this growth, lead to a loss of vital services and add hundreds of thousands to the dole queues.

"The Tory policy of wanting to jump from the frying pan of recession into the fire of slashed public services and public investment should be resisted by the electorate.

"Growth and rebalancing the economy back to manufacturing and exports is the key to a successful future for Britain's economy."

Work and Pensions Secretary Yvette Cooper said February had been a "tough" month and people were still being affected by the recession.

"What this shows is that we are not out of the woods yet. That is why it is so important that we keep increasing the support to the unemployed, but also that we sustain the overall support for the economy," she told the BBC.

"The approach that the Conservatives are taking would be devastating for jobs, devastating for unemployment, and devastating for families across the country."

Shadow work and pensions secretary Theresa May said the jobless figures were "worrying", adding that Labour had failed to tackle unemployment.

"Nothing could give clearer evidence that Labour's policies are not working. The figures also show that there could not be a more crazy time to introduce a jobs tax."

Ms May said the Conservatives were offering something "radically different", warning that spending a lifetime on benefits was no longer a "lifestyle choice".

She told a news conference in London: "We will look after people who genuinely cannot work and we will give unprecedented help to people wanting work."

Nigel Meager, director of the Institute for Employment Studies, said: "Although it appears increasingly unlikely that unemployment will reach the three million figure which some commentators were predicting, it is difficult to say whether it has yet peaked.

"A good deal of the focus is now on the looming cuts to public sector employment, although the scale and timing of these is as yet unclear."

TUC general secretary Brendan Barber said: "These are mixed figures. The good news is that the dole queues have now been falling since January, but overall unemployment rose on the more accurate but less up-to-date ILO measure.

"The economy is still very fragile, and could easily go into retreat. A double-dip recession remains a real threat, particularly if big early spending cuts hit both public sector jobs and the companies that sell goods and services to the public sector.

"It is still remarkable how the labour market today has fared compared to the 1980s, when a whole generation was scarred."

David Kern, chief economist at the British Chambers of Commerce, said: "These figures are disappointing, but not surprising given the worrying trends that have been apparent in recent months.

"They support the BCC's forecast that unemployment is set to reach 2.65 million later this year.

"In addition to a rise in unemployment that reverses recent declines, we have witnessed a large fall in employment and a sharp increase in inactivity. The number of people working part-time has risen to a record high.

"Whatever the result of the election, a new government must enable businesses to invest and create jobs.

"Scrapping the proposed employer National Insurance increase next year appears even more important in the light of these figures.

"It is equally important that the regulatory burdens on business are limited in the coming years."

Dr John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development, said: "The last set of official labour market statistics before the election contains a mix of good and bad news. Since this provides all three main UK political parties with something to seize on, these pre-election jobs figures are unlikely to prove a game changer at the polls.

"Labour can highlight a welcome further fall of almost 33,000 in March in the number of people claiming Jobseeker's Allowance. They can also claim that the 2.5 million headline unemployment figure is around half a million lower than most forecasters had expected this time last year and is vindication of the Government's approach to supporting the economy through the recession and its intention to keep spending to stimulate the economy in 2010-11.

"But the Conservative and Liberal Democrat parties can point to yet another quarterly fall, of 89,000, in the number of people in work, an increase to 1.046 million in the number of people working part-time because they can't find full-time jobs, and a quarterly 89,000 rise in the number of people unemployed for more than a year; taking the long-term jobless total to 726,000."

The Federation of Small Business said a survey of over 1,400 of its members showed that two thirds will keep employment levels on hold over the next three months which confirmed that firms were not yet ready to take on more staff.

Chairman John Walker said: "The rise in unemployment confirms that the economy is still too fragile for small businesses to take on new staff. With GDP figures expected later this week, small firms are showing signs that they are more confident about their overall business performance over the next three months.

"The FSB is calling for a renewed economic stimulus to help small businesses continue to create jobs, get access to crucial finance, innovate and start up new businesses, to get us squarely on the road to recovery."

Liberal Democrat shadow chancellor, Vince Cable said: "Labour's record speaks for itself as unemployment is now higher than when they came into office.

"It underlines just how fragile the UK economy is and exposes the folly of Tory plans to pull the rug from under the recovery.

"Without a strong and concerted plan of action to support jobs and businesses, the fall-out from the recession will be with us for years to come.

"The Liberal Democrats have that plan. We will ensure that the nationalised banks lend money to sound British businesses to help support the recovery. We have a jobs package that will help people back into work and improve the country's infrastructure."

Today's figures also showed that the number of over-50s who have been unemployed for more than 12 months increased by 20,000 to 143,000 in the December-February quarter, up 16.9% on the previous quarter and 34.2% on the year.

Chris Ball, chief executive of the Age and Employment Network, said: "Older workers, particularly older men, have been through a great deal of pain during this recession, but while these figures show slow, steady improvement overall, there is a continuing problem of long-term unemployment among the over-50s.

"For older workers unlucky enough to lose their present jobs, finding work could be so difficult that job loss could spell the end of their working lives altogether, and this is at a time when pensions and savings are under pressure and older people increasingly want and need to work."

Graeme Leach, chief economist at the Institute of Directors, said: "These latest figures reveal more worrying evidence that the Government is still not taking appropriate steps to bring public spending under control.

"There remains a yawning gap between the performance of the public and private sectors. The latest figures show public sector employment up 46,000 whilst private sector employment is down 527,000."