How 1.7m extra jobless are kept hidden

In a major new study, researchers concluded that millions of unemployed have been pushed on to other benefits or out of the welfare system altogether.

They found that on top of the 880,000 out of work and claiming benefit, there are another 1.7million "hidden jobless".

Almost a million are claiming incapacity benefit, even though they are fit for work, according to experts at Sheffield Hallam University.

Another 650,000 are out of work but do not claim unemployment benefit either because they have not built up enough National Insurance contributions or are disqualified because their household income or savings are too high.

The report came as official figures showed that the number of people who are economically inactive - meaning they are out of work and not seeking a job - has reached a record high.

The figure increased by 77,000 in the latest quarter to 7.95 million, the highest figure since records began in 1971.

It includes people on benefits, in education, and those who do not want to work, as well as those who have taken early retirement or are looking after a relative.

Ministers yesterday hailed a 9,300 reduction in the number of people claiming JobSeeker's Allowance in May to 880,400, the tenth time the figure has fallen in the past 11 months.

But opposition MPs seized on the findings of the new study and the rise in economic inactivity as evidence that official jobless figures have become a "mockery".

The Tories highlighted a sharp increase in youth unemployment, despite the Government's claim to have "virtually extinguished" it.

The number of 18 to 24-year-olds unemployed for more than six months has hit 180,000, more than 20 per cent higher than the previous quarter.

Shadow work and pensions secretary Philip Hammond said: "This study lays bare the true state of Gordon Brown's Britain.

"At least 1.7 million unemployed people are being hidden from view while the Governmentmakes outrageous claims of success in tackling unemployment.

"Ministers focus on the number of people claiming JobSeeker's Allowance, which is a much smaller figure than the real number of unemployed people who want to find a job."

Liberal Democrat Treasury spokesman Vince Cable said: "It is becoming increasingly clear that the headline unemployment rate is a work of fiction.

"It's striking that the proportion of men currently in the labour market is lower than when Mrs Thatcher was in power.

"Overall, low unemployment and rising employment have been amongst Gordon Brown's biggest claims of economic success.

"However, it is increasingly clear that there is a hidden army of people who have dropped out of the labour force."