Wilson irked by students on dole

January 5, 2007

In 1976, Britain suffered the worst drought in living memory. The Government was forced to go cap in hand to seek a huge loan from the International Monetary Fund and Harold Wilson shocked the nation by resigning as Prime Minister.

But government papers released under the 30-year rule show that little frustrated Mr Wilson more than the persistent problem of students inflating the unemployment figures when they signed on during the holidays.

Unemployment levels were a particularly sensitive issue for a Labour Government that relied on the goodwill of the trade unions agreeing to pay-restraint deals.

Told in January 1976 of yet another failure to devise a workable solution, Mr Wilson minuted: "This is chronic. I raised it in June and now I'm told it will take 18 months even without further slippage."

When the issue came to Cabinet in February, it was agreed that administrative complications ruled out all the solutions on offer but that students should in future be counted separately from the main unemployment figure.

Student finance also proved a disappointment for a Government desperate to raise income.

It was initially hoped that £42 million might be raised by an increase in annual overseas students fees, which at the time were £320 a year.

But a Department of Education official named Lloyd-Jones calculated that this would require a politically impossible increase of annual fees to £2,000 by 1978-79 - consequently, the Government managed to raise only a more modest £21 million through fees.

Further Government penny-pinching also saw capital funding for further and higher education taking a £30 million hit - as Chancellor Denis Healey looked for the cuts needed to secure the IMF loan.

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