Chancellor is accused of being out of touch after making slip-up as he prepares for politically difficult budget later this week

Philip Hammond has claimed “there are no unemployed people” in the UK in a major slip-up as the chancellor prepares to fight for his political life in this week’s budget.

Hammond’s gaffe came as he made the case on the BBC’s Andrew Marr Show that driverless cars will not necessarily lead to more unemployment.

Playing down worries about automation technologies, he said: “It’s a simple choice: either we embrace change or we try to hide from change and we allow ourselves to slip behind … I remember 20 years ago we were worried about what would happen to a million shorthand typists in Britain as the personal computer took over. Nobody has a shorthand typist these days.

“Where are all these unemployed people? There are no unemployed people. We have created 3.5m jobs since 2010. This economy has become a jobs factory.”

In fact, there are about 1.42 million unemployed people in the UK and many more who are underemployed and would like more hours.

His comments come at a bad time for the chancellor as he faces a politically difficult budget on Wednesday where he will have to try to turn his party’s fortunes around at a time of worsening economic forecasts and uncertain Brexit negotiations.

He will pledge to target the construction of 300,000 new homes a year in an attempt to appeal to younger people but insisted this could be done without building on the green belt or resorting to extra borrowing. Amid calls for more money for the NHS, Hammond is expected to hand over some to help fund a pay rise for nurses but he suggested he would not be bowing to demands for a large cash injection demanded by the health service chief, Simon Stevens.

Conservative MPs have been hoping for some bold proposals they can sell to voters after May lost her majority at the election. But asked on ITV’s Peston on Sunday show whether it would be a big budget or a boring budget, Hammond said it would be “a balanced budget”.

At the same time, the chancellor is coming under attack from senior Brexit supporters in the Conservatives who believe he is not sufficiently committed to leaving the EU, with Theresa May facing calls to move him from his job. Asked by ITV’s Peston on Sunday whether he would still be in his job after the budget, Hammond ducked the question but said he had spent the last year listening to predictions of his own demise that had not come true.

He was also accused this week by Nick Timothy, the prime minister’s former chief of staff, of being politically tone-deaf and lacking a burning desire to change people’s lives for the better.

Hammond defended himself on the Andrew Marr Show, saying: “Nobody would be in politics if they didn’t have a desire to change people’s lives for the better.”

Facebook Twitter Pinterest The number of people unemployed in Britain is 1.42 million. Photograph: Philip Toscano/PA

However, his comments about the lack of unemployed people immediately led to charges that he is detached from economic reality.

John McDonnell, the shadow chancellor, said: “The chancellor thinks there are no unemployed people in this country. Completely out of touch.”

Jon Trickett MP, the shadow minister for the Cabinet Office, added: “The chancellor is living on another planet. If the person in charge of the country’s finances doesn’t know, or chooses to ignore, the fact that nearly 1.5 million people are unemployed, and almost a million people are on zero-hours contracts, then he is clearly losing a grip on reality.

“The Tories have become even more out of touch and are now so inwards looking that they have no clue of the experiences of ordinary people suffering from seven years of Tory austerity.”

Vince Cable, the Lib Dem leader, said it “underlines just how out of touch the Conservatives are with millions of Britons who are living on the breadline”.

He added: “As chancellor, Philip Hammond needs to be on top of the numbers, and as he should know very well, there are actually 1.425 million people unemployed. Worse, a large number of them are second or third generation out of work, suggesting that all that a large number of people are inheriting in Britain today is poverty.”

Hammond was later pulled up on his comments. He did not apologise but stressed he had been talking about the government’s record of creating jobs.



He told ITV’s Peston on Sunday: “Of course I didn’t mean [there is no unemployment]. There’s 1.4 million unemployed people in this country and that’s 1.4 million too many. But we have record low levels of unemployment. It hasn’t been this low since the 1970s.

“But the point I was making to your former colleague Andrew Marr is that previous waves of technological change have not resulted in millions of people being long-term unemployed. They have been reabsorbed into the workforce.”