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Unemployment has fallen but the number of people claiming Jobseekers Allowance increased by 23,500 to reach the highest level since Labour came to power in 1997, according to figures released today.
With a visible blow to Gordon Brown's efforts to win the next general election, the number of claimants rose to 1.64 million in January, the worst figures since April 1997.
Long-term unemployment, increased by 37,000 in the quarter to December to 663,000, also displaying the highest figure since 1997.
However, the number of people out of work fell by 3,000 to 2.46 million in the three months to December, leaving the unemployment rate at 7.8 per cent.
Work and pensions secretary Yvette Cooper said that the government's actions have helped to keep the unemployment total almost half a million lower than expected.
"These figures show how important it is to keep increasing not cutting back on the help for people to get work," she said.
"Unemployment is much lower than expected last year, reflecting the tough decisions families and businesses have taken to protect jobs, as well as the substantial extra investment in getting people back to work."
Shadow work and pensions secretary Theresa May said she was concerned about some of the underlying trends.
"What is very concerning about today's figures is the rise in the number of people claiming Jobseeker's Allowance, and the steady growth in the number of people becoming long-term unemployed.
"It is more important than ever that the government delivers a credible plan for jobs and growth."
And a report published on Tuesday revealed almost 10 per cent of the workforce is now classed as under-employed, compared with the 2005 rate of 6.6 per cent.
Liberal Democrat spokesman Steve Webb said the long-term jobless figures are the government's "dreaded landmark".
Webb said: "These figures show why cutting spending while the economy remains fragile would be a big mistake. We need to invest in a green jobs package which will support the economy now and build our infrastructure for the long-term."
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