Philip Hammond sparked fury today by declared ‘there are no unemployed people’ during a pre-Budget interview.
The Chancellor was left desperately scrambling to correct the gaffe after being reminded there are officially 1.4million jobless in the UK.
Opponents seized on the remark as evidence that Mr Hammond is ‘living on another planet’.
The blunder could be a fresh blow to the Cabinet minister’s hopes of surviving an expected reshuffle after his crucial Budget package on Wednesday.
He was already facing a tightrope act to appease demands for more spending on things like public sector pay and housing, without abandoning the government’s efforts to tackle the deficit.
The error came as Mr Hammond was asked how Britain can deal with the increasing automation of jobs, ahead of a Budget in which he will pledge hundreds of million in high-tech investment.
The Budget will also contain plans for a retraining scheme to help workers learn new skills as more traditional jobs disappear.
The Chancellor stressed the UK must ’embrace change’ and suggested that worries about shorthand typists losing their jobs with the advent of the personal computer were ill-founded.
Last week official figures showed the number of people in work fell by 14,000, to just over 32 million in the quarter to September.
But asked about the potential threat to jobs from automation, Mr Hammond told BBC One’s Andrew Marr Show: ‘There’s a simple choice here, either we embrace change, and we put ourselves at the forefront of it, or we try to hide from change and we allow ourselves to slip behind.
‘We have to embrace change in this country and we have to ensure that our people have the skills and the capability and the tools they need to be able to evolve, to learn new skills, to take up new careers.
‘I remember 20 years ago we were worrying about what was going to happen to the million shorthand typists in Britain as the personal computer took over.
‘Well nobody has a shorthand typist these days, but where are all these unemployed people?
‘There are no unemployed people.’
He added: ‘We have created 3.5 million new jobs since 2010, this economy has become a jobs factory, constantly reinventing itself, constantly creating new jobs and careers.’
Economists believe the UK is close to what is classified as ‘full employment’ – where everyone who wants a job can find one.
But the loose language from Mr Hammond sparked a big backlash.
Pressed on the mistake later on ITV’s Peston programme, he insisted he had misspoken.
‘There are 1.4million unemployed in this country – that’s 1.4million too many,’ he said.
Shadow Cabinet Office minister Jon Trickett said: ‘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 7 years of Tory austerity.’
Mr Hammond also risked more trouble by appearing to dismiss warnings of a crisis in the NHS.
Asked about demands from NHS England chief Simon Stevens for an extra £4billion a year in funding, Mr Hammond joked about people predicting ‘Armageddon’.
‘In the run up to Budget, people running all kinds of services and government departments come to see us and they always have very large numbers that are essential, otherwise Armageddon will arrive,’ he said.
Mr Hammond pointed out that Mr Stevens’ efficiencies plan had not delivered the promised results and said increases in funding would be delivered in a ‘sensible measured and balanced way’.
The blunders seem to have caused Mr Hammond to rethink a plan to pose in a driverless car on a visit tomorrow.
After Mrs May’s embattled deputy Damian Green was ridiculed for a photo op with a lifeboat recently, aides appear to have realised the event had the potential to go wrong.
In the Budget, Mr Hammond will announce a national retraining scheme in collaboration with the CBI and Trade Union Congress.
A first step will include GBP36 million for digital skills courses which use artificial intelligence.
As part of the Government’s drive to build more homes, GBP40 million will also be invested in construction training programmes for groundworkers, bricklayers, roofers and plasterers.