Britain "probably never will return" to the high levels of male employment of past decades, the minister for work has acknowledged.

Jane Kennedy's admission suggests that the government's own figures have forced it to rethink its vision of "full employment" -a goal constantly espoused by Gordon Brown, Ms Kennedy and other ministers.

Stakeholder Response: Institute of Directors

Richard Wilson, head of business policy at the Institute of Directors, said: "Since sterling escaped from the straight-jacket of the Exchange Rate Mechanism on September 16, 1992, the conduct of monetary policy in the UK has been broadly positive, not least the decision in 1997 to grant the Bank of England operational control for the setting of interest rates in order to meet an inflation target. This, coupled with the UK's relatively lightly regulated labour market, has been generally favourable to job creation.
 
"However, the goal of full employment is now more difficult to achieve because of the increase in the tax and regulatory burden on business.

"According to the accountancy firm PricewaterhouseCoopers, the burden of taxation increased by £8 billion every year between 1997 and 2002, with business footing 80 per cent of the bill. At the same time, the cost of regulations imposed on business since 1997 now amount to £30 billion. These increases in costs on business deter job creation. Indeed, the main engine of job growth is increasingly the public sector.
 
"The government must reduce the tax and regulatory burdens on business and maintain macro-economic stability in order to encourage job creation. It also needs to improve skills and basic education. This is the best approach to getting more of the 7.8 million people who are economically inactive into employment."

Stakeholder Response: Chartered Institute of Personnel and Development

Dr John Philpott, CIPD chief economist, said: "Ms Kennedy's honest admission is realistic given the scale of the continuing 'male jobs deficit' in the UK, though her wider comments suggest that the government is still strongly committed to 'full employment' as a policy objective.