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The Government has been warned that unemployment could spiral to three million after the biggest jobless rise since 1991 left 1.79 million people looking for work.

Unemployment soared by 164,000, more than 10%, in the quarter to August, while the number of people claiming jobseeker's allowance increased for the eighth month in a row.

Prime Minister Gordon Brown vowed to do all he could to keep people in jobs, pointing out that unemployment was higher in America, Germany, France and Italy than in Britain.

The Prime Minister said one way to tackle unemployment and climate change at the same time was to train people to install loft insulation. 

He said: "We are training large numbers of additional people to do that work in insulation and that will become one of the unemployment programmes that will grow over the next period of time. So the need to meet climate change goals and cut people's gas and electricity bills will create work."

Unions and opposition politicians pressed the Government to halt its programme of Jobcentre closures and 12,000 job cuts in the Department for Work and Pensions in the face of lengthening dole queues.

In the Commons, shadow foreign secretary William Hague said it was a "grim day" for the British economy, and claimed that a Government promise of £100 million to help retrain the jobless had been previously announced, and would be spread over three years, working out at just £18 for each unemployed person. 

TUC general secretary Brendan Barber said: "This is extremely bad news, and these figures do not even show the effects of the bank crash. After years when we could take reasonably full employment for granted, we are now in for grim times. This is the next big challenge for the Government."

Vicky Redwood, of Capital Economics, forecast that, at the current rate, the number of people claiming jobseeker's allowance would top a million by the end of this year. Total unemployment would rise by 1.5 million to about three million by the end of 2010, she predicted.  continues here

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