A carrot and a stick for the young unemployed

The Government yesterday unveiled its Big Idea to persuade, cajole and even force the jobless to improve themselves or go out to work.

Announcing his "Welfare to Work" strategy, the Chancellor said that the windfall tax on the excess profits of privatised utilities would ensure that everyone would have the opportunity to find a job or advance through training and education. Those who fail to grasp the opportunities would have their benefits cut, he warned.

"From now on, no section of society, no one should suffer permanent exclusion. In the past the United Kingdom has been united in name only," he said.

There were two main planks of the policy towards the unemployed for which the Government is to set aside pounds 3.5bn, including a reserve of pounds 500m. Mr Brown announced a national crusade for a new deal for 250,000 young people, funded by the windfall levy. All those between 18 and 25 who had been jobless for six months would be offered "the first step on the employment ladder".

The programme will involve four options: the offer of a job for six months at an employer who will receive pounds 60 per placement, work with a voluntary organisation for a similar period, a place on the Government's new environmental taskforce or full-time education or training.

Mr Brown, however, warned there was no fifth option - "to stay at home on full benefit". Those who refused to participate would receive lower payments from the state. After demonstration projects covering around 10 per cent of the country, the programme will go national next April.

One discrepancy in the Government's calculations, however, seems to be that while the programme is funded to cover 250,000 participants, only 178,000 youngsters have been out of work for six months.

For the 350,000 adults who have been jobless for two years or more, there would be the offer of a job. From next June employers would be granted a subsidy of pounds 75 for each person taken on. "When the long-term unemployed sign on for benefit they will now sign up for work or training," the Chancellor said.

The Government will also relax the rule which means that the long-term unemployed lose benefit if they are in education for more than 16 hours. The rule exists because the jobless have to prove they are available for and actively seeking work in order to receive benefit.

Paul Convery of the Unemployment Unit, a constant critic of the previous Government, welcomed the Budget. "The money is in place for the unemployed and the structure to deliver the policies have been developed."

Public service unions, however, have argued that some of the pounds 5bn windfall tax should be spent on ensuring there are no job losses among their members. Unions argue that strict government spending limits will inevitably lead to thousands of redundancies.

Mr Brown may also have his work cut out to persuade the unemployed that the new programme is entirely different from the much-derided Youth Training and Training for Work, schemes, which led to cynicism among the jobless.