`Welfare-to-work' becomes a reality

The Chancellor started to put flesh on the bones of Labour's manifesto promise to tilt the tax and benefit system towards incentives to work, but the measures announced yesterday fell short of a radical recasting of the welfare state.

Gordon Brown emphasised the element of compulsion on young unemployed people to take up places offered to them, but the details of the training and work schemes to be provided will not be given until this afternoon. And the new measures aimed at encouraging lone parents to find work are to be funded by just pounds 200m over the life of the parliament.

The unveiling of the pounds 3.5bn "welfare-to-work" programme lacked impact, partly because it was so faithful to Labour's manifesto promises, but also because the details of the schemes to be offered to young people are to be announced in the Commons today by David Blunkett, Secretary of State for Education and Employment.

The programme is dominated by the plans to take young people off benefit, and by a separate scheme to subsidise employers who take on over-25s who have been out of work for a year or more.

But Mr Brown used the scheme to signal a shift in the direction of US- style "workfare". He said in his speech: "With these new opportunities for young people come new responsibilities." And he said bluntly that benefits will be cut if young people refuse to take up the opportunities.

The main new elements consist of smaller packages to encourage lone parents to take up work, and to help the disabled. Each group will receive pounds 200m over five years to pay for help with training and finding work. But the money for lone parents will also cover the cost to the taxpayer of allowing them to pay up to pounds 100 a week for childcare without affecting their in- work benefits.

In a hidden move towards a more punitive approach to increasing the incentive to work, the Chancellor also failed to restore Conservative cuts in benefits for lone parents due to come in next year. But the Budget failed to confirm officially inspired speculation that it would be even tougher on lone parents and contain measures to compel them to accept job offers.

More details of plans to offer help with "jobsearch, childcare and training" to 40,000 lone parents this year and 1 million next year will be announced by Harriet Harman, Secretary of State for Social Security, tomorrow.

On the "carrot" side of the carrot-and-stick approach, Mr Brown also announced that the "supply" of childcare would be boosted by the recruitment of an army of 50,000 childcare workers from the ranks of the young unemployed joining the "welfare-to-work" programme, the centrepiece of the Budget.

The main focus of the programme has been blurred recently by the fall in the number of 18-25-year-olds who have been unemployed for more than six months. There are now fewer than the 250,000 that Labour was pledged in its manifesto to get off benefit and into work or training schemes. This was seized on by William Hague, the Conservative leader, who proclaimed the previous government's achievement in presiding over a fall in youth unemployment of 400,000 over the past four years - "without a windfall tax", he told the Commons.

Against a background of speculation that companies have been reluctant to come forward to take part in schemes to provide training and work for the young unemployed, he called on "every business to play its part in this national crusade to equip this country for the future".