Jobseekers' cash plan attacked from all sides

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The White Paper on the proposed new six-month Jobseekers' Allowance to replace unemployment benefit was met with a barrage of concerns from the opposition parties and benefit experts yesterday.

Peter Lilley, Secretary of State for Social Security hailed it as a measure to 'help people back into jobs, improve incentives to work, and streamline the system to give jobseekers a better service'.

That last effect might just turn out to be true because most of the jobless will deal with a single office, the Jobcentre. But opposition spokesmen were quick to spot potential problems, chief among which was the planned six- month cut-off point when means-testing begins to bite.

Harriet Harman, Labour spokeswoman on employment, said: 'A working woman with an unemployed partner who moves on to means-tested benefit may find that her family will be better off if she gives up work.'

The White Paper proposes to increase the number of hours a partner can work from 16 to 24 without the unemployed partner losing benefit. But Paul Convery, information director of the Unemployment Unit, the research and lobbying organisation, said this would depend on their earnings - and there was no guarantee that a part-time worker could secure extra hours.

Liz Lynne, the Liberal Democrats' social security spokeswoman, spotlighted a change affecting 18- to 24-year-olds who have been in previous employment.

'Their contribution record will not be taken into account and they will be pounds 9.55 a week worse off than they are at present,' she said.

Both the opposition parties complained that the paper included no change to the so- called '21-hour rule', which penalises unemployed people who study to improve their chances of getting work.

Even the 'back to work bonus', while broadly welcomed, was dubbed the 'bogus bonus'. Unemployment claimants who take part-time work will be able to accumulate up to pounds 1,000 worth of credits, to be drawn down in cash once a full- time job is obtained. But they will actually have to earn pounds 2,000. That is because 50p of every pounds 1 earned above the current pounds 5 disregard has been earmarked for the Treasury.

The details of the bonus are to be compared with the scheme suggested in yesterday's Commission for Social Justice report to ease people off benefit and into full-time work - increasing the disregard to perhaps pounds 260 in part- time earnings averaged out over three months.

That, the Treasury would argue, would encourage people to settle into a routine of benefit plus slightly greater part- time earnings.

Mr Convery insisted such a scheme would have quite the reverse effect in the medium to long term. 'It's basic economics,' he said. 'People would gradually begin to enjoy the advantages of being in work.'

Sally Witcher, director of the Child Poverty Action Group, said that even now, 'many who are genuinely unemployed are put off claiming or face unreasonable benefit penalties. It serves the Government's purpose to portray the unemployed as idlers in order to justify cutting benefits.'

HOW THE PROPOSALS WILL WORK The proposals in the White Paper will: Cut the period in which the full allowance is payable to six months from one year under unemployment benefit rules.

Place a duty on unemployed people to sign an individually tailored jobseeker's agreement, which will lay out a detailed strategy to find employment.

Require unemployed people to be available for 'any work which they can reasonably be expected to do' for a minimum of 40 hours a week.

Allow Employment Service advisers formally to direct claimants to improve their chances by increasing job- seeking skills or motivation or taking steps to 'present themselves acceptably' to an employer.

Introduce a 'back-to-work bonus', a lump sum of up to pounds 1,000 taken from benefit reductions as a result of a claimant taking part-time work.