Jobless adults who cannot read, write or add up are to be given a £10-a-week learning allowance to help them master the basics. The move is part of a drive to aid the estimated seven million adults in Britain with literacy and numeracy difficulties find work.
Ivan Lewis, the Skills minister, said the Government was setting a target of getting 2.25 million of these adults to gain a qualification by 2010.
The scale of the UK's skills problem was revealed when a government report showed that 7.8 million adults had "poor" qualifications. The total represented a third of the working age population. Since the inquiry was published, about 750,000 adults have been persuaded to learn a new skill.
Mr Lewis said the skills package would offer every adult with poor qualifications a chance to learn through free training, plus time off work to take up the opportunity.
In his pre-Budget statement, the Chancellor, Gordon Brown, said Britain had the highest proportion of unskilled workers of any European country. He said: "For decades, low skills have been our Achilles' heel as a modern economy. In future every adult who has missed out ... will have the funds and the opportunity to acquire skills."
Ministers also announced they intend to cut down on the "sick-note culture" by encouraging people on incapacity benefits back to work.
In addition, the Government plan to place careers advisers in doctors' surgeries to give employment advice to those on incapacity benefits. A £40 weekly payment to help former incapacity benefit claimants back to work would be extended to cover a third of the country.
The Work and Pensions Secretary, Alan Johnson, said that the Government was planning to help those people on incapacity benefits who wanted to work. Mr Johnson said: "With a thriving economy, record low unemployment and over half a million job vacancies, everyone should have the chance to work."
The Pathways to Work scheme for the disabled, which has been piloted in seven areas of the country, is to be extended and The New Deal for Disabled People will receive a £30m boost.
More than 250,000 lone parents would also be enticed back to work as a result of the offer of a £40-a-week (£2,000-a-year) bonus to be paid during their first year of work.
Mr Brown said he had also asked for measures to be drawn up to increase employment rates among ethnic minorities - just 59 per cent of whom are in work.
Brendan Barber, the general secretary of the TUC, said: "The moves to help people on incapacity benefit into work rightly concentrate on the carrot and not the stick, as had been feared."
Derek Simpson, the general secretary of the Amicus white collar and skilled workers' union, said that while he welcomed the Chancellor's emphasis on skills, employers were complacent at best.
Mr Simpson said: "Employers' record on training leaves a lot to be desired. We have the second lowest level of investment in training in Europe. We need to ensure that employers play their part in helping the UK workforce to compete in the global economy."
Kevin Curran, the general secretary of the GMB union, said: "We welcome the boost the Chancellor plans for employment levels in Britain's black and minority ethnic population, and the 'return to work' help for lone parents and people on incapacity benefits."
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