Jobs service and Benefit Agency are to merge

The Government promised a "revolution" in the benefits system yesterday by unveiling plans for a new welfare-to-work ministry which will step up its drive to get the unemployed, single parents and the disabled into jobs.

Tony Blair announced that the Benefits Agency, which pays out social security, and the Employment Service, which is responsible for getting the jobless back into work, will merge next year. Although the move will cut bureaucracy, it is also seen in Whitehall as a further step towards an American-style "workfare" system under which the jobless have to take work to draw benefits.

From next month, unemployed people will face losing their job-seeker's allowance for up to six months if they refuse three offers of work or training. The Chancellor, Gordon Brown may announce further sanctions, coupled with more cash help for job-seekers, in his Budget next Tuesday.

The Government toughened its "work for all" message yesterday when Mr Blair said: "The new agency will give a new culture, and will be firmly focused on helping people to become independent. It will help further to embed a culture of rights and responsibilities within the welfare system.

"A single agency will provide a better and more responsive benefits service tailored to individual needs and asking the question 'what can we do to help you become independent?'"

The shake-up will affect 10 million people drawing benefits, all of whom will be assigned a personal adviser. But ministers denied that the disabled and single mothers would be forced into work.

At present, 80,000 people work for the Benefits Agency and 20,000 for the Employment Service. Although administrators will be retained as personal advisers, some redundancies are expected.

The reform could put a question mark over the long-term survival of the Department of Social Security, which is responsible for the Benefits Agency. It will share the job of setting up the new agency with the Department of Education and Employment, which runs the Employment Service. Mr Blair has yet to decide which of the two Whitehall departments will ultimately be in charge.

Alistair Darling, the Social Security Secretary, said: "The new agency marks a revolution in the way we help people become more independent."

But David Willetts, the Tory spokesman on welfare, warned Mr Darling he could soon be left without a DSS to run. "All that's left for Alistair Darling to do is turn off the lights as he leaves the building," he said.

David Blunkett, the Education and Employment Secretary, said the separation of the Benefits Agency and Employment Service was a "historic conundrum." In a trial run for the merger, staff from the two departments have worked together in one-stop shops for claimants in 12 pilot areas, and this scheme will be extended nationwide.

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