Plan to aid jobless 'will cost £75bn'

James Purnell, the Work and Pensions Secretary, announced yesterday that private companies and voluntary groups would win bigger and longer contracts to provide intensive and personalised support for the jobless and those who return to work, as well as getting more freedom from Whitehall.

The outside organisations will be paid after an unemployed person stays in a job for six months, with a further bonus expected after 18 months. At present, they are paid if someone is still in a job after three months.

Mr Purnell said: "For the providers the rewards will be high... but in return I will set high expectations." The Child Poverty Action Group said that the Government would be paying up to £50,000 for every jobless person who returns to work, which could mean an eventual bill of £75bn.

In a speech to a Fabian Society fringe meeting at Labour's spring conference in Birmingham tomorrow, Kate Green, the group's chief executive, will appeal to the Chancellor, Alistair Darling, to raise child benefit and boost tax credits. She will say Labour is "serious" about tackling child poverty, but will warn that it is in danger of missing its target of abolishing it by 2020.

The Tories attacked as "astonishing" Mr Purnell's claim that there was "no dependency culture" in Britain, as three million jobs had been created since 1997. George Osborne, the shadow Chancellor, asked: "What further evidence do we need that ministers are out of touch? Can't he see what is happening? Can't he see that millions are languishing on benefits?"