Portillo derides job subsidies

Michael Portillo, the Thatcherite Secretary of State for Employment, last night launched an outspoken attack on "clever-clever ideas" for job creation, while being driven to a grudging defence of the existing Workstart scheme and the National Insurance holiday for long-term jobless announced in Kenneth Clarke's last Budget.

Labour, which pledged generous "dole to work" incentives in its shadow Budget, was quick to seize on the difference of approach.

In a speech to the London Rotary Club, Mr Portillo dismissed as "tricksters" those who devised "schemes, ruses or some clever-clever ideas which they claim will not only solve unemployment but actually save the Government money". In most cases, "one man's subsidy is another man's tax rise," and governments could not create jobs.

"If the Government pays subsidies to employers to hire people, some of the people hired are likely to be people who would have got a job anyway . . . you pay subsidies to one set of firms who undercut another set of firms, who lay people off."

He added: "You may well ask why, if I think this is a mug's game, the Government does use employment subsidies such as Workstart . . . and why it is introducing a National Insurance holiday for the long-term unemployed. We see such policies as a way of expanding the supply of labour by getting the long-term unemployed into jobs, perhaps by reducing employer prejudice towards them . . . We know they cost money - and we do not pretend that they don't cost money."

Harriet Harman, Labour's employment spokesman, said: "Instead of putting forward what he plans to do to cut unemployment he sets up a caricature of Labour's approach in order to devote an entire speech to attacking it."