Windfall tax plan to pay for bigger back-to-work scheme

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The Government is considering extending its New Deal for the long-term unemployed to anybody under the age of 50 who has been out of a job for more than six months. A sharp dip in the number of young people out of work means that older people can be included in the project, a move which could come as early as next month's Budget.

Andrew Smith, the employment minister, said: "We are considering whether it would be possible to broaden the general approach." And David Blunkett, Secretary of State for Education and Employment, said the Chancellor had indicated that funds from the windfall tax might be available to fund an extension of the initiative.

Pilot schemes for the New Deal for young people are under way before the national programme begins in April, while in June a separate scheme for older long-term unemployed workers will begin. But the number of young people qualifying for the scheme is less than half the figure expected when the plans were first drawn up. There are now 118,000 16- to 24-year- olds who are eligible, compared to 250,000 a year ago.

The fact that unemployment has fallen so rapidly since the election has therefore created the leeway for an extension of the New Deal to essentially all of Britain's long-term unemployed. It will be funded over four years by the pounds 5.2bn windfall tax on the privatised utilities.

Mr Blunkett and Mr Smith were speaking after the Jobs Summit hosted by Britain yesterday for ministers from the other six leading industrial nations and Russia. The ministers, meeting in London, agreed a set of principles for ensuring high levels of employment and high social standards. Gordon Brown, the Chancellor, said after the conference: "Unemployment for some, inequality and low pay for others, may seem to be a feature of the global economy. In all our countries, the challenge is greater cohesion."

The first three of the seven principles, sound macroeconomic policy, flexible markets and fostering entrepreneurship, could have been drawn up by the last government. But the rest had a distinctly New Labour flavour, emphasising education, tax and benefit reform and equal opportunities. The British delegation was pleased by the consensus at the summit, as similar events in the past have been scarred by a clash of philosophies.

Mr Brown also emphasised the need for improved childcare, on which The Independent is campaigning for more Government help for working mothers.

On Wednesday Mr Blunkett will launch a Green Paper to consult on the Government's proposals for education and training throughout people's working lives.

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