Brown launches jobs plan as 3,000 more face the dole

Businesses offered £2,500 bonus for recruiting and training unemployed staff.

By Andrew Grice
Tuesday 13 January 2009 01:00

A pledge by Gordon Brown to limit the pain of the recession by getting the unemployed back into work was overshadowed by a "Black Monday" of job losses throughout British industry.

Businesses and economists expressed doubts about the Government's plan to offer firms a "golden hello" of up to £2,500 for recruiting and training someone who has been unemployed for six months. They warned that the main question for most firms was whether to cut jobs. Their doubts were vindicated when more than 3,000 redundancies were announced yesterday, including 684 at JCB and 367 at Waterford Wedgwood.

Administrators were called in at Land of Leather, where 850 jobs are under threat, and the Findus frozen foods company Newcastle Productions, where 420 are at risk. The logistics firm Wincanton may axe 875 jobs and Christie's, the auction house, said it faced "significant staff reductions".

Downing Street insisted that more than 200,000 jobs were being created each month and there were 500,000 vacancies in the economy. Morrisons, the supermarket chain, announced it would recruit 5,000 staff this year.

Mr Brown promised to get credit flowing to companies through "non-bank institutions" as well as banks. "We are looking at every possible avenue by which the different functions of banks can be brought back into being," he stated.

A package of government-backed loan guarantees for small firms is expected tomorrow, with selective help for medium and large companies, including the car industry, to follow next week. Export credit guarantees may be expanded.

At a jobs summit in London, the Prime Minister pledged he would not abandon the jobless so they became long-term unemployed. "He predicted that yesterday's £500m package would help 500,000 people into work or training over the next two years.

Mr Brown told a meeting of Labour MPs last night: "We will not walk by on the other side.When challenged by the most difficult circumstances, we will not only prove ourselves, we will prevail."

A Populus poll for today's (tues) Times shows the Tories have increased their lead over Labour to 10 points. While people are pessimistic about the economy, they are more upbeat about their own prospects.

Richard Jeffrey, chief investment officer at Cazenove Capital Management, warned that Britain could experience a "jobless recovery" in which unemployment continued to rise slowly even when the economy was growing again. He said high public borrowing and tax rises could mean slow growth rates. He doubted that the "golden hellos" would mean any net addition to jobs. "Firms won't employ extra people just because of a small subsidy," he said.

David Frost, director general of the British Chambers of Commerce (BCC), said: "Companies are not recruiting so I am not sure at this stage in the economic cycle what the offer of a £2,500 grant to take on people is going to do."

In a survey published today, the BCC warned that there was a "frightening deterioration" towards the end of last year and it that would almost certainly revise downwards the forecast it made only two weeks ago. It said: "The priority for now should be helping businesses keep jobs."

The election-style battle between the parties on the economy intensified when David Cameron unveiled an emotive poster of a baby to highlight rising government debt. The caption says: "Dad's nose. Mum's eyes. Gordon Brown's debt." The Tory leader said every baby is being born owing £17,000 thanks to Mr Brown. "It's easy for politicians to talk about tax rates and borrowing as if there was no tomorrow – but there is a tomorrow and it is going to be paid for by our children," he said.

But Mr Brown replied: "By the end of this global downturn our debt will still be lower, as a result of what is happening, than in the US, Japan and Italy."

*Up to 6,000 new teachers will earn a £10,000 "golden handcuffs" payment to work in more than 500 underperforming schools, the Government will announce today in a White Paper on social mobility, Fair Chances for the Future. They must stay three years to qualify.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

View comments