New Deal will grow to cover the older jobless

The New Deal jobs programme is to become a permanent and expanded scheme, taking up much greater proportion of taxpayers' money.

The New Deal jobs programme is to become a permanent and expanded scheme, taking up much greater proportion of taxpayers' money.

A new fund will be set up, which will build to £1.4bn a year by 2004 to help extend and reshape the initiative, the Chancellor said. It will be developed to cover more older people, disabled workers and lone parents.

Mr Brown said it was part of the Government's strategy to "encourage the work ethic", with the "carrot" of a job backed by the "stick" of withdrawal of benefits if claimants refuse to participate.

David Blunkett, Education and Employment Secretary, said: "New Deal is here to stay. It's going from strength to strength. This success story is all the more remarkable as New Deal largely pays for itself in saved benefits and extra taxes."

Ministers say the scheme has already helped 216,000 young people move from welfare into work, leaving Labour about 35,000 short of its target of 250,000 before the next election. Long-term youth unemployment has fallen by 70 per cent over the past three years, Mr Blunkett said.

The Tories have attacked the programme in recent weeks, claiming that many New Dealers would have found a job anyway in the stronger economy.

New Deal was launched more than two years ago, and by the end of April in excess of 470,000 young people had joined the scheme, with 137,000 receiving training or work experience as well as those finding a job. Almost 74,000 employers have signed up.

The TUC general secretary, John Monks, said: "We welcome the news that the New Deal is to become permanent. It has done much to boost the job prospects of long-term unemployed and school-leavers."

The Chancellor also announced that the industry budget is to rise by a total of £700m over the next three years - an average annual increase of 6.6 per cent - with increased funding for science, innovation, small business, the regions and the Post Office.

An extra £270m will be pumped into the Post Office to help modernise the network and prevent rural branch closures while £190m of new money is going into the Government's Small Business Service. There will also be increased venture capital funding with an additional £84m being earmarked for the Phoenix Fund, which is designed to support entrepreneurs in deprived areas.

As part of the Government's drive to improve the commercial exploitation of science, £100m will be allocated to a "knowledge transfer fund" for universities linking with businesses. This is in addition to the £1bn of capital investment in science announced by the Chancellor this month. Of the total, £775m is government money, with the rest is coming from the Wellcome Trust.

Leaving aside the money the Department of Trade and Industry needs to meet liabilities - mainly compensation payments to former mineworkers - the departmental budget will rise from £3.28bn this year to £3.65bn next year, £3.73bn in 2002-03 and £3.97bn in 2003-04.