Tories would scrap New Deal in £1bn cutback

The Tories would scrap the Government's flagship "New Deal" strategy for the unemployed in an attempt to save £1bn, as part of plans to cut public spending.

The Tories would scrap the Government's flagship "New Deal" strategy for the unemployed in an attempt to save £1bn, as part of plans to cut public spending.

The Conservatives would replace the New Deal with a programme called "Britain Works", where private recruitment agencies would be rewarded with £1,500 each time they found work for an unemployed person and a further £1,500 if that person held their job for at least six months.

The proposal, to be unveiled by Michael Portillo, the shadow Chancellor, at a shadow cabinet meeting today, will form a key part of a pre-election consultation paper being sent to party members before the party's annual conference in Bournemouth in October.

The scheme, modelled on a strategy in the United States called "America Works", would involve contracting out to the private sector the task of getting the long-term jobless into work.

The Tories claim the strategy would cut £1bn from the £5bn annual cost of the New Deal, which is funded mainly from the "windfall tax" on utilities.

Despite government claims that 216,000 young people have found employment under the scheme since 1998, the Opposition has attacked it as "an expensive failure". It claims many of those involved would have found jobs anyway.

The Tory policy document says: "'Britain Works' will focus on making sure the potential recruits have the right attitude, they get to work on time, they are presentable and they understand the responsibilities that go with work and that employers can rely on them."

The Tories also believe the Government's stress on lifelong learning and retraining is misplaced. "Employers do not want more qualifications but basic skills and common sense," the document says.

But a Labour spokesman said the proposal would lead to a rise in unemployment and social security costs. "The New Deal is proven to be a success, not just in helping people to find jobs but in making young people who have been out of work more employable.

"The Tories remain what they always were; the party of high unemployment. It would be completely foolhardy to scrap the New Deal when it is delivering on all counts."