Benefit plan is a £75bn disaster

GORDON Brown’s attempt to tackle long-term unemployment and benefits dependency will today be condemned as a £75billion “fiasco” in a scathing report from a leading welfare expert.

Brown announced his vision for a new global order yesterday Brown announced his vision for a 'new global order' yesterday

Former Labour minister Frank Field will say the Prime Minister’s New Deal and other schemes designed to encourage the workless into employment have been a hugely expensive failure.

He will argue that the welfare system has allowed millions of work-shy young people to languish on benefits while many new jobs in Britain have been taken by immigrants.

Instead the senior backbencher is calling for strict time limits on how long claimants under 25 can claim benefits to prevent them lapsing into a life of dependency.

But workers made redundant following years of paid employment should get higher benefits based on their National Insurance contributions.

His radical proposals are designed to offer a genuine safety net to people made jobless by the recession while cracking down on the long-term work-shy.

Mr Field’s devastating analysis comes in a report written for the independent policy think-tank Reform, published today and titled “Help! Refashioning welfare reform to help fight the recession.”

The conclusions, coming from a senior backbench Labour MP, will be a serious blow to Mr Brown’s credibility over welfare.

And the attack is likely to reopen bitter wounds within the Labour Party.

Mr Field was asked to “think the unthinkable” and overhaul the welfare system by Tony Blair, but found his ideas blocked when Mr Brown was Chancellor.

Mr Field’s report will say that a first step in overhauling the welfare system should be “scrapping the New Deal fiasco”, Mr Brown’s flagship scheme for tackling long-term unemployment.

It will say: “The Government’s pioneering New Deal has cost a staggering £75billion over the past decade.

“But benefit claimants have fallen by only 400,000, despite the creation of over three million new jobs. The number of foreign workers entering the UK in the past decade – now making up one in nine of the total working population – shows that there are jobs available.”

The report says the Government’s failure to put a time limit on benefits “allows claimants to continue receiving welfare while making little or no attempt to find work.”

Figures in the report show that the number of so-called “NEETS” – young people not in employment, education or training – has soared by 308,000 to 1.2million since 1999.

More than one in six aged between 16 and 24 now falls into this category. Yet the number of young people helped into jobs by the New Deal has been “pathetically small”, the report says.

“Only a very small number of New Dealers have been helped into sustainable work.”

Mr Field says that the employed workforce has expanded by 3.5million to 27.5million between 1992 and 2007. But the proportion of foreign-born workers has risen from 7.5 per cent to 12.4 per cent over the same period.

“The growth in the number of jobs has far outstripped the fall in the number of workless claimants,” the report says.

Mr Field calls for more substantial support for workers with lengthy employment records who have spent years paying tax and national insurance.

His report adds: “Many workers with honourable work records, but who have been made redundant, have expressed surprise and outrage at the modest size of the national insurance benefit to which they have contributed over many decades.

“As a matter of urgency the Government should now bring forward new regulations doubling the size of the Jobseekers’ Allowance, currently £60.50 per week, for every five years of national insurance contribution.”

The move would mean a newly-redundant worker with a 10-year contribution record could expect £121 a week, while one with 15-year record could expect £181.50 a week.

And in an acknowledgement that Labour has failed to tackle the culture of worklessness, the report says: “The largest total fall in the worklessness count occurred under the last Conservative government.

“It is true that the Thatcher government pushed unemployment to record levels, but the fall was equally startling and can be ascribed almost solely to the strength of the economy.” He also calls for a “green community programme” to force long-term jobless claimants into environmental projects.

Work and Pensions Secretary James Purnell is currently piloting a Welfare Bill through Parliament which seeks to ensure claimants are unable to get benefits unless they show they are looking for work.

Last night Mr Field said: “The Government is debating welfare reform whilst standing on the burning ship. With over-bubbling phrases and good intent the Government has set upon a strategy that will defeat its goal.

“A radical Government would withdraw this Bill and replace it with serious welfare reform as one means of overcoming the recession.”

Elizabeth Truss, deputy director of Reform, said: “We have had 11 years of talk of welfare reform. Will the Government now be brave enough to act seriously on its rhetoric?”

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