A SCHEME to cut unemployment by 200,000 by introducing a form of workfare, in which the jobless are required to work for subsidised wages rather than receive welfare benefits, is recommended to the Government by social reformers today.
Their proposals combine subsidies to employers who offer jobs to the unemployed with payments of up to £4 an hour for those who agree to give up the dole and take a job.
The scheme, proposed by Politeia, an independent social and economic "think-tank", comes as the Government is reported to be drawing up a £3 billion plan to get the long-term unemployed and the young into jobs.
Politeia estimates that its scheme, which it says is the most carefully worked out and costed of any plan yet put forward, will create 200,000 jobs within three years at a total cost of £66 million.
A report setting out the scheme says: "It will create not only the wider social benefits of bringing people into regular employment but also an increase in national output which would considerably exceed the costs."
Its author, Hugh Sykes, chairman of Sheffield Development Corporation, believes the scheme runs with the grain of the Government's thinking and is the most practicable plan scheme so far.
It builds on pilot schemes introduced by the Tories in which long-term unemployed people in a limited number of areas were offered 13 weeks of help with job-seeking followed by 13 weeks of work experience. Those on the scheme are paid £10 a week on top of their existing benefits but have all benefits withdrawn if they refuse to take part.
Mr Sykes says: "Most economists and politicians are now agreed that we must change the system of paying unemployment benefits which, at the moment, provides an incentive not to work and so aggravates unemployment with its heavy economic, personal and social costs.
"Although a workfare scheme is not the only possible new approach, it is hard to see that any other is practicable."
Its scheme is in two parts, Workstart and Opportunity to Work. Under Workstart a subsidy would be paid to employers who hire people under 25 years old who have been on the dole for at least six months or over-25s who have been unemployed for at least a year. The subsidy would be £60 a week for the first 26 weeks of employment and £30 for a further 26 weeks.
The scheme is similar to the Conservatives' pilot projects although it is on a larger scale and would be "strongly promoted locally, to increase take-up and the quality of employment offered".
Opportunity to Work would apply to under-25s who have been unemployed more than 12 months and others who have been unemployed for more than 18 months - such as those who have failed to find "real jobs" despite a six-month period of eligibility for Workstart.
Employers would be given 75 per cent of the wage to be paid, up to a maximum of £4 an hour, or 100 per cent if the job included training or "skill enhancement" which would improve future employability.
Mr Sykes says: "If vigorously pushed, the programme will provide a sustained reduction in unemployment of at least 200,000 within three years and the prospect of continuing reductions thereafter by focused measures to increase the employability of people who might otherwise drop out of the effective labour force."
