Labour: Poverty trap will be closed for good

Launching the party's General Election manifesto, Mr Brown will today hail the "Better Off in Work Guarantee" as a signal of Labour's intention to revolutionise the benefits system and encourage thousands of people back to work.

The Scotsman also understands the Prime Minister will end weeks of speculation and doubt over the 5 billion aircraft carrier projects and guarantee that they will be safe from the strategic defence review.

However, it is also understood that while Mr Brown has pledged not to raise basic income tax or capital gains tax levels, he will not provide a similar guarantee on VAT, despite spending much of last week accusing the Conservatives of wanting to raise it.

Energy Secretary Ed Miliband, who wrote Labour's manifesto, has made clear it will not provide any big-ticket giveaways but "affordable measures" to change the way things are done.

The poverty trap occurs when a person would receive a lower income if they accepted work than they receive through the benefits system, acting as a disincentive to seeking employment.

The new scheme will guarantee that anybody who returns to work will receive 40 more a week through the tax-credit system and minimum wage than they would get in benefits if they remained unemployed.

In raising the issue, Labour appears to have stolen a march on the other two main parties, each of which has previously promised to tackle the poverty trap.

In his conference speech last October, Tory leader David Cameron said dealing with the problem was a priority and asked shadow Chancellor George Osborne to draw up proposals to address it.

Mr Cameron pointed out that some single mothers who work lose 96p in every pound they earn as a result of tax and the loss of benefits, and that an unemployed couple with no children would be 9.27 a week worse off if one of them took a part-time job, while an unemployed couple with three children also faced losing out by accepting low-skilled work once travel costs were included.

The Liberal Democrats have also made clear they will produce policies to tackle the problem and have already unveiled an exemption from income tax for the first 10,000 of earnings.

A Labour Party source said: "What we want to do is basically give something for something, rather than something for nothing.

"We want people to realise it pays to work and not stay at home. This is a measure that will help us break the poverty trap and change the way we think about benefits."

Labour hopes the scheme will be largely self-funding by removing the burden on the public purse of people taking benefits and earning wages instead.

Despite still fighting accusations that it is pushing through a "tax on jobs" with an increase in National Insurance contributions, Labour claims its manifesto will be about job creation and fairness.

Other measures already unveiled include major constitutional reform with referenda on reforming the House of Lords, introducing a different electoral system and a free vote in parliament on allowing 16-year-olds to vote.

There will be a ban on lobbying and voters will be given the power to recall MPs and force debates by petitioning parliament. And there will be help for first-time buyers and a promise to build 10,000 council houses a year.

In his foreword, Mr Brown states "it cannot be a business-as-usual manifesto".

He reminds voters the election is being held against a continuing background of war in Afghanistan and economic turmoil. And he repeats his claim that it is time for experience rather than novices.

He writes: "The world has been rocked by the first great crisis of the new global economic age.

"In Britain, the political crisis caused by expenses has undermined the trust between the people and the politicians elected to serve them."

He promises to rebuild the economy to secure the recovery and invest in future growth and jobs as well as renew society.

He adds: "Our manifesto is ambitious but affordable, bold but realistic, and learns from our experience. Over the next ten years we will confront major challenges – intensive global competition, climate change, an ageing society, and bringing stability to Afghanistan. This is a moment for good judgment and serious purpose to meet the challenges ahead."

And in a manifesto which will promise to give the Scottish Parliament more powers, Mr Brown concludes: "I love Britain and want the very best for our country."

Labour will also launch a Scottish manifesto today which is expected to highlight the promise to guarantee the building of the two new aircraft carriers, preserving British ship building jobs including in the Clyde and at Rosyth.

The move has been lobbied for by Scottish Labour MPs who have wanted to pressure the Tories for not providing a similar guarantee and admitting to looking at contract-break clauses.

The Scottish manifesto will be unveiled at the old site of the Ravenscraig steel works, now Motherwell College. The location is meant to highlight the job losses under Margaret Thatcher in the 1980s as well as Labour's plans to use colleges to provide training for jobs for the future.

The manifesto launches come on the day Labour will also screen its first election broadcast, titled The Road Ahead.

Filmed in Yorkshire, it shows a modern Everyman, played by actor Sean Pertwee, walking the road to recovery through the countryside and villages.

On the journey, he talks about British determination and resilience, and the way we stay on course through good times and bad.

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