Labour will target pensions of high-earners to fund 130,000 jobs

Pension tax relief for top earners could be slashed to fund guaranteed jobs for the long-term unemployed, under plans unveiled by Labour yesterday.

Shadow chancellor Ed Balls said the £1 billion scheme would see 130,000 people out of work for more than two years offered posts on at least the minimum wage.

But they face losing benefits if they refuse to take the jobs.

Getting people back to work has to be the first priority, Mr Balls said, as he visited a community centre to meet unemployed Londoners in Stratford, in the east of the capital. 
But Mr Balls’ idea was attacked by Prime Minister David ­Cameron, who dubbed Labour’s position “bizarre”.

Mr Balls said: “I wouldn’t pay too much attention to the government. We have had a double-dip recession, a 100 per cent rise in long-term unemployment, and the priority now is to get people back to work.

“It’s the only way to get the welfare bills down.”

The row comes ahead of a Commons vote on Tuesday, on plans to limit most working-age benefits to a 1 per cent rise, which Labour will oppose.

Speaking during a regional visit to Derby, Mr Cameron said: “This is sort of reheating a rather unworkable scheme we inherited in 2010. I think what Labour really need to focus on is their bizarre decision to support benefits going up faster than wages, which is what they are going to be voting for on Tuesday.”

Mr Balls said Labour’s scheme would be available to people who tried to find a job for two years but were still unemployed.

The plans are similarly designed to the last Labour government’s youth unemployment scheme, the Future Jobs Fund, which was scrapped by the coalition. Labour says the new plans could see 130,000 long-term unemployed people offered work.

Mr Balls said his proposals had strict rules to ensure people looked for work. He said: “Someone out of work has to be job-searching from day one. If they are not doing interviews, taking up offers, they can lose their benefits after three months, four months, five months.

“The [government’s] work programme is supposed to be getting people into work during those first two years, but it is clearly failing.

“What we’re saying, which the government isn’t, is a tough, fair programme that works, that says there is a guarantee at two years, or earlier if we could, to get ­people into work.”

Conservative Party chairman Grant Shapps said: “We are taking firm action to help the long-term unemployed Labour left behind get back into work.

“Our work programme has already helped more than 200,000 of the hardest-to-help unemployed people into jobs.

“Ed Balls is trying to spend the same money twice. That means more borrowing and more debt – exactly how Labour got us into this mess in the first place.”

Responding to Labour’s announcement, Paul Callanan, national organiser of pressure group Youth Fight for Jobs and Education, said: “Tellingly, Balls and [shadow work and pensions secretary Liam] Byrne are yet to say whether these jobs will come with a secure, long-term contract or whether this will be just another workfare-style wheeze.

“Short-term or insecure contracts will leave the doors open for companies to use unemployed people as a source of cheap labour.”

Malcolm Small, senior pensions policy adviser at the Institute of Directors, said: “However laudable Ed Balls’ job-creation aim may be, pensions saving is the wrong target to produce money to pay for the scheme. Pensions have been hammered repeatedly by governments looking for more cash, ­damaging public confidence in retirement saving.”

He added: “If the ­coalition wishes to encourage people to save more, they should ­resist calls for further changes to ­pensions.”