Osborne defends Help to Work scheme as way to end 'something-for-nothing culture'

Announcing the US-style Help to Work scheme in his keynote speech to the Conservative Party conference in Manchester today, Mr Osborne will say the change will end the "something-for-nothing culture".

Claimants who have been out of work for three years and fail to find a job through the Coalition's flagship Work Programme will be required either to do 30 hours a week of community work, report to a job centre daily, or undergo intensive treatment to tackle problems such as illiteracy or mental illness, he will say.

Those who break the rules, for example by failing to turn up for duties without a good reason, could lose their benefit for four weeks. A second offence would see them lose out for three months.

The Chancellor rejected critics' claims that the Government is exploiting or punishing the long-term unemployed, insisting that the new schemes will help them develop the skills and attitudes they need to find paid employment.

He told ITV1's Daybreak: "We are saying there is no option of doing nothing for your benefits, no something for nothing any more. People are going to have to do things to get their dole and that is going to help them into work.

"That's the crucial point. This is all activity that is going to help them get ready for the real world of work.

"In order to make sure that people are ready for jobs, they have got to have the right skills and the right work talents, the right work attitudes, and this programme is going to deliver that. It is going to create a culture where people are ready for work."

Potentially, around 200,000 long-term Jobseeker's Allowance claimants could be eligible for the new initiative, which comes into force in April next year.

But ministers believe that the numbers on it will be significantly lower, as many of those working covertly will decide it is no longer worth trying to claim benefits and drop out.

The scheme, devised by Work and Pensions Secretary Iain Duncan Smith, will cost around £300 million to implement - with the money likely to be found from departmental underspends. But the Chancellor said he believed it would make savings on the welfare bill by helping people get off benefits.

Speaking to the Tory conference today, Mr Osborne will say: "No one will be ignored or left without help. But no one will get something for nothing.

"Help to work - and in return work for the dole. Because a fair welfare system is fair to those who need it and fair to those who pay for it too."

Labour Treasury spokeswoman Rachel Reeves said: "It's taken three wasted years of rising long-term unemployment and a failed Work Programme to come up with this new scheme.

"But this policy is not as ambitious as Labour's compulsory jobs guarantee, which would ensure there is a paid job for every young person out of work for over 12 months and every adult unemployed for more than two years.

"With Labour's plans we would work with employers to ensure there are jobs for young people and the long-term unemployed - which they would have to take up or lose benefits. Under the Tory scheme people would still be allowed to languish on the dole for years on end without having a proper job."

But Mr Osborne denied the scheme was "heartless", telling Sky News: "I'll tell you want I think is heartless - it is leaving the long-term unemployed to just recycle through job centres and never get a proper chance of getting a job.

"This is for people who have been unemployed for more than three years and we are saying we are going to help you get into work, but we're going to ask for something in return... I think it is a very compassionate approach to people who previous governments just ignored, and I don't think that's very fair."

The Chancellor insisted that jobs are available for those willing to do them, hailing the announcement of 1,000 new positions at mail delivery company TNT Post.

"There are jobs being created in our economy, for example today TNT Post, the big delivery company, has announced a thousand jobs here in Manchester, and they've explicitly said they want to help long-term unemployed people get those jobs," he said.

"Jobs are being created in our economy because we are fixing the economy and the economic plan is working. I just want to make sure we don't leave behind a generation who are long-term unemployed. That's what happened, I'm afraid, over the last couple of decades and I think that's one of the big social problems we've now got an opportunity to tackle."

He added: "I'm determined that as the economy recovers we don't leave behind a whole group of people on long-term unemployment and wash our hands of them. That's what's happened in the past, I don't want that to happen on my watch."

Mr Osborne dismissed Ed Miliband's energy price freeze pledge at last week's Labour conference as "just a gimmick, not a serious economic policy", and said that the best way of helping people with the cost of living was to stick to the Government's economic plan to eliminate the deficit and create stability in the economy.

In his speech, he will say: "We have to deal with our debts and see our plan through. And yes, if the recovery is sustained then families will start to feel better off.

"Because what matters most for living standards are jobs, and low mortgage rates, and lower taxes.

"But family finances will not be transformed overnight. Because Britain was made much poorer by the crash.

"That is what happens when you get a catastrophic failure of economic policy of the kind we saw five years ago the result of a decade of Labour failure when bust follows boom when banks get bailed out and when government budgets spiral out of control."

He will add: "This battle to turn around Britain it is not even close to being over."

Mr Osborne told Daybreak: "Of course we have got a huge amount of work to do to make sure we go on reducing our deficit, go on creating jobs, go on preparing Britain for the future.

"We have to go on delivering our economic plan because that's the only credible plan for living standards. If you don't fix the economy, people don't get jobs, mortgages go up in cost because borrowing gets out of control, you are not able to take people out of tax.

"All these things would be a total disaster for the country's economy and a disaster for living standards."

He added: "What you have heard from the Labour Party just proves that they don't have a credible economic plan and people remember the price we paid for that three or four years ago, when the entire economy collapsed when they were in office."

Mr Osborne insisted that he was aware of the worries felt by many voters over the cost of living.

He told BBC1's Breakfast: "Of course I accept there's a real concern about living standards. What happened to our country five or six years ago made our country poorer. It was an economic catastrophe.

"That really points to the big argument I am making in my speech today, which is that you can't have a living standards plan unless you have an economic plan.

"It's an economic plan that delivers the jobs, the lower mortgage rates, that helps people keep more of their income tax-free. Those are the things that do the most for people's living standards, and it's that economic plan that is helping Britain turn a corner in what remains a very, very difficult world out there.

"The BBC is reporting at the moment problems for the Italian government, deadlock in the US Congress. The debt crisis has not disappeared. We have got to stick to our economic plan, and that's also the way to improve living standards."

Mr Osborne also defended the Government's Help to Buy mortgage support scheme, after the announcement that the second phase of the scheme is to be launched within weeks, three months ahead of schedule.

The Chancellor denied that the offer of state assistance to enable homebuyers to secure properties with a deposit as low as 5% of the value of the property would encourage people to overstretch themselves.

"I don't agree with that at all," he said. "Ninety-five per cent mortgages or 90% mortgages were the way that many, many people in this country bought their home.

"They are not weapons of financial destruction. They are a way of helping people onto the housing ladder. What we are clear is that people have to be able to afford the mortgage repayments, and we've got much tougher rules we've introduced on things like self-certification.

"But that doesn't mean that people should be asked for very large deposits, of the kind they are being asked for at the moment. That's a problem with the banks, not a problem with the housing market, and Help to Buy is going to help those families get onto the housing ladder who currently can't afford to do so, and I think that is part of a fair and aspirational society."

Mr Osborne hit back at critics of the scheme, including Jonathan Portes, director of the National Institute of Economic and Social Research and former chief economist at the Cabinet Office.

Speaking on the BBC Radio 4 Today programme, he said: "I don't agree with his analysis. I think he's comparing apples and pears, he's comparing an existing scheme for all jobseekers - where, by the way, half of the people that have gone through the programme that already exists, half have come off benefits, that's pretty successful.

"There is a broader point - that I come from a generation that, in cities like Manchester, just accepted there were going to be a lot of workless people. And that was something that happened under Conservatives, as well as under Labour governments. Now I don't think that we should accept that as a country."

Mr Osborne also denied reports that he had described Mr Duncan Smith as not being very clever.

"No, I did not. And I, by the way, work incredibly close with Iain Duncan Smith."

Paying tribute to the Work and Pensions Secretary, he said: "I think he is a remarkable individual, who has transformed almost single-handedly the entire debate about welfare in this country and is deeply compassionate and understands... and clever."

He added: "I have huge respect and time for Iain Duncan Smith and, by the way, here's a staggering truth about this Government: the fact that the Chancellor of the Exchequer and the Welfare Secretary can work together and deliver programmes like this and talk to each other is itself a sign that we have a functionable Government that is working for hard-working people."

Joanna Long, of the Boycott Workfare campaign, said: "Community workfare schemes literally treat the unemployed as criminals - with far harsher sentences than if they had committed a crime.

"Osborne's announcement is a PR rehash of schemes that are already failing to help people find work on a massive scale. It's bad news for people who will be forced to work at far below the minimum wage - and it's terrible news for the people whose jobs they will be replacing.

"This is about cutting the safety net for unemployed people, and handing something for nothing to charities, companies and councils which should be paying wages and taxes."

Labour MP Jim Sheridan said: "The Tories' ill-fitting mask of compassion has finally fallen away to expose the true face of Conservatism in Britain with the workhouse reborn.

"Instead of paying people a proper wage, it's clear that David Cameron and George Osborne plan on using the unemployed as cheap labour to provide services which have been lost as a result of their cutbacks in public spending. This is pure exploitation."

Mr Osborne's plan was welcomed by Matthew Sinclair, chief executive of the TaxPayers' Alliance, which recently published its own proposals for a "work for the dole" scheme.

"The TaxPayers' Alliance proposed a 'Work for the Dole' scheme as the next stage of welfare reform precisely because it's not fair on taxpayers that some claimants subsist on benefits for years on end without giving something back," said Mr Sinclair.

"There is plenty of international evidence from countries such as Australia, Canada and the US that this type of scheme is not only fairer on those footing the welfare bill, but also gets people back into work."

But Graeme Cooke, research director at the left-of-centre Institute for Public Policy Research thinktank, said: "George Osborne's welfare announcement today is not a revolution. It will probably end up affecting less than one in 20 JSA claims, which accounts for 2.5% of all benefit spend. People have had to 'do something in return for their benefits' since 1911.

"There is nothing wrong in principle with expecting the long-term unemployed to undertake work experience or a more intensive job search.

"The key issue is how such schemes are designed. If they give people real experience of work and the practical employability habits that go with it, they can help people be more attractive to prospective employers.

"But if it is pitched as a punishment where people do menial tasks, it risks acting as a signal to employers that these are people not to employ."