U.K. Labour to Strip Benefits From Unemployed If Job Refused

By Kitty Donaldson

January 4 (Bloomberg) — The U.K.’s opposition Labour Party called for a compulsory jobs guarantee for the long-term unemployed, making state welfare payments dependent on paid employment.

The party’s treasury spokesman, Ed Balls, said the guarantee would initially be for adults who are out of work for 24 months or more, though Labour would seek to reduce this to 18 or 12 months over time. The party said there are currently 129,400 adults over the age of 25 who have been out of work for two years or more, a rise of 88 percent in a year.

To pay for the jobs guarantee, which Balls estimates would cost 1 billion pounds ($1.6 billion), he would restrict tax relief on pension contributions for people earning more than 150,000 pounds a year.

“A One Nation approach to welfare reform means government has a responsibility to help people into work and support those who cannot, but those who can work must be required to take up jobs or lose benefits as a result — no ifs or buts,” Balls wrote in an article for the Politics Home website today. “Britain needs real welfare reform that is tough, fair and that works, not divisive, nasty and misleading smears from an out-of- touch and failing government.”

‘Squeezed Middle’

Labour and Prime Minister David Cameron’s Conservatives are battling to attract what the premier calls the “strivers” and opposition leader Ed Miliband the “squeezed middle” of voters whose wages aren’t rising in line with inflation and who are suffering from cuts in public services.

An overhaul of the welfare system is at the heart of the debate, with the Tories seeking to portray themselves as defenders of hard-working families by cutting the welfare bill, and Labour saying it is protecting the most vulnerable in society. Today’s announcement by Balls seeks to show Labour will also be tough on the long-term unemployed.

The Conservative Party said Balls had already pledged in March last year to spend the 1 billion pounds from pension tax relief to increase tax credits for low-paid workers and families with children.

“We are taking firm action to help the long-term unemployed Labour left behind get back into work,” Conservative Party Chairman Grant Shapps said in an e-mailed statement. “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.”