Labour to get tough with jobless

As part of a radical carrot-and-stick approach to unemployment, a Labour government would pay the national minimum wage to the long-term jobless for undertaking community work. If the unemployed refused the jobs offered they would lose large chunks of their state benefits.

The strategy being drawn up by Ian McCartney, the party's chief employment spokesman, is an attempt to break with discredited "schemes" for the jobless where the work was considered meaningless and the training minimal.

The plan involves the concept of the "intermediate labour market" where there is a need for goods and services, but private enterprise cannot satisfy the demand because there is insufficient money to pay for it.

Mr McCartney argues that there is sufficient money already in the system to fund the work and ensure that participants were covered by the same statutory minimum wage as employees in conventional jobs. He believes that the application of the minimum rate is critical to the psychology of those who would participate.

He pointed to the cash already spent on benefits, existing schemes for the long-term unemployed, local authority budgets and grants available from European funds.

Ministers will claim that the idea is little different from the Project Work initiative already being piloted which pays the unemployed pounds 10 on top of their benefits - except that Labour's programme will be far more expensive. Sceptics will also warn that organisations operating in the "intermediate labour market" might undercut conventional enterprises and throw other people out of work,

The Centre for Local Economic Strategies calculates that by bringing together budgets for existing schemes into a national fund of pounds 1.7bn, 176,500 jobs a year could be created.

Under a Labour government, the national minimum wage would be set by the Cabinet after taking advice from a Low Pay Commission. It is unlikely that it will be set very high - probably around the pounds 3 to pounds 3.25 an hour mark on present figures - but it would make a substantial difference to most of the unemployed depending on the length of the working week. However, people with a large number of dependents and therefore on high benefits could lose out.

Meanwhile, Labour and the Tories continued to trade insults last night: Tony Blair used his new year's message to accuse John Major of weak leadership; and the Tory party chairman, Brian Mawhinney, claimed Labour was planning a "dirty" election campaign. Mr Blair said: "The Prime Minister himself has admitted divisions in his party have damaged Britain's negotiating strength. But people know it is weak leadership that has allowed those divisions to grow."

Dr Mawhinney, said in his own message that Labour was gearing up for one of the most negative and deceitful campaigns in recent history.

"They are desperate to stop the electorate from focusing on the success of the economy and what New Labour would do themselves," her said. "Labour have always campaigned with the big lie and the big scare story."