Chancellor vows to help unemployed and low paid

Tough talking Gordon Brown has promised a shake up of how the unemployed will get benefits and has vowed to help fraudulent claiments on to the staright and narrow.

The Chancellor announced a new review of institutional investment which will report in time for the next Budget.

He declared: "By delivering employment opportunity for all we are making Britain both more enterprising and more fair, to the benefits not just of the high unemployment areas but the whole country."

Starting from April 2001 the New Deal will be extended to the long term unemployed with four options: work, work-based training, work experience including in the voluntary sector, and self-employment.

"But no fifth option, no staying at home on benefits doing nothing," Mr Brown added.

The long term unemployed will be helped with a £100 grant to ease the transition back to work and help with rent or a mortgage.

From April 1 this year, all long term unemployed over 50 returning to work will be guaranteed a minimum income in their first year - £60 a week on top of wages up to £15,000.

The working families tax credit will rise next April by 7%, from £200 a week to £214.

The Chancellor announced the Government will implement the report by Lord Grabiner QC aimed at tackling the "hidden economy".

A confidential phone line will open in May to advise benefit claimants on how they can move from the black economy, stop fraudulently claiming benefits or tax perks, how to get work, register as a business or become self-employed.

Mr Brown warned those who failed to respond that after six months from January 1 2001 "tougher rules and penalties will be imposed".

He announced that "special action teams" will be set up in 20 unemployment blackspots across Britain covering 127,000 unemployed to help them take up local job vacancies.

The Chancellor went on to announce measures to boost the employment rate of lone parents which - at 45% - was still "far below" the 70% to 80% rates achieved in the US, France and Scandinavia.

"In this Budget we remove old barriers to work and I can today announce an extension of the New deal in a new way to half a million loan parents," he said. It will apply to parents aged five and above.

Nationally from next April, lone parents with children over five will be invited to "work-focused interviews" and encouraged to take up new choices, including training and part-time work.

Trade secretary Stephen Byers will review what improvements can be made in maternity pay and parental leave to improve family friendly employment.

For all low income mothers, who meet the basic requirement of health check-ups for their young child, the Sure-Start maternity grant will rise from £200 to £300.

Mothers on paid maternity leave who would otherwise fall into income support will now stay on working families tax credit.

Mr Brown said child benefit will be £15.50 from April 2001 - 40% more than in 1997.

For young children in the poorest families, weekly support in 1997 was £28. Today Social Security Secretary Alistair Darling will announce a further increase of £4.35 a week.

Maximum support will be up from £28 in 1997 to £50 a week next year. The poorest two child family on income support will now be £1,500 a year better off than in 1997.

The low paid family with two children on a wage of £10,000 a year will now be £2,700 a year better off.

The number of children lifted out of poverty will rise beyond one million this year and reach 1.2 million children next year - " the greatest reduction in child poverty in 50 years".

Mr Brown announced the creation of "integrated and seamless" system of support for children paid to the mother.

"I can confirm that after consultation with charities and voluntary organisations we will proceed to set up, in every region of our country, and with new cash allocated in our spending review, not just one children's fund but a network of local and regional children's funds to support work by the voluntary sector in meeting the needs of children."

Mr Brown said he was announcing tax reforms to make it easier to give money and time to voluntary organisations and charities.

From April 6 this year the Government will add an extra 28p for every pound given by a taxpayer to charity.

For every pound contributed through pay packets, the Government will add up to 50p worth of tax relief.

To encourage corporate giving, any company can from next month receive tax relief on the full amount of any donation.

Mr Brown said the Government will also exempt tickets for charity events from VAT, within prescribed limits.

The Chancellor said that a strong civic society must take seriously its obligations to the elderly.

He said the Social Security Secretary Alistair Darling will launch a consultation for the next Parliament on how to develop a new pensioners credit.

He explained that this would not only lift the poorest out of poverty but also help those with modest occupational pensions and savings.

Mr Brown told the Commons that the pensioners' tax allowance will be set this year at £5,790 and for those over 75 at £6,050.

He added that for years pensioners with savings over £3,000 had lost out on income support.

"I have decided from next April to double the limit, raising it from £3,000 to £6,000," Mr Brown said.

In addition, the Chancellor said that the cut off point for income support, which had been frozen at £8,000 will be raised to £12,000 of savings.

"As a result 500,000 elderly people, previously penalised for their thrift and savings, would be on average £250 a year better off, many better off by £1,000 a year."

The Winter Fuel Allowance for pensioners will be raised from £100 to £150.

Cheaper and more energy efficient central heating will be made available for pensioners and those on low incomes through the new "affordable warmth programme".

Mr Brown confirmed that from November 1 all pensioners over 75 will receive a free TV licence and announced that anyone over that age with an unexpired licence running beyond that date will be eligible for a refund.

The minimum income guarantee will be increased in line with earnings next year.

For a single pensioner it will be worth £82 a week and for pensioners over 80 it will be £90 a week. For a couple it will be worth £127 a week.

Taken together, he said that by April next year one million pensioners will be £1,000 a year better off than in 1997.

On banking reform, Mr Brown said he was inviting all the banks to work with the Post Office to offer a basic banking service to all.

The ceiling on Individual Savings Accounts was announced as £5,000 for the coming year, but Mr Brown said instead the ceiling will remain at £7,000 for 2000-2001.