Workfare revolution to be costed by Major

John Major has agreed to an independent evaluation of a "right to work" scheme which its backers claim could put many hundreds of thousands back into jobs and save pounds 5bn annually in public expenditure.

Under the scheme the jobless would be paid pounds 3 an hour - perhaps less for the young - for useful work created by local authorities, voluntary organisations, environmental agencies and private industry. The idea bears some similarities to US-style workfare schemes, under which claimants can be forced to work for their benefits, or a sum just above.

The backers of the idea accept, however, that the number of jobs needed to cover the 2.2 million unemployed mean the scheme would have to begin here on a voluntary basis.

The move was hailed as "a real breakthrough" yesterday by Frank Field, Labour chairman of the Commons Social Security Committee, who, with Sir Ralph Howell, the Tory backbencher, is co-sponsor of the "Right to Work" Bill which the Prime Minister has agreed to have costed.

Mr Major's agreement to the study follows a demand for one by 135 backbenchers across all three parties. The study should be completed in time for a second reading of Sir Ralph's Bill set for 15 October. Downing Street yesterday said its study of the idea was absolutely "without commitment".

Ministers, including those on the right, have remained firmly opposed to workfare, which effectively turns the state into the employer of last resort. That, ministers argued, would distort the jobs market and put people in non-subsidised low- paid jobs out of work.

Number 10 said yesterday: "All the Government's own investigations of Sir Ralph's scheme have concluded that it is unworkable." The Prime Minister, had, however, agreed that the Department of Education and Employment would commission an independent evaluation, given Sir Ralph's refusal to accept the Government's judgement.

The idea received unanimous backing in March from the cross-party Commons Employment Committee, which called for a pilot of the job subsidy and work experience idea "forthwith". The Government's rejection of that produced an Early Day Motion demanding a study "to prove or disprove" whether Sir Ralph's scheme would save billions. It would, its backers claimed, "eliminate unemployment, increase human happiness and sense of worth and give everybody the opportunity to earn a living".

Those signing the motion included 80 Conservatives, among them ex-ministers such as John Butcher and George Walden, and ranging from Peter Bottomley on the left to John Carlisle on the right. Alex Carlile and five other Liberal Democrats backed the call, as did 40 Labour MPs, stretching from Alice Mahon on the party's left to Greville Janner, the Employment Committee chairman, on the right.

Mr Field said yesterday: "This is a real breakthrough, given that the Government to date has stonewalled over any costings. It is equally important if you are looking at options which a Labour government might consider.

"Both Sir Ralph and I are confident that, if the calculations are done fairly, this will be shown to save money. It would not only allow large numbers of people to do useful work, but it will allow spouses in families to go back work as well, transforming people's lives."

At present, social-security rules force part-time workers to quit when the main breadwinner loses a job. The scheme would put benefit money into letting people work, while generating tax receipts and stimulating the economy, Mr Field said. A successful scheme would eventually lead to compulsory workfare, he added, "but in the initial stages we will never have enough jobs for all the people who would volunteer".