More than 100,000 part-timers could face a cut in benefits if they don’t properly arrange to work more hours, Kwasi Kwarteng he is expected to announce in his mini-budget on Friday.
The chancellor is set to unveil a major shake-up to the welfare system, with claimants to work up to 15 hours a week on the National Living Wage required to take “active steps” to boost earnings.
If they don’t, under Mr. Kwarteng’s new plan, their payments will be offset as part of the compensation Universal credit the system may decrease.
Mr Kwarteng described the policy as a “win-win” – pitching it as a way to fill 1.2 million vacant jobs across the country.
It comes as Liz Truss told an audience of US business giants in New York that Britain has too many “economically inactive” people in the wake of the Covid crisis – promising the mini-budget would “encourage more people to get into work”.
Birth accused Ms Truss of calling British workers lazy after she said British workers needed “more bribes” in a leaked audio recording that emerged during the Tory leadership contest.
Sir Keir Starmer’s was quick to respond to the benefits plan – with the shadow work and pensions secretary referring to Ms Truss and Mr Kwarteng’s intention to lift the cap on bankers’ bonuses.
“Tory ministers think we have over a million job vacancies because the low paid are underworking and should be threatened with sanctions and bankers need massive bonuses,” shadow work and pensions secretary Jonathan Ashworth tweeted.
A Labor spokesman added: “We need a serious plan to support people back to work and boost labor supply.”
The latest move, billed by the Treasury as a gradual expansion, will see the future 12-hour threshold for a more intensive job search regime raised and is due to come into effect in January.
Under the changes, applicants over 50 will also receive additional support from job coaches, while the newly unemployed will receive nine months of targeted courses.
The Ministry of Finance believes that increasing economic inactivity among the over-50s is contributing to shortages in the labor market, increasing inflation and limiting growth.
A return to pre-pandemic economic activity among the over-50s could increase GDP by up to one percentage point, according to the government.
“Our labor market is extremely resilient, but not perfect. While the unemployment rate is at its lowest in almost 50 years, the high number of vacancies that still exist and the inactivity in the labor market are limiting economic growth,” said Mr Kwarteng.
“Britain needs to work again. These incremental changes focus on getting people back to work and maximizing the number of hours people work to help grow the economy and raise living standards for all.”
The latest announcement comes ahead of a mini-budget on Friday, at which Mr. Kwarteng has unveiled plans to boost growth and attract investment – including how he will pay for a guaranteed energy price for households and businesses.
As well as reversing the rise in National Insurance contributions and scrapping a planned rise in corporation tax, the Chancellor has been reported to cut stamp duty in a further attempt to boost growth.
Ms Truss told business bosses including Google, Microsoft and JPMorgan Chase that she wanted “lower and simpler taxes” to attract businesses to the UK during a speech in New York on Wednesday.
It comes as almost 400,000 workers received a pay rise after a “real living wage” increase was proposed and agreed by thousands of businesses and organisations.
Hourly rates for volunteers living wage are rising by £1 to £10.90 in the UK and by 90p to £11.95 in London. This is higher than the government’s statutory £9.50 an hour.