Tories plan employment boost

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The Conservatives have offered companies a £2,500 national insurance break for every new worker they take on who has been on the dole for more than three months.

Tory leader David Cameron said that the £2.5bn scheme would pay for itself by reducing the future cost of unemployment.

He urged Gordon Brown to adopt the plan immediately, in order to prevent the numbers out of work from soaring further from its current level of 1.79 million.

His initiative comes amid widespread expectation of tax cuts in chancellor Alistair Darling's upcoming pre-Budget report.

Brown is certain to be quizzed on the growing tax-cut war between the three main parties when he faces the media later at his regular monthly press conference.

Liberal Democrat leader Nick Clegg is also expected today to set out details of his party's plans to reduce taxes on the less well-off by closing loopholes for the wealthy.

Cameron told BBC1's Breakfast: "We have got 1.8 million people unemployed in Britain today. Tragically that is going to go up again tomorrow, and as we go into recession it is going to get worse.

"We are saying, instead of spending the money on unemployment benefit, take the money from unemployment benefit and spend it on giving companies a tax break to take people off the unemployment register.

"As you go into recession, you have got a choice: either you stand back, do nothing, let unemployment rise and let that unemployment benefit be spent, or in advance use that money to get companies to take on workers."

Cameron said that the government's own calculations suggest that every person who goes onto the unemployment register costs the taxpayer £8,000 a year.

"We are saying take one-third of that money - £2,500 - and if a company takes on somebody who has been unemployed for three months, they get that £2,500 knocked off their National Insurance bill. That helps companies to hire people."

Cameron indicated that he may be preparing to drop his long-standing pledge to match Labour's public spending plans in the light of the changed economic circumstances.

He said that Labour's plans were now "up for grabs" and the Conservatives would have to wait until after the pre-Budget report to assess whether they could still accept them.

Cameron told the Breakfast programme: "Their plans are in complete flux and complete confusion and we will have to wait and see what they do in the pre-Budget report.

"It's been our approach up to now to say that these spending plans are right, but we will have to see. Obviously, those spending plans will come under huge pressure from the rise in unemployment if they don't take up imaginative plans like the ones we have announced today."

The Tory leader warned that the government's apparent intention to use increased borrowing to finance tax cuts and spending would store up problems for the country in the future.

"For us, there's a very, very clear principle, which is that you can't cut taxes unless you can say where the money's coming from," he said.

"In our proposal today, you can see absolutely where the money is coming from. What Gordon Brown seems to be talking about is just splashing the cash as if there's no tomorrow.

"If it is borrowing that has got us into such a mess, why is the Government playing so fast and loose with borrowing for the future? All this money they are borrowing will have to be paid back."

Cameron said that the Tories' proposed national insurance break had been tried in countries like the US and Canada and shown to work.

But he warned that it could not wait until a change in government, saying: "This needs to happen now. Otherwise unemployment is going to go up and up."

He stressed that his plans to spend less on unemployment benefits would not hit anyone who fails to find work.

"We are not cutting anyone's benefit," he said. "What we are doing is using the money that would otherwise be spent.

"If you did nothing, unemployment would go up and that money would be spent on unemployment benefit and foregone tax receipts. Instead of sitting back and doing nothing, use the money that would otherwise be spent to help people be taken on by companies."