More than 100,000 people in part-time work could face a benefit cut if they fail to properly look for more work, the Chancellor is set to announce in his 'mini-budget' on Friday.
Among a range of measures set to be revealed by Kwasi Kwarteng is a significant shake-up of the welfare system, with claimants working up to 15 hours a week on the National Living Wage required to meet regularly with a work coach and to take “active steps” to increase earnings.
If they fail to do so, under the plan, their benefits could be reduced.
Billed by the Treasury as a gradual expansion, the move will be an increase from the incoming 12-hour threshold for a more intensive work search regime and is expected to take effect from January as part of the Universal Credit system.
Kwarteng has described the policy as a “win-win”, pitching it as a way to fill 1.2 million job vacancies across the country.
Under the changes, claimants aged over 50 will also get extra support from work coaches, while the newly unemployed will receive nine months of targeted sessions.
The Treasury believes that rising economic inactivity among the over-50s is contributing to a shortage in the jobs market, driving up inflation and limiting growth.
A return to pre-pandemic economic activity among over-50s, according to a government estimate, could boost GDP by up to one percentage point.
“Our jobs market is remarkably resilient, but it is not perfect. While unemployment is at its lowest rate for nearly 50 years, the high number of vacancies that still exist and inactivity in the labour market is limiting economic growth,” Kwarteng said.
“We must get Britain working again. These gradual changes focus on getting people back into work and maximising the hours people take on to help grow the economy and raise living standards for all.
“It’s a win-win, it boosts incomes for families and helps businesses get the domestic workers they need, all while supporting economic growth.”
The latest announcement comes ahead of a mini-budget on Friday, at which Kwarteng is due to set out details of the UK Government’s plans to boost growth and attract investment, including how it will pay for the energy price guarantee for households and businesses.
As well as reversing the hike in national insurance contributions and scrapping a planned increase in corporation tax, which Prime Minister Liz Truss has promised, it has been reported that the Chancellor will cut stamp duty in a further attempt to drive growth.
Work and Pensions Secretary Chloe Smith said of the plan: “Whether it’s increasing their hours in their current role, entering a new sector or switching careers, we want people of all ages and all stages to be able to progress into fulfilling careers.
“The expertise our dedicated DWP work coaches bring will help to drive this change by removing barriers to progression and opening up opportunities for training and building skills, to increase earnings.”
Labour was quick to respond to the plan, with the shadow work and pensions secretary making reference to a reported Conservative plan to scrap the cap on bankers’ bonuses.
“So Tory ministers think reason we have over a million vacancies is because the low paid aren’t working hard enough and need to be threatened with sanctions but bankers needs bumper bonuses,” Jonathan Ashworth tweeted.
“We need a serious plan to support people to return to work and increase labour supply,” he said.
Separately, electric vehicle (EV) chargepoint operators have urged the Chancellor to cut VAT on public charging.
Bosses at 23 companies signed a letter urging Kwarteng to make the “simple, relatively low-cost intervention” as the rise in electricity prices “threatens consumers’ willingness” to switch to EVs.
Drivers who cannot charge at home because they do not have off-street parking pay four times more tax for electricity when using public chargepoints.
VAT on domestic electricity is 5% whereas motorists using on-street chargers pay 20%.
The letter, coordinated by EV campaign group FairCharge, was signed by chargepoint operators such as Ionity, Instavolt and Osprey ahead of Kwarteng’s mini-budget.
It stated: “We write to highlight the severe threat that high and volatile electricity costs are having on the Government’s stated ambitions to decarbonise transport with the switch to electric vehicles and your ambitious plans for the development of a comprehensive public charge point network.”
It went on: “One quick solution, that is totally within your control, is to heed the Fair Charge campaign’s call for an immediate cut in VAT on the electricity delivered by our networks.
“Such a cut would immediately feed through to a reduction in prices. Further, it would show the strength of the Government’s continued commitment to transport decarbonisation.”
Latest figures from the Society of Motor Manufacturers and Traders show the rapid increase in sales of new pure electric cars has slowed in recent months.
The number of registrations during the first three months of the year was 102% more than during the same period in 2021.
At the end of August, the year-to-date increase had fallen to 49%.
Quentin Willson, founder of FairCharge, said the Treasury “needs to act now on EV charging costs”, adding: “This is a critical moment in the transition to electric cars, and the Government must not be allowed to unintentionally sabotage this transition.
“It’s also huge opportunity for this new government to prove its green credentials and show it is serious about net zero.”
RAC spokesman Simon Williams said: “Chargepoint operators have had no choice in recent months but to increase their charges to reflect the enormous increases in the wholesale cost of electricity, and this is something we could well see worsen in the next few months.
“Cutting the 20% VAT rate on public chargers to match the 5% charged on domestic electricity would cost the Government little in the grand scheme of things and is absolutely the right thing to do.
“What’s more, it would be those drivers who depend on the public charging network - including those who can’t charge at home - who would benefit the most, helping to end the current inequity between those with driveways and those without.”
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