THE BRITISH Labour Party unveiled its plans yesterday to revolutionise the welfare state by giving people a "hand up, not just a handout." However, the plan exposed lingering divisions within the party over financing the policy.
Launching the plans at a Westminster press conference, the Shadow Social Security Secretary, Mr Chris Smith, admitted that the policy would cost an estimated £200 million.
However, he said that this would be offset by saving £1 billion through reducing fraud, which in turn should benefit taxpayers.
"The benefit system should be about giving people a hand up, not just a hand out. The DSS should be helping people into jobs, not just dishing out Giros", he said.
However, Mr Smith refused to state whether a Labour government would extend the current six month Jobseekers' Allowance to a full year, despite his own personal preference and the increasing pressure from the left wing in the Labour Party to such a commitment.
It is understood that the Labour Party leader, Mr Tony Blair, and the Shadow Chancellor, Mr Gordon Brown, are determined not to succumb to the pressure, which would add an estimated extra £200 million to the welfare state bill.
"Gordon Brown is absolutely determined to ensure we don't spend extra money. He's right in doing that. We are saying that the initial start up costs of what we propose, which we don't anticipate being very much, will come from the savings we are going to make in the battle against fraud", Mr Smith added.
Under the proposals, Labour would introduce a more flexible system tailored to individuals needs, encourage volunteer work and education courses, help with keeping jobs, budgeting loans and establishing a network of One Stop Shops for benefits and employment advice.
Mr Smith also refused to commit a Labour government to introduce a minimum wage in its first year of office.
"We are determined to make good progress in bringing in a minimum wage when we get into government. But it would be foolish at this stage to put any exact number of months on it", Mr Smith added.
However, the Social Security Secretary, Mr Peter Lilley denounced the policies, predicting that they will "destroy" up to a million jobs and lead to higher taxes.
"Labour's announcement shows that they remain incompetent, dangerous and extravagant policy makers. Not only would their policies keep people out of work but they would cost billions of extra pounds", he said.
"Fewer working people would pay higher taxes to keep more people on the dole", Mr Lilley claimed.