Chancellor Kwasi Kwarteng will announce measures on Friday to pressure more workers claiming Universal Credit to increase their hours or face a cut in benefits.
The move is part of the new Liz Truss administration’s drive to increase size British workforce at a time of historically low levels of unemployment.
Truss told a meeting of US business leaders in New York this week that Britain had a problem with economic inactivity and would introduce measures to get people into jobs.
QuarterlyThe mini-budget on Friday will announce changes to the welfare system aimed at boosting people’s earnings by putting pressure on them to work longer hours or find new jobs.
The chancellor will also bill the move as part of a raft of measures — including tax cuts — aimed at boosting Britain’s growth rate to the 2.5 percent average before the financial crash.
Kwarteng will announce changes to Universal Credit which will require benefit claimants to work up to 15 hours a week on the National Living Wage to meet regularly with a work coach and take active steps to increase their earnings.
This is an increase on the current 12-hour threshold and will put an additional 120,000 benefit claimants into “intensive job-seeking mode”. Benefits may be withdrawn from those who do not comply.
The UK has more than 1.2 million job vacancies. Workers subject to the new rules are expected to apply for jobs, attend interviews or increase their hours.
Kwarteng will say eligible claimants over the age of 50, including new claimants and the long-term unemployed, will also receive additional support from job coaches.
Growing economic inactivity among the over-50s is contributing to a shortage in the labor market, a phenomenon that has become more noticeable since the coronavirus pandemic.
Kwarteng believes this causes higher inflation and limits growth. The Treasury claimed on Wednesday that a return to pre-pandemic activity rates among the over-50s could boost GDP by up to 1 percentage point.
Kwarteng said: “Although unemployment is at its lowest rate in almost 50 years, the large number of vacancies that still exist and inactivity in the labor market are limiting economic growth.”
Truss said in New York that she wants more economically inactive people “to go into work with a tight labor market and get the right skills.”