Brown to spend on jobs as layoffs mount

LONDON Mon Jan 12, 2009 5:37pm GMT

1 of 3. Britain's Prime Minister Gordon Brown (L) and Business Secretary Peter Mandelson listen to questions at an Employment Summit in central London January 12, 2009.

Credit: Reuters/Toby Melville

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LONDON (Reuters) - Prime Minister Gordon Brown pledged on Monday to spend 500 million pounds to help the long-term unemployed as layoffs piled up in the worst downturn in almost two decades.

Unemployment in Britain is already at a decade-high and set to climb further with the country going into its first recession since the early 1990s. Some experts predict the jobless total could hit 3 million.

Furniture retailer Land of Leather was the latest group to confirm it had been placed into administration, putting its 850 staff at risk, while tableware maker Waterford Wedgwood said it would cut nearly 400 positions.

Construction equipment maker JCB said it was cutting 684 jobs in England and Wales because of the credit crunch.

Under plans announced on Monday, companies will get 2,500 pounds for recruiting people who have been unemployed for more than six months. The money was already allocated as part of the government's 20 billion pound fiscal stimulus package announced in November.

"We know that any action we take has costs. But the biggest cost of all would be the cost of doing nothing," Brown, who must fight an election in less than 18 months, told industry leaders at a special summit to discuss jobs.

"That would mean lasting damage to our economy and a bigger bill to pay in the future. This will not happen on my watch."

Brown said the government would help employers who took on new staff, help young people with new apprenticeships and offer aid to people starting their own businesses.

He promised plans for investment in environment, technology and infrastructure and said there were some 500,000 vacancies in the economy -- the trick was to get people into them.

Wm Morrison Supermarket bucked the bad news trend on Monday, saying it would create 5,000 jobs this year.

GETTING CREDIT

Brown also said further measures to increase bank lending for small businesses would be announced this week.

"There are a lot of small businesses that are going to the wall and we must stop that," said John Wright, national chairman of the Federation of Small Businesses. "When we do come out of this we will need those...businesses to stimulate the economy."

The Bank of England cut interest rates to a record low of 1.5 percent last week and is expected to reduce them again next month, but banks, squeezed by a global credit crunch, remain reluctant to lend, hurting companies and consumers.

"I hope the measures announced this morning will make a real difference. There are some serious resources being committed to strengthen employment and training," Brendan Barber, general secretary of the Trades Union Congress told Reuters.

"But there are other things the government has to do too, including getting credit moving around the economy."

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