The work and pensions secretary, Alistair Darling, has announced plans for a £40 million programme of compulsory work for the long-term unemployed.

Making a statement to MPs in the Commons on Wednesday, Darling said those people out of work for long periods of time needed more intensive help to get back into the jobs market.

"We will guarantee those people who qualify a full time job, lasting up to a year, and paid at the national minimum wage," he said. "In return, it is not unreasonable to require people to take up that opportunity."

Those taking part in the programme are likely to be offered a choice of jobs and will be entitled to full in-work benefits. However, if they turn down all job offers they will not be permitted to remain on benefits.

The new plan will be introduced in Sheffield, Cardiff, Oldham, Sunderland, Lambeth and East Ayrshire in April next year, and will be piloted in 14 other areas later in the year.

"These are jobs we will pay for, working in partnership with employers, local authorities and organisations with experience in offering intermediate labour market opportunities," said Darling.

The programme will cost £40 million a year to help 5000 people back into the labour market.

Rapid response

"Where people lose their jobs, the evidence shows that the quicker we intervene, the quicker people will get back into work," said Darling.

He said he would do more to match those seeking work with the vacancies that are available, and announced an additional £6 million over the next two years to the Rapid Response Service which helps those recently made redundant.

Benefits

The work and pensions secretary confirmed that national insurance benefits and most income-related benefits will rise by 1.7 per cent.

Maternity Allowance and statutory maternity pay is to rise from £62.20 to £75.00 next April - described by Darling as "the largest increase in maternity benefit since 1985". In 2003 the payments will rise again to £100 per week. The Sure Start maternity grant will rise from £300 to £500 next year, he told MPs.

The Disabled Child Premium for parents bringing up a disabled child is to rise by £5 a week on top of the normal uprating, to a total of £35.50. It will rise by a further £5 above inflation in 2003, benefiting around 8000 children.

Changes to the Independent Living fund will also see some families gaining by £130 a week.

Pensions

The new Pension Credit will bring pensioners' entitlement to a minimum of £100 per week in 2003, or £154 for couples. It will rise in line with earnings for the rest of the parliament. A rule which excludes pensioners with savings of £12,000 or more from any help will be abolished.

"On average, pensioners will gain £400 a year, with some getting up to £1000 a year," said Darling.

The Minimum Income Guarantee for pensioners is to rise to £98.15 a week next April, while the basic state pension will rise by £3 for single pensioners and £4.80 for married couples.