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Miliband: young unemployed must train or lose benefits

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Ed Miliband is set to announce plans to end benefits for unemployed 18-21-year-olds and replace them with a means-tested allowance reliant on them taking training courses.

The Labour leader will outline the policy in a speech later today at think-tank IPPR.

It would mean around 100,000 young jobseekers would lose their current Jobseeker's Allowance. He will claim it is a response to an IPPR poll that found 78% of people see the current benefit system as unfair to working people. 

The 'Youth Allowance' will be available to young people who undertake vocational training and will be £57 a week, the same rate as the current Jobseeker's Allowance (JSA) for under-25s. 

"Britain's young people who do not have the skills they need for work should be in training, not on benefits," he is due to say. "We must reshape our social security system so that it does everything it can to get people into decent jobs and the world of work, not a life on benefits."

Another announcement the opposition leader is expected to make is to increase JSA for from £72 per week to £100, for those who are over 25 and were continuously in work for the five years before becoming unemployed. 

Conservative party co-chairman Grant Shapps said the proposals are "a recipe for more spending". 

"That's exactly how Labour got us into a mess in the first place," he said. "Ed Miliband has no economic plan. All he offers is more of the same old Labour, and Britain would have a less secure future as a result."

No pay increases until unemployment at 5%

In a separate statement, Bank of England monetary policy adviser Martin Weale has warned that average salaries in the UK will not significantly increase until unemployment drops below 5%. 

The current rate is 6.6%, a fall from 7.8% this time last year. However, in a speech to the Confederation of British Industry conference, Weale warned that at current unemployment rates, employers will not see the need to increase reward to attract workers, even with a perceived skills shortage. 

"If I put all of the weakness in wages over the past year down to the unemployment gap being larger than we currently believe, this points to extra spare capacity of over half a percent of GDP," he said. "This is consistent with a medium-term unemployment rate closer to 5% than our current range of 6% to 6.5%."