£2.5bn to cut dole queues as unemployment hits new high

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As unemployment soared above the level when Labour came to power, the Chancellor threw billions of pounds at getting people back into work.

Making the young a priority, he said: "I'm determined that we do more to protect young people from the damaging impact of long-term unemployment. The alternative is to return to the days when a whole generation of young people found themselves abandoned to a future on the scrap heap. We will not repeat that mistake."

However, figures showed the number looking for work jumped by 177,000 in the three months to February to reach 2.1 million, the biggest quarterly rise since 1991. The total is the worst since February 1997. A million more people are expected to be unemployed by the end of 2010.

Long-term unemployment rose by 49,000 to 481,000, and the jobless total among 18 to 24-year-olds was 631,000, up by 17,000. In London, those out of work rose by 22,000 to 320,000. The number claiming Jobseeker's Allowance increased for the 13th month in a row in March, up by 73,700 to 1.46 million, the highest total since September 1997.

In a "Budget for jobs", Mr Darling unveiled a programme of at least £2.5 billion. Up to 250,000 people under 25 who have been on the dole for a year will be offered employment or training. Town halls will offer low-skill jobs cleaning derelict land, repairing roads and making homes more energy efficient.

Councils are expected to be offered up to £6,000 per worker to set up job projects. Private firms in such sectors as health and social care are expected to be given one-off payments to employ people out of work. The Chancellor also announced a further £1.7 billion for the Jobcentre Plus network and New Deal.

More than £900 million extra funding will be used to boost skills and training and allow 16 and 17-year-olds to stay on in further education. Shadow work secretary Theresa May accused ministers of sleepwalking through the unemployment crisis.