Tories and firms attack Brown's £500m jobless aid

The Prime Minister told an audience of 150 business, union and charity leaders at the Science Museum that the Government would spend an extra £500 million to help those threatened with unemployment.

He predicted that the package - which includes paying firms "golden hellos" of up to £2,500 to employ those who have been on the dole for over six months - would help more than half a million people into jobs or training in the next two years.

Mr Brown pledged that those thrown out of work would not be "abandoned" by ministers. "We estimate that with this additional financial support we will be able to help 500,000 people into work or work-focused training over the next two years," he said.

He also denied the £12 billion VAT cut was not working, pointing out that it was too early to see the expected £275 annual cut in consumers' shopping bills.

But the Tories said that the news of job losses at logistics firm Wincanton, Land of Leather and frozen foods firm Findus overshadowed today's announcements. Shadow work and pensions secretary Chris Grayling said: "The news is a further worrying sign that the Government's policies on the recession just aren't working. What the Government now needs to do is adopt our plans for a National Loan Guarantee Scheme to help existing businesses and to protect jobs."

David Frost, director-general of the British Chambers of Commerce, warned that the latest Government proposals would have only a limited impact.

"With unemployment rising fast and projected to rise by over a million, from what I am seeing companies are not recruiting so I am not sure at this stage in the economic cycle what the offer of a £2,500 grant to take on people is going to do," he told BBC Radio 4's Today programme. "We have got to focus on retaining those skills within the business because once they've gone they've gone."

Steve Radley, chief economist at the Engineering Employers' Federation, said: "The main priority for manufacturers is to keep the skilled workforce they already have and maintain cash flow."

John Wright, chairman of the Federation of Small Businesses, said 86 small firms were going out of business every day, highlighting the urgent need for extra help such as reductions in regulations and cuts in payroll taxes.