UK unveils £500 million job rescue plan amid losses

British Prime Minister Gordon Brown has unveiled a £500-million job rescue plan after the UK economy registered its biggest decline since WWII forcing company after company to shed jobs as they falter because of the non-availability of credit.

Despite the infusion of taxpayers money to recapitalise their balance sheets, banks have been hesitant to lend money during the current economic slowdown.

Speaking to an audience of business houses, union and charity leaders at the Science Museum in London, Brown told that the government would spend £500 million to help those whose jobs are on the line.

The £500-million rescue package called ''golden hellos'' involves companies receiving a subsidy of £2,500 for taking on an unemployed person who has been without a job for over six months and training him / her.

Brown says this scheme would help more than half a million people get jobs or work-focused training in the next two years.

Unemployed people who want to start their own business will be given extra funding for training andalso government funding for the new start up venture for the first months of operations to help through the difficult start up period.

The government is planning added measures later this week on new loan guarantee scheme for small businesses.

Since 70 per cent of people who have lost their jobs find employment within the first six months, the government is targeting people who have been out of work for more than six months, as researchers feel that the chances of someone out of work for more than six months finding a job is difficult as demoralisation and sometimes health problems and depression set in.

Britain has 726,000 people who have been out of work for more than six months and analysts feel that this figure would rise to 1 million in the coming months. The government will find it extremely difficult to train the nearly 136,000 people in the age group of 50-55 who have been out of work for more than six months as experts believe that this age group is often the most difficult to retrain.

At last count, Britain had 2.8 million people unemployed and some economists feel that the unemployment figure could touch the 3 million mark by the end of this year.

Last week, skills secretary John Denham had announced new plans for increasing apprenticeship by 35,000 as well as internships for students who are unable to find jobs.

David Frost, the director-general of the British Chambers of Commerce, speaking on BBC Radio 4's Today programme, warned that the latest government scheme would have very little 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, we have got to focus on retaining those skills within the business because once they've gone they've gone."

Even as the British Prime Minister announced his job rescue plan, a wave of job losses hit the British economy as people lost their jobs as once reputed employers like Woolworths and Zavvi had to find buyers.

Many firms are up in arms as banks refuse to lend and have warned the government that the bank bailout has made no difference to the lending scene and the country is facing an unprecedented situation.

Kent-based furniture retailer Land Of Leather, and frozen food maker Findus called in the administrators as they found it impossible to get credit.

Land Of Leather's administrators, Deloitte, said that the company has 109 stores around the country, including 13 in London and employs 940 people.

More than 400 jobs are under the axe at Newcastle Production, which runs Findus Food factory in Longbenton as the food company has gone into administration because it had major cash flow problems.

Deloitte is also the administrator for Waterford Wedgwood, the collapsed classic China and crystal maker, with around 400 employees.

Construction machinery firm JCB is cutting 684 jobs and blamed the banks for not making credit available to buy machines citing low confidence in the construction industry.

Last year, employees at JCB had voted to reduce their hours in a bid to save jobs, a move that the company says has saved over 300 jobs.

Book retailer Waterstone's, who has a chain of 303 bookstores and employs 4,500 in the UK, said that it will slash nearly 200 jobs to save on costs.

Haulage firm Wincaton is closing its sites in Manchester and Gloucester, which will result in 865 jobs being shed.

Christie's said it planning a reorganisation which will include staff reductions but has not confirmed how many jobs is at stake. Christie's employs 2,100 globally.

Service industries in the UK also felt a sharp decline in business action during December, as staff lay-offs reached a record pace.

Much of the sector's shedding jobs have come in Credit Suisse, HSBC and Goldman Sachs, all who have announced cuts recently.