Welfare Reforms set out by Duncan Smith

Britain's welfare system is "trapping" poor people in poverty, the work and pensions secretary said as he unveiled plans for far-reaching reforms. Iain Duncan Smith wants to ensure benefit claimants are not made worse off by working and make state support conditional on willingness to work. He said the current benefits system was "broken" and unaffordable.

But shadow work secretary Yvette Cooper claimed the government was planning to cut 80,000 youth jobs.

Mr Duncan Smith, brought back into frontline politics by Prime Minister David Cameron, has spent several years in opposition preparing a blueprint for the future of the welfare state. The former Conservative Party leader is now responsible for pushing the government's Welfare Reform Bill - announced in Tuesday's Queen's Speech - through Parliament over the next few months.

Speaking to welfare experts from the voluntary, private and public sectors on Thursday, he said it was "absurd" that some of the poorest people faced huge penalties for moving from benefits to work. Outlining the scale of the problem, he said almost five million people were on unemployment benefits, 1.4 million of whom had been receiving support for nine or more of the last 10 years. In addition, 1.4 million under-25s were neither working nor in full-time education.

"This picture is set against a backdrop of 13 years of continuously increasing expenditure, which has outstripped inflation," he said. "Worse than the growing expense though, is the fact that the money is not even making the impact we want it to. A system that was originally designed to support the poorest in society is now trapping them in the very condition it was supposed to alleviate."

He added: "We must be here to help people improve their lives, not just park them on long-term benefits. Aspiration, it seems, is in danger of becoming the preserve of the wealthy."

Announcing that everyone on incapacity benefit will be reassessed for their ability to work, he said it was a "tragedy" that people on these benefits for more than two years were more likely to retire or die than get a job. Among other measures, a new Work Programme will be established and older workers will be given assistance to find work immediately rather than having to wait 12 months, as is currently the case. But penalties for benefit claimants who refuse to accept jobs introduced by Labour would be more rigorously enforced.

For Labour, Ms Cooper said tax credits had made many people in low-paid jobs "thousands of pounds better off" but they did not always realise it. While talking about helping people into work, she said the government's plans to cut £6.2bn in spending this year would actually reduce had job chances for young people.

"If you look really at what the Conservatives are proposing, they talk about trying to get more people back into work. In fact, the only thing they have done so far is to cut £300 million from the employment programmes budget - including cutting one of the highest-quality programmes, the Future Jobs Fund - and that means cutting 80,000 youth jobs at a time when unemployment is too high," she told BBC Radio 4's Today programme. She urged the government to continue with the incapacity reforms started by Labour.

As in all policy areas, the government's welfare agenda is having to reflect compromises reached between the Conservatives and the Lib Dems in their coalition agreement. Mr Duncan Smith will chair a new Cabinet Committee, involving Cabinet members from the treasury, Home Office, health, and communities and local government, to tackle the underlying causes of poverty.

In an interview with the Guardian newspaper, he hinted that he was prepared to reach out to sympathetic figures in the Labour Party to try and build a consensus over the reforms. Former Labour cabinet minister John Hutton, who stood down as an MP at the election, said he welcomed some of the government's thinking, saying it was "potentially a very fruitful line of reform". Although Labour had made "significant headway" in making work more affordable and penalising those not willing to accept jobs, there was "room for further improvement".

But he warned Mr Duncan Smith the cost of the plans were likely to mean opposition from the Treasury and there was a real risk that some people would be left worse off. "In simplifying the benefits system which he is right to emphasise, there are going to be winners and losers. How is he going to manage that?"