Liam Byrne MP

Labour is considering radical reforms to the welfare system that would directly link benefits to contributions.

Writing in the Observer, Shadow Work and Pensions Secretary Liam Byrne commits to a return to the "old principle of contribution" championed by William Beveridge.

"There are lots of people right now who feel they pay an awful lot more in than they ever get back," Byrne writes. "That should change."

Labour deputy leader Harriet Harman this morning backed the plans, and said it was understandable that people in work felt "very resentful" towards those deemed to be "not pulling their weight".

“He [Byrne] is talking about three principles which we’re working on up to the general election. One is that work should pay, secondly, there should be an obligation to take work, and thirdly that there should be support through a contributory principle for people putting into the system as well as taking out," Ms Harman told the Andrew Marr Show.

"This is a discussion which is underway. And it will come to fruition in what we put forward for our manifesto."

But Ms Harman also criticised the Government for using "divisive" language and suggesting those out of work were "scroungers".

"Instead of just being divisive about it, which is what the Government’s doing, they should actually be supporting the economy into growth. And also having a proper work programme, with a jobs guarantee, which is what we have been suggesting."

Shadow Work and Pensions Secretary Liam Byrne has said the Government's work programme is in 'chaos', after forecasts of the number of people eligible for the programme fell by almost half.

The Government had predicted in December that 2.6m people would got through its work programme between now and 2015-16, but in its May forecast this number fell by 43% to 1.4m.

Mr Byrne today said: "Chaos is engulfing the government's flagship back-to-work scheme. Unemployment is at a 16-year high and yet welfare to work now appears to be in the hands of the Keystone Cops."

"Ministers have got into one almighty mess over their back-to-work programme and the result is there for all to see: a generation out of work and a government department totally unable to cope."

A spokesperson for the Department of Work and Pensions said the figures were "misleading" as claimaints of Employment Support Allowance were not included in the newer figures.

Labour has said it would withdraw benefits from unemployed people for six months if they refused a government-provided job following completion of a placement on the work programme. The proposals, set out by Shadow Work and Pensions Secretary Liam Byrne yesterday, mark a hardening of the party's position on welfare. Mr Byrne insisted that "the right to work must carry with it a responsibility to work".