A Conservative government would privatise Jobcentres, handing contracts to get the unemployed into work to the private and voluntary sector, according to David Willets, shadow work and pensions secretary.

The move, affecting 80,000 Jobcentre staff, would release more than ?1bn a year, according to David James, who heads the Tory party's efficiency review. Mr Willetts said that the cash would pay for rises in the basic state pension.