A £1bn 1980s-style community work programme to take young people off the dole and a watered-down plan to help carworkers will be announced by Alistair Darling as he sets out what allies claim will be a “Budget for jobs”.

The chancellor will target scant resources on job schemes for under-25s in an attempt to prevent a generation ending up “on the scrapheap” as the recession tightens its grip.