Long-term unemployment is set to rocket, with more than 300,000 people expected to join the ranks of those out of work for longer than a year, says the Department for Work and Pensions.

The rise is so dramatic that officials have admitted that bidders for a flagship new £1.2bn welfare-to-work programme will have to revise radically their tenders for the contracts. The admission is a stark recognition by ministers of how rapidly the jobs market has deteriorated.