The New Deal for young people which was launched in April 1998 is a key component of the UK government's "Welfare to work" strategy. It is playing an important role in helping long-term unemployed and economically inactive people move into employment. In early 2000, research on New Deal suggests that generally it has made a good start, with many young unemployed people benefiting from the programme's innovative approach. However, it is clear that the long-term success of New Deal hinges on the economy, the danger remaining that it could be hit in some parts of the country by rising unemployment.
As the Labour government marked its first 1,000 days in office on 26 January 2000, its performance to date has been compared with its election pledges (UK9704125F). One area of apparent success for the government is its New Deal for young people - part of the Welfare to work programme for the long-term jobless. Department for Education and Employment (DfEE) figures show that since its launch in April 1998, 179,000 young people had found jobs by the end of November 1999 through New Deal.
In the first year of New Deal for young people, youth unemployment fell by 40%. A strong economy with overall unemployment falling has undoubtedly helped, but the New Deal programme also seems to be making an impact. Youth unemployment is now the lowest it has been since July 1974, with the number of young people claiming Jobseeker's Allowance (JSA) falling from 119,000 in April 1998 to 70,900 in April 1999.
New Deal is part of the Labour Party's manifesto pledge to create 250,000 jobs for young unemployed people over the current Parliament. It is at the heart of the government's Welfare to work programme, which has the stated aims of giving everyone in need of work the opportunity to work, ensuring that work pays and giving everyone who seeks education and employment the means to advance (UK9707143F).
Key features of New Deal
New Deal programmes are targeted at specific groups of people - 18-25 year olds, older long-term unemployed people, lone parents and people with disabilities. Looking specifically at the New Deal for young people, the government has allocated GBP 2.6 billion over five years to 18-25 year olds who have spent at least six months on JSA. The Employment Service has the lead responsibility for implementation of New Deal, yet it aims to deliver the programme through local partnerships, including local authorities, voluntary organisations, Training and Enterprise Councils, colleges and private training providers.
New Deal begins with the "gateway" - a period of up to four months of personalised help designed to: help with job search activity; enhance basic "job-readiness"; direct to unsubsidised jobs; or plan entry to a job, work experience or education and training placements within New Deal. If young people fail to find an unsubsidised job, they are offered a choice of four programme options:
- six months of subsided employment plus training;
- six months of work experience and training with a voluntary sector organisation;
- six months of work experience and training on an Environment Task Force project; or
- up to one year on a course of full-time education and training.
Those New Dealers still unemployed at the end of this period then enter a follow-through phase offering further advice and support. The main objective of New Deal is to improve young people's employability by improving their skills and so prevent unemployed people becoming detached from the labour force and forming a pool of unemployable people.
Research into the impact of New Deal
The DfEE is funding a programme of independent evaluation and monitoring of New Deal. Whilst it is still early on in the lifetime of New Deal, various reports have been issued, detailing research on outcomes of the programme:
- a report by the Employment Policy Institute (EPI) and the Prince's Trust focuses on New Dealers and employers participating in New Deal, highlighting what is termed the "expectations gap" between their expectations and experiences;
- the Institute for Employment Studies (IES) has produced a summary of progress to date drawing on information from the programme of administrative systems set up by the Employment Service to monitor New Deal and from early results of the Employment Service's evaluation research; and
- the National Centre for Social Research (NCSR) has produced a report on the attitudes of young people on New Deal.
The main findings of these reports are outlined below.
Gateway
An important feature of the "gateway" is the role played by personal advisers. The advisers interview New Deal participants up to seven times within a six-month period, offering information and advice on New Deal options and monitoring their progress. Both the EPI/Prince's Trust and NCSR reports highlight both the success of the role played by personal advisers in the personal relationships built between them and the jobseeker, and the generally favourable perception of personal advisers held by New Deal participants. The few negative comments about advisers concerned their inability to devote enough time to clients, or bottlenecks in getting from the gateway to an option. Bottlenecks usually occur either because the option is not ready for New Dealers or that they were expected to search for work before entering it.
The gateway stage is to be boosted by funding to improve jobseekers' "soft skills". New Deal participants will be given training, ranging from basic literacy and numeracy skills to advice on presentation and interview techniques. This is ostensibly in response to employers' concerns that some New Deal trainees are not sufficiently "job-ready".
The options
Of the New Deal clients who left the gateway, 25% took subsidised jobs with an employer, 50% took the full-time education or training option, 13% took jobs in the voluntary sector and 12% with an Environment Task Force.
The IES study analyses New Dealers' and employers' attitudes to New Deal, reporting that most of the young people have a positive attitude to New Deal and what it is trying to do. The EPI/Prince's Trust report examines New Deal in terms of the "expectations gap" between expectations and experience and reveals that the gap is lowest for those on the employment option. There was, however, an apparent level of dissatisfaction with the types of jobs and the level of training New Dealers were given. Whilst New Deal was introduced with the explicit aim of helping young people to find work and gain additional qualifications, training and skills, it appears that the training provided is generally not of a high quality. Despite employers receiving a GBP 750 training subsidy for each recruit, the EPI study reports on a training gap between that provided for New Dealers and existing staff. Moreover, 21% of the employers studied planned no training at all. The majority of those New Dealers who were working towards qualifications were training for Level 2 National Vocational Qualifications (NVQ).
The full-time education and training option has attracted much higher numbers than expected. The EPI/Prince's Trust report surmises that this is due partly to young people acknowledging that qualifications are needed to secure employment and partly to the inability of some to get a job. The majority of those least qualified are aiming to secure NVQ level 2 qualifications which should enhance most participants' employability. However, this option has proved most attractive to relatively better qualified young people, with the majority of these pursuing a lower-level qualification than already obtained.
The IES report states that the longer a person is unemployed before entering New Deal, the more likely they are to enter a subsidised job and the more likely to enter the voluntary sector or Environment Task Force options. These options were viewed by New Dealers as "make work" schemes, involving short-term jobs and poor-quality training and offering few long-term prospects. These views are generally held on account of the reputations of previous government programmes such as the Youth Training Scheme (YTS) in the 1980s. However, programmes such as that run by the Prince's Trust have received positive comments from both participants and employers.
Commentary
The Trades Union Congress has warned of problems arising from a "spatial mismatch" between participant employers and New Dealers. A 1999 TUC report, Reinforcing the New Deal, argues that while the UK is enjoying a widespread fall in unemployment, it is also suffering a "two-nation" economy. Not only is there higher unemployment in both the north of the country and in the inner cities and older industrial areas, but industry in these areas is feeling the effects of increasing interest rates. The long-term success of New Deal may therefore be hampered by the lack of jobs for young people to progress to in such geographical areas. Despite the success of New Deal hitherto in reducing unemployment figures for young people, the future remains uncertain for participants in areas with low levels of demand for labour. The danger therefore exists that these young people will continue to experience insecure job histories, moving in and out of work, leading to further social exclusion. (Rachael McIlroy, IRRU)