Recruitment to the Government's training and enterprise programmes dropped sharply over the past 12 months, fuelling speculation that Chancellor Kenneth Clarke will cut their money in order to fund future tax cuts.
Official statistics from the Department for Education and Employment show that the number of new recruits on Training for Work in Britain for the three months to July fell by 24 per cent to 52,900 this year.
Numbers on the scheme as a whole fell sharply to 30 per cent over the same period. New recruits to Youth Training fell 8 per cent to 66,900, while numbers on the scheme as a whole fell by 4 per cent.
George Binette, research associate for the independent consultants, Industrial Relations Services, said: "The official satistics highlight the drastic fall in participants since the cut of approximately Pounds 115 million in the November 1994 budget and the switch to an output-related funding regime in England and Wales."
He said that while causes of the decline were "debatable" changes in funding must be considered. In Scotland, which has had a more liberal funding regime, recruitment has either stayed constant or only fallen slightly.
Research published last week by IRS should give ministers food for thought. Increasingly, the efforts of politicians have focused on the long-term unemployed through three main programmes: TfW, work trials and the job interview guarantee. A total of Pounds 610 million is to be spent to fund an estimated 600,000 places.
But the IRS research showed that two-thirds of employers failed to take advantage of the programmes. George Binette said it was most worrying that "almost a quarter of employers are not even aware of their existence."
The figures caused surprise since the schemes allow employers to save between Pounds 10 and Pounds 1,000 in recruitment costs.
But Mr Binette's concern was that "by acting as an indirect recruitment subsidy, schemes could be papering over the cracks and masking the real reasons for recruitment problems" such as the backlash of deregulation, privatisation and relative deterioration in pay and conditions.
The IRS survey was not specifically designed to find out whether employers' ignorance of the schemes was due to poor marketing. But since those who took part in the schemes were satisfied, it suggests ministers should review their strategies.
The research showed that out of 24 employers surveyed who used the schemes, five said workers recruited through the scheme had a better attitude to work and 13 reported no difference in attitude.
"This finding might partly undermine any rational basis for assuming that those who are long-term unemployed are somehow unsuitable for employment, " Mr Binette said.