Job scheme has 'paid for itself

1st December 2000 at 00:00
Simon Midgley assesses opinions on how successful the New Deal programme has been and talks to one beneficiary.

THE New Deal programme aimed at getting long-term unemployed young people into sustainable employment has, according to the Government, been one of its outstanding successes.

Labour's manifesto commitment was to get a quarter of a million young people off benefit and into work by the end of this Parliament.

At the end of July, it was just 13,000 people short of achieving this target, with 237,040 young people in employment. Of these, 180,600 were in sustained jobs - that is, in jobs that have lasted more than 13 weeks - and 56,440 in jobs lasting less than 13 weeks. This week, the Government was expected to publish figures showing that the manifesto target had been exceeded.

Independent research findings from the National Institute of Economic and Social Research (NIESR) support the view that the New Deal programme has indeed been an outstanding success and a recent Industrial Society report praises the programme for reducing long-term youth unemployment by 70 per cent since the election. This compares with a 32 per cent fall in total unemployment.

When the New Deal began, the report - A Good Deal Better by Gill Sargeant and Philip Whiteley - notes that 50,000 18 to 24-year-olds had been unemployed for more than six months. This figure has now fallen to 6,000.

In July, the NIESR said that had it not been for the New Deal long-term youth unemployment would be roughly twice as high. It also added that an estimated 160,000 young people had spent less time on benefit than they would otherwise have done. This, NIESR economists estimated, was the equivalent of creating 13,000 more jobs.

Such job creation, they added, meant in effect that the New Deal programme was very close to paying for itself. The Industrial Society (IS) report described this as representing an outstanding return on investment.

Will Hutton, IS chief executive, said that the programme, which was financed by the windfall profits' tax on utilities, has succeeded in virtually eliminating long-term unemployment among 18 to 24-year-olds.

While he considered that the programme had been value for money, it remains an open question whether the same result could have been achieved less expensively.

The cost of creating each new job has been estimated to be anything from pound;4,000 (the Government's own statistic) to pound;37,700 (a Centre for Employment Studies figure).

The NIESR research added that only one-fifth of young people involved in the New Deal were in Government-subsidised jobs, while four- fifths were in non-subsidised jobs.

Hutton and Sargeant say that because employers are prepared to hire young people without a subsidy in a booming economy, this employment subsidy money should be diverted to developing the role of personal advisers.

The idea is to develop a new cadre of high-status, public service advisers with individual caseloads to advise clients over an extended period of time on how they can find their way back into sustained employment.

This would neatly tie in with the plan to deploy personal advisers via the Connexions Service to advise 14 to 18-year-olds on their learning and career choices.

Not all commentators consider the New Deal programme to have been such a success, however. In a study of the geographical impact of the New Deal, Ron Martin and Peter Sunley, from Cambridge and Edinburgh universities respectively, conclude that the effectiveness of the programme varies according to a North-South divide.

Where there are new jobs in the dynamic South, there are high rates of job entry and retention. However, in more northern and peripheral labour markets, the New Deal has been less successfulbecause far fewer employment opportunities are being created.

They say that sustained employment growth is the key to widening the opportunities available to the unemployed and working poor. In depressed regional and local labour markets, measures need to be taken to create jobs.

Jamie Peck, professor of geography at the University of Wisconsin and formerly of Manchester University, says that many of the outcomes of the New Deal programme would have been achieved in any event because of the booming economy and the expansion of the labour market.

"It is very difficult to separate the effects of the programme from the following wind of the economy," he said. The programme has also, he added, suffered from a very high drop-out rate.

Paul Convery, director of the Unemployment Unit, said that personal advisers need to develop a better understanding of exactly what employers are looking for from their employees.

He would also like to see the four-pathway New Deal programme allowing New Dealers an individually- customised service.

Mr Hutton believes that the next stage of the programme should be to help the 2.6m people over the age of 50 back into jobs, and to concentrate on areas with high levels of unemployment.


INITIALLY, the New Deal was intended to focus on all 18 to 24-year-olds registered as unemployed for more than six months.

However, it has since been extended to other unemployed groups including long-term unemployed adults aged 25 and over, out-of-work lone parents, people on disability benefit, out-of-work partners of the unemployed and the unemployed and economically inactive over-50s.

The New Deal consists of a gateway stage in which people are offered guidance and advice on finding jobs.

If, after four months, they have not found a job, they can choose one of four options: a subsidised job with an employer for up to six months; full-time education and training for up to a year; voluntary sector work for up to six months; or a place on an environmental task force for up to six months.

Torquay to Top of the Pops

SOPHIE Penwill was signing on for unemployment benefit for nearly three years until she entered the New Deal programme. She aspired to working in the media but opportunities to break into this field in the South-west were few and far between.

Ms Penwill, now 22, from Torquay in Devon, had left school at 16 with four GCSEs. She later acquired two A-levels - in media studies and in photography - at South Devon College. These qualifications were insufficient to find her a job.

On joining the New Deal programme, Ms Penwill was guided into the voluntary section option. She landed a placement with Community Service Volunteers (CSV) as a radio production trainee in Exeter.

Under guidance from CSV trainers and BBC Radio Devon staff, she learned how to undertake research, conduct interviews and edit tape. She also managed to acquire some television experience with the regional television programme, Spotlight on Westminster.

Ms Penwill also gained an NVQ2 in information technology and received continuing career guidance.

"I would not have found out about this placement with CSV if it had not been for the New Deal," she said. After 18 months with CSV, in June Ms Penwill landed a two-year contract at BBC Television Centre as an assistant camera operator.

"CSV's training provided me with every skill under the sun, be they technical skills, communication skills or IT skills," she said. "I learned something new every day, and had something real to show my future employers about what I had been doing. I gained the confidence, through doing local vox-pops out on the streets, and now find myself working on Eastenders and Top of the Pops."

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