Designing the New Deal

Barely a month has passed since the Government changed. But many insiders say it feels like the "New Deal" has almost been implemented. Nothing could be further from the truth. Although Ministers have piled a frenetic workload on their officials, the basic design of the New Deal is not yet set in stone. The trick for Ďoutsidersí is to differentiate between the non-negotiable elements of New Deal and those parts which are clearly open to debate.

So what are the fixed points? Obviously, the manifesto items - there must be 4 options for those aged 18-24 unemployed for more than 6 months. These are also quite prescriptive: subsidised jobs and the benefit-plus options of work experience in voluntary organisations, the environmental taskforce or a place in full-time education. Whilst the "welfare-to-work" agenda is very broad indeed - and will take some time to develop - the New Deal is quite precise and it includes Labourís election promise to also offer subsidised jobs to those aged 25+ out of work for more than 2 years.

What else is non negotiable? All of the options will last for at least 6 months. High quality training (at least 1 day per week) must built-in to each of the options. There must also be rapid delivery of the programme and, although local partnerships are a mandatory part of the delivery mechanism, the Employment Service will be the "lead" agency. The programme will have a compulsion element too - as the Prime Minister reiterated in his "Aylesbury" speech (the giant South London housing estate of that name where he announced his aim to create an "alliance between the haves and the have-nots"). Mr Blair again said that there will be no "fifth option of an inactive life on benefit" because where "opportunitites are given for real jobs and skills, there should be a reciprocal duty to take them up". Lastly, the New Deal will be financed from the tax on windfall profits and, as it is commonly expected to yield a one-off sum of £3bn, this probably means the New Deal budget is about £1bn per year.

So these are the fixed items. It needs a political frame of mind to appreciate that Ministers will not alter any of these - even if there are good arguments to do so. Any revisions would leave the Government open to the politically unpalateable accusation of "a rethink".

But - if it fits within these fixed points - everything else is negotiable. And the Government has broadcast the message that it has a genuinely open mind about how the New Deal could be implemented - and by whom.

So, could voluntary organisations qualify as an employer in their own right and draw down the employer subsidy to create real paid work in their, growing, sector? Might flexibility allow a self-employment subsidy to be introduced? Could other additional options be open to the younger unemployed - like continued participation on ESF funded programmes or in part-time study? Might a "pre-vocational" programme be developed on the front-end of New Deal options to make sure that disadvantaged young people are included? Or should a training component be bolted on at the end of a New Deal option - because 26 days (1 day per week for 6 months) of vocational training may not be sufficient to acheive a qualification. Should local delivery partnerships, as a matter of course, include local government, business interests, TECs, voluntary agencies and colleges? To make an effective link with other regeneration strategies, can the "windfall cash" be mixed and matched with other funding sources from Europe, local government, the private sector or from other mainstream programmes like TfW and YT? Will minimum wage standards apply to the subsidised jobs? And could the benefit-plus options turn into waged opportunities if extra money is found by providers?

Although sanctions appear to be non-negotiable, there are grounds for discussion. But make no mistake, we think that a blanket approach to sanctions is a serious error. It could undermine the entire programme - and it is too blunt an instrument for catching any real dole-dodgers.

The "New Labour" project of re-balancing rights and responsibilities may be appealling in the abstract. But, in practice, it could create a perception of the New Deal that there is something wrong with it. From the very start, claimants might be suspicious and resistant - even if their fears are unjustified. And employers - whose enthusiastic participation is absolutley essential - will not fill vacancies with what they perceive to be reluctant recruits. This would be perverse because young people will be queuing up for the employer option - at the very least, it pays a regular wage where the other 3 options do not.

But we have more than simple speculation to test the impact of compulsion. Experience tells us that previous "guarantees" - backed up with benefit-withdrawl - do not work. The Youth Training Guarantee has consistently failed more than 100,000 young people at any one time and has left thousands of kids begging on the streets - or worse. And previous compulsory programmes, like Jobplan Workshop, have a sorry track record. A large scale evaluation for the DfEE - buried hastily - showed that claimants had two and a half times more chance of getting into work by not going through JPW!

But, if the new Government insists on a compulsion regime, some key safeguards are needed. A new guidance agency should be created which is quite independent of the Employment Service and its "bad cop" role. A sanctions regime should not be implemented at all until the New Deal is runnning and proving its high quality standard. Claimants should enjoy an absolute guarantee of free choice between the 4 options. Drop-out should be tolerated by re-routing quitters back into the guidance "loop" as many will have valid quality-related reasons - their employer was not up to scratch, the training was inadaquate or they made the wrong choice in the first place. And an intensive "case-management" approach would be far better than instant sanctions.

As the "man from the Pru", Sir Peter Davies, takes up the chair of the New Deal Taskforce, he and Ministers would benefit from some careful thoughts about compulsion potentially wrecking the most ambitous programme to reduce unemployment since the days of Clem Attlee.