The Employment Service has been caught cheating again. Before the election, Labour’s employment team blew the whistle on Jobcentres fiddling their job placement figures in order to meet the last Government’s targets. An avalanche of colourful stories emerged: claimants sent to Police stations to fill-in for identity line-ups, musicians playing occassional gigs, even Jobcentre staff themselves getting an evening job - all these counted as successful placings by the Employment Service. This was target culture gone crazy.

Now they are at it again. Before the election, this was good political knockabout although rather serious for unemployed people - after all, claimants ultimately suffer when the Employment Service camouflages its inadaquate job filling by logging phantom placements.

The Employment Service is an arms-length Executive Agency delivering services under the terms of an Annual Performance Agreement. This specifies target outcomes which include targets for the number of people to be turned away at the front door (10%) and the numbers of claimants to be referred to adjudication (145,000). These are targets that are usually overacheived. The APA also includes goals for job placement but, last year, the ES undershot its target to place 1,970,000 unemployed people into work by 285,000. Last year, the Jobcentres failed to meet their target for placing longer term (6 months+) unemployed people too. Against a target of 29.5 % of all unemployed placings to be long-term unemployed, they only achieved 24.3%.

Hence the sudden frenzy to meet their target by holding vacancies back for 48 hours before making them available to all other jobseekers. Those two days are a significant delay - our analysis shows that the typical Jobcentre notified vacancy is filled in less than a week.

On the face of it, a 48 hour head-start sounds like a positive thing to help overcome the discrimination experienced by the longer term jobless. After all, the long term unemployed are always last-in-the queue, so why not help them jump the queue? However, the 6 month-plus group of unemployed are actually the majority of claimants (54% in fact) so this is not an initiative that carefully targets the most severely disadvantaged.

Instead, the unemployed will be worse off because employers will stop using Jobcentres. Many bosses hold prejudices about the long term unemployed which, although misguided, affect their recruitment patterns - they doubt the readiness, calibre and ability of people who have been jobless for some time - to recognise this as a fact does not necessarily condone it. If the Employment Service surreptiously holds back jobs, it will not offer the comprehensive service that it promises - broking vacancies for all employers and all jobseekers (be they unemployed, new entrants or jobchangers). So employers will stop notifying their vacancies and Jobcentres will get another twist on a downward spiral that is rapidly converting them into a backwater of broking last-resort jobs to the unemployed.

The new Government has a strategy for the Employment Service which is quite different to this. They plan reforms which will open up Jobcentre services to more people not less (lone parents for example) and which reverses the Conservatives’ approach which slowly abandoned the role of a comprehensive public employment service.

So what is going on? The new Ministers are about to review the Annual Performance Agreement and revise its targets, but inevitably this takes time. Meanwhile, the previous Government’s targets remain and the Employment Service management is working towards them. Indeed the ES Chief Executive has tenuously interpreted the new Secretary of State’s priorities to claim that "he is expecting us to attach key importance to our APA targets".

The Government is also considering a very important new role for the Employment Service - New Deal. As early as May 3rd, David Blunkett said that the Employment Service will "be the lead agency for coordinating the delivery of our new programmes" and will have "a new priority for planning and implementing our proposals". It is not yet clear how Ministers see the Employment Service taking this key role and there is a lot of subterranean politicking between two distinctively different models for delivering New Deal.

The first (favoured by TECs, Local Authorities and voluntary organisations) is a local partnership model in which the Employment Service at a regional level has responsibility for strategy, financial control and monitoring but devolves delivery, under contract, to local partnerships (which the ES also participates in). The second is more heavy handed with the Employment Service operating a "command and control" style of direct contracting with employers, charities, colleges and other providers - a model based on the way Community Action and Project Work have been administered.

The latest episode of target-cheating provides two instructive lessons. Firstly, when the Employment Service is given a major new task, it skews the remainder of its operations. The undershoot on job placements last year was almost certainly caused by the disruption of JSA. Behind closed doors, the Employment Service already says it needs 600 extra staff to implement New Deal but David Blunkett says the Service must "live within existing budgets", so something may have to give.

The second question is even more fundamental. As lead agency, is the Employment Service "fit for purpose"? Yes and no. Certainly, its proven relationship with employers will be vital in delivering New Deal’s employer subsidy option. Although it is run at arms-length, the ES also offers Ministers much more direct control over the programme than if it is delivered in a more devolved and locally rooted way. But the ES counselling and guidance functions need to be divorced from benefit policing and placed in a new, independent "Gateway" agency offering impartial advice to New Deal participants. The Employment Service needs to find extra funds to do this well. We suggest they simply wind-down the £150m planned expenditure on the Employment Services’s pointless, compulsory, short schemes inherited from the last Government.

The New Deal puts this all in a new light. Employer confidence is fundamental to the New Deal’s success. The achievements of Gordon Brown and David Blunkett to bring blue-chip business leaders on board could be undermined if employers question the Employment Service’s ability to administer the New Deal or have doubts raised by the lack of transparency in their vacancy broking.