Designing the rest of New Deal

With only a few weeks left until the New Deal starts in its 12 pathfinder areas, attention will soon turn to the next phases of the New Deal.

Far too many people think that "welfare to work" and "New Deal" are simply about 18 to 24 year olds. Although, the 4th item on Labourís famous election pledge card was to to help "250,000 young people off benefit and into work", its manifesto commitments go much wider. Welfare-to-work is a much more ambitious project and the first of the New Deal programmes needs to be seen in a more complete light. After all, the new Governmentís approach to social exclusion specifically pinpoints the need to integrate the myriad of initiatives across many Departments.

Soon, Ministers, officials and the many partner organisations involved in New Deal will have to start to plan the programme for those aged 25+ unemployed for over 2 years. So far, only the bare outlines exist. It will start nationwide in June 1998 and consist of just two options: a job subsidy of £75pw to an employer plus a £750 flat rate grant for training; and it will offer up to 10,000 full time education places.

How will this pan out? As the job subsidy option is almost identical to the job subsidy option for young people, the Government assumes that the pool of vacancies and support infrastructure can be extended to the older age group. But companies need to get this message soon or they will get a surprise mid 1998. The second option - full time education or training - comes with a few problems. How they will ration out the places and stay below an upper ceiling of 10,000 is both unclear and may not even be legally enforceable. But more significantly, should adults not get the same range of options as the younger New Dealers? If in some areas, the voluntary sector option and environmental task force deliver high quality projects (particularly paying wages and achieve good community benefit outcomes) there will be a strong logic for extending this to older unemployed people.

Those who simply view the New Deal as a programme for 18-24 year olds are correct in one regard: money. The funds allocated to the first New Deal is £3,150m. We estimate, on current stock and flow numbers that a total of just under 100,000 places are required to make good the New Deal commitment. That means a maximimum potential budget allocation of almost £8,000 per place, per year for the remaining 4 years of this Parliament. That is a very sizeable sum of money (the Youth Training budget averages about £2,500 a year per place). By contrast, the budget allocated to the next major phase of New Deal - the older and longer term unemployed - is just £350m. As we point out on page ?, the number of JSA claimants in this older age group (25 and over, unemployed for more than 2 years), is twice the number of 18 to 24 year olds. With 9 times as much windfall cash allocated for the young unemployed, this means (per capita) the Government is planning to spend 18 times as much on the "young" as on the "old".

So, over the next few months, as the total numberof young unemployed "flattens out" at about 100,000 the Government and its advisers should be looking to transfer the resources towards the older age group: that means more than just funding, it also includes the pool of goodwill that has been created amongst employers, local authorities, voluntary sector and other key players in the employment and regeneration field.

Because New Deal is more than just a couple of programmes, the Government also needs to fully develop its other initiatives like the £195m provision for assistance to people on Incapacity Benefit or the expected announcement of the first 5 Employment Zones which will bundle together "Neighbourhood Match" (Intermediate Labour Market-type programmes of waged work for community regeneration), a self-employment subsidy and a full-time study option.

To make the breadth of their labour market policies more apparant, Ministers also need to firm up their proposals for the 16 to 17 age group. This is arguably a more acute problem with over 100,000 young people unemployed and not engaged in any form of educational or training activity. As we illustrate on page ?, Ministers have started the "Target 2000" process with legislation for the "right to study or train". But this will cost up to £50m and the Government is unlikely to implement until 1999. More complicated is the Manifesto pledge to "replace the failed Youth Training" by implementing National Traineeships and extending the scope and numbers of Modern Apprenticeships for 16-19 age group. Success in this age group will in itself make sure that there are subsequently fewer 18 to 24 year olds who need New Deal attention.

Lastly, the Government needs to take care with its New Deal for lone parents. Already £200m has been allocated for a voluntary programme of jobsearch assistance from Employment Service where the unemployed parentís youngest child is over 5 years old. Ministers say that the 8 pilots started July 1997 (covering 40,000 people) have achieved a good measure of success and the national roll-out - aimed at 500,000 lone parents - which was planned for October 1998 has now been advanced to April. The Government has also allocated £300m for an ambitious national network of childcare provision.

So far so good. But a new risk has emerged which could threaten the credibility of the "New Deals" generally. The Governmentís defence of its plan to abolish the lone parent premium is increasingly being justified by reference to the New Deal for lone parents. With tax revenues strengthening, the Governmentís argument that it has merely "inherited" this cut by adopting the previous Governmentís astere spending plans is not so justifiable. Increasingly Ministers are defending this benefit cut by pointing to their New Deal programme which aims to help lone parents get out of social security altogether by finding work. But this was never the context in which the original plan for a voluntary job assistance programme was devised.

If the Government persists with this sort of linkage to a highly contentious social security proposal, the New Deal process and the goodwill generated towards it will be endangered and its success could be undermined.