New Deal for the 25+

The next phase of the New Deal has quietly snuck up without anyone realising. Ministerial minds have been totally focussed on the flagship programme for 18 to 24 year olds. So the June launch of a more modest offering to the older and longer term unemployed has commanded less attention. And it shows.

During February and March, a rather uninspiring plan was put together which the Government feels duty bound to launch - on schedule "in June". This looks too much like a re-branding of existing (and mainly discredited) ES programmes. It runs the risk of New Deal being characterised as "Old Deal" not least where the initial design paper itself coyly admits that "some of this menu will be familiar to the two years plus unemployed".

For the jobless themselves, phase 2 of the New Deal will be a grave disappointment when compared with the higher quality of the 18 to 24s programme. There are two main problems.

Firstly, the unique New Deal-style element - the employment subsidy - will get lost in the undergrowth of all the other ES programmes. The branding of New Deal is all about jobs. For the under 25s, about half the programme is exactly that - a real job with a real employer paying a real wage. And the image is not compromised by more than a quarter of the programme actually being on work experience which pays JSA plus 15 a week. But for the over 25s that is not true. The New Deal "brand" will be damaged when - even on the Department's rather optimistic estimate - 85% will not get a flagship New Deal job.

Secondly, employers have established a very high expectation of the Gateway's matching and screening process for the younger unemployed. The New Deal for over 25s has an "advisory process" but this can not credibly be described as comparable to the Gateway in the under-25s New Deal. So what it lacks is a "sifting" of the job-ready and a system which genuinely prepares the less job-ready for submission to an employer. Listen to employers - particularly the bigger blue chip firms. What really attracts them to the New Deal it is not the 60 subsidy: instead they value the Gateway and the commitment to job-specific training.

Employers have already warned that the reputation of the "core New Deal for young unemployed" needs protecting. This is important for marketing New Deal, but also for preserving the political coalition which supports the New Deal which should not be alienated. If the 2nd New Deal offering seems to lack quality and resembles previous ES schemes, the continuing support of employers, Local Government, Trade Unions and the voluntary sector might be lost.

The strong emphasis on mandatory participation will not go down well with providers or participants. It is possible that some advocates could command a degree for support for the argument that compulsion is justifiable for the small number of younger people, with limited labour market disciplines who might need "a bit of a prod". But this is not valid for older, work-experienced unemployed people. So hostility is a near certainty and this does represent a big political risk

The funding is also a problem. The budget for the programme to be launched in June remains at 350m. Although the Treasury will never admit this, New Deal funding decisions are pretty arbitrary. But, because the Opposition parties have declared that youth is the wrong target group, the laws of politics now guarantee that the Government has to resolutely stick to its original plan and spit in the eye of its critics.

So the adult programme gets about a tenth of the budget allocated to the 18 to 24 year olds despite the client group being double in size (using the Labour Force Survey definitions). Although the March Budget announced a hike of 100m, this is destined for the 'Part 2' pilots from November. Even if all the 350m were spent over a Parliament's lifetime on employer subsidy alone, this would only deliver a programme helping 22,500 people a year (about 1 in 10 of the eligible cohort).

Because the programme cannot help everyone, the DfEE is trying to square this circle by offering something that looks as if it is a comprehensive offer. Instead it would be far better to have a lower key, scaled down programme that admits that it only helps (say) 1 in 10 or 1 in 5. This approach has been widely recommended to Ministers and could well be the one they adopt. It requires a marketing campaign with far less hype and some subtle re-branding, probably characterising the adult dimension as an "add-on" rather than a fully blown programme.

This will not be easy for a programme that Ministers would like to score the maximum political points for. So far, no-one could ever accuse the New Deal of being under-launched.