Keep on experimenting

In the first heady weeks after the May 1997 General Election, the New Deal looked like a monolithic programme devised by manifesto writers. "Here's our plan", you could imagine Ministers saying to their officials, "now just do it". But although Brown, Blunkett and Andrew Smith knew they had a crucial pledge-card promise to deliver on, they had much grander ambitions.

So they told officials to remember 4 things. Firstly, they planned to be in power for a good long time; secondly they wanted to defeat long term structural unemployment; thirdly New Deal was just one strand in an ambitious welfare-to-work strategy that included wide ranging tax and benefits reform, sweeping changes to education and training, plus a boost to productivity, investment, competitiveness and enterprise; lastly, they had no fixed ideas about what might work best and were keen to find out.

So was born a dizzying universe of pilots, trials, zones, prototypes and innovative projects. As a result, it is becoming increasingly hard to see the core programmes from the mass of variants. And the huge mixed-economy of private, public and voluntary sector organisations that are delivering these initiatives is consequently going through a remarkable period of evolution and invention.

There are agencies now successfully delivering large parts of the New Deal that scarcely existed 5 years ago. And there are others who would not have conceived of being in this business under the last Government. Think about it. Ernst and Young partnering the Employment Service? In a bidding competition to run Employment Zones that gamble the benefit budget on getting long term jobless back into work? And pay them a good profit if it works well? These were unthinkable under the Tories.

What is even more perplexing is that 2 years into this Parliament, the politicians' upcoming time horizon is the next General Election which could well be in Spring 2001. At just the time when orthodox pre-electoral thinking dictates that Ministers should be consolidating, they are trying out even more experiments.

In big picture terms the Government's strategy is very clear. It is not simply to reduce unemployment, but to increase the proportion of working age people who are economically active and employed. There are some hard nosed reasons for this. Exclusion from the labour market is an acute personal crisis for any individual, but it is also a waste of economic resources. It depresses consumer demand, reduces public revenues and leads to blockages in labour supply that can subsequently cause inflationary pressure as macro economic conditions improve.

This Government also recognises that its social agenda - promoting equality and reducing exclusion - cannot succeed by public expenditure. The most effective way of achieving this is through the wage packet and not through the Girocheque. Sustained, secure, well-paid employment is the key to individual economic independence. This goal requires a strategy that has four main planks: making employment financially worthwhile and more secure; boosting employability, activation measures to bring unemployed people closer to the labour market; the engagement of employers.

But implementing this strategy requires hundreds of thousands of micro-level decisions and actions. The most important of these hinges on a judgement - case by case - about the transition into work. In ideal circumstances, the New Deals are designed to boost employability and lead to job entry. But in too many cases, they are not sequentially possible. Too many New Deal participants are very much harder to place in work than had been thought 2 years ago. And many employers are still deeply sceptical about recruiting a long term unemployed individual.

Yet some in Government still swear by the old saw that the "best way to get a job is to have a job." Undoubtedly, a minimum level "re-entry" job today is better paid and more secure than it was under the last Government. Job entry in itself is a good thing. But too many jobs do not work out. Even with New Deal, only 57% of all successful job placements have lasted longer than 13 weeks. And the more that Ministers start talking about their 250,000 jobs target, the temptation to go for ever faster job entry will become greater. The announcement that 155,000 people aged 18 to 24 have already got "off welfare and into work" (the precise text of the pledge-card) is wrong - in fact 41,000 of these returned to benefit.

To maintain the confidence of New Dealers and employers, job entry must involve a careful, detailed and considered matchmaking of candidate to job. That requires precisely the sort of intensive preparatory and "intermediation" work that the myriad of pilots and innovative projects are identifying. Ironically when all around are groaning that "there is too much going on", more is actually needed.

And there is still plenty to fund it. As the Chancellor's Pre-Budget Report shows the amount of unallocated windfall tax has grown rather than shrunk - rising to 570 million, compared with just 290 million identified 9 months earlier - in the 1999 Budget.