Four fixes for New Deal
The Conservative party has started to grumble about New Deal. According to Employment spokesman John Bercow MP, it has been a "colossal and expensive failure". This sort of absurdity is completely at odds with a consensus view that New Deal has been a highly effective programme. But the background of wild Tory criticism - and the knowledge that New Deal's pledge card commitment has holy writ status - also makes it hard to offer any measured critique.
But looking beyond the orthodoxy, some hard questions do need to be asked. We publish tables each month on our website that reveal how variable are the success rates across the country. Admittedly we use a definition of success that places New Deal in the most demanding light by showing what percentage of all entrants have entered known job destinations that are "sustained" (i.e. have lasted for more than 3 months).
So, on this measure, why is the job entry rate amongst young New Deal participants just 33%; why has only 1 Delivery Unit in the whole country managed to make it past a threshold of 50% sustained job entry; and why have the Delivery Units in Central London - in the jobs growth hotspot of Britain - managed to get barely a quarter of their participants back into lasting work?
We do not ask these questions just to be awkward. At the Unemployment Unit & Youthaid, we have been amongst the staunchest supporters of New Deal - and taken a bit of stick for it too. We said almost 3 years ago that New Deal represented the best chance in a generation to permanently rescue Britain from the debilitating effects of long term unemployment.
We still think that.
But the New Deal must be more than just a pledge card commitment. It has to be step-change improvement in the life chances for over half a million people.
So, the New Deal has to raise its game. The most effective changes must come from 4 directions:
- Although it sounds like a paradox, the Employment Service may be trying too hard to get people into jobs. That could be because the principal success indicator for New Deal has been concentrated on crude job entry - other wise known as the "Core Performance Measure A". But for those New Dealers who are a long way from being job-ready, better measures of achievement are needed. And for those can enter work quite quickly, job retention and advancement are more important than simple job entry - after all some 42% of all job starts do not last more than 13 weeks.
- There should be more effort focussed on geographical areas that have the highest concentrations of unemployment and which need the help most. Delivery Units in inner urban areas have typically handled up to 7,000 cases since the two main New Deal programmes launched in April and June of 1998. More importantly, these areas also benefit from significant injections of public funding from the Single Regeneration Budget, the New Deal for Communities and from Europe. Making the connection between these initiatives and New Deal has been one significant weakness of planning in an era of "joined-up" Government. In these areas - particularly those blighted by long term industrial decline - participants who do not have strong job prospects should be eligible to enter programmes immediately and not have to wait for a soul destroying 6, 12 or 18 months.
- The design of New Deal has been too rigid. Changes are needed that recognise that discrete New Deal options make little sense and are not very effective or popular. The 4 New Deal options should be used to create individual packages that mix spells of learning, work experience and then employment. Far more emphasis needs to be placed on improving interpersonal and communication skills and job specific training needs to be concentrated on the skills that are required in growing industries and occupations. This needs a more flexibile funding and contracting regime.
- Lastly, New Deal contracts - which will be subject to renewal in April 2001 - should only be awarded to intermediary organisations that really understand their local labour markets and have strong connections with employers. Too often, New Deal participants are refered arbitrarily to jobs where they have little realistic chance of meeting an employer's specification and with little preparation for what to expect. Too often they are placed into low paid, low quality, unsustainable jobs that lack any structured introduction to work like appraisals and supervision or subsequent training for any career advancement. Worst of all, hardly any New Deal agencies maintain communication with either employee or employer after the placement has been made. There is no funding incentive to do so.
What we are describing for the future are the models that have been spearheaded in Employment Zones, the 20 Action Team areas and with the "new intermediaries". The Government has set aside £40m for the Action Teams and just under £10m to encourage new types of intermediary organisations.
This is plainly a vision for the future and the Government should really get down to spending a bit of money to make sure it happens quickly. There is no shortage of "windfall" tax receipts. Significant underspends mean that the New Deal budget keeps on stretching. The unallocated budget has grown from a "reserve" of just £350 million in April 1998 to £570m last November and to over £1bn by March 2000.