New Deal: the next generation

As the Government finalises details of its likely election platform, David Blunkett has announced the broad outlines of "New Deal Mark 2". Programmes for people disadvantaged in the labour market will probably be very different in the next Parliament to the current ones. Indeed "programmes" might not even be the right word to describe the new approach.

Firstly, the "next generation" New Deal will see a shift away from JSA claimants matched by a corresponding emphasis on people currently receiving Income Support or Incapacity Benefit. By the election time, there will be less than a million JSA claimants - a population group significantly outnumbered by the million or more ICB recipients who want to work and about million lone parents on Income Support who also want to work. The new priority will be to offer carefully tailored services that meet their complicated requirements.

Secondly, the quality, effectiveness and performance of education and training will come under intense scrutiny. Most of the current learning programmes for adults have job entry rates that languish around the 40% mark. In some parts of the country that have tightening labour markets, this is dismally poor.

In growing labour markets, employers want much better prepared candidates for their vacancies - people that demonstrably have attributes that match their business needs. Significant improvement is required to avoid the competition for new jobs increasingly being won by job changers and new entrants to the labour market at the expense of disadvantaged jobseekers.

All 4 main funding institutions (Development Agencies for SRB, Government Offices for ESF, the Learning and Skills Council and the Employment Service) should work in parallel to demand improvements to the quality of learning, to acquire higher levels of employment outcome and consistently higher performance and widened participation. This means a new focus on achieving longer term job retention and advancement which can only be achieved by developing a precision understanding of the employer requirements.

Thirdly, Government interventions should start to focus on job retention, advancement and wage gain - not simply on job entry that lasts for 13 weeks. Now is the time to experiment with models of post-placement services for disadvantaged individuals who are re-entering the labour market. After all, the success of mainstream programmes like New Deal for Young People has been undermined by a persistent inability to keep job entrants in work after their initial placement. Nearly 40% of all job starts under the New Deal have not lasted for more than 13 weeks. The evidence shows that long term unemployed people are more likely to enter steady continuous employment if their initial job on re-entering the labour market was a secure one. The factors that ensure a stable first job are:

Lastly, policy should accept the need for a sizeable element of "transitional employment". This is the latest jargon for "intermediate labour market" type projects have already achieved success in many cities by helping the non-employed obtain skills and waged employment through a gradual transition into the labour market.

These are now proven to be highly effective ways for individuals to acquire the attributes that will enable them to compete effectively for work in the open labour market. But they can also create jobs in areas where there is a shortage of work and contribute to local area regeneration by supplying services that are of community benefit.

They are not a panacea however and need to sit alongside other effective measures. They need to reflect local circumstances, usually require multi-agency collaboration, are complicated to manage and fund, and often work best on a relatively small scale.

By paying wages at a "going rate", transitional work also ensures that participants can exit from the benefit system and avoid the problems of the tax and benefit "traps" which discourage means-tested benefit recipients and their household dependants from taking employment.