New Deal jobs precarious

13 Jul 00
The government scrambled to rebuff mounting criticism of its flagship New Deal scheme this week, after claims that it had made little impact on the labour market and that even its own departments were unwilling to employ recipients.

14 July 2000

In the first of two highly critical reports, the Commons education and employment committee said the £5bn New Deal programme was creating too many short-term jobs and was costing far more than the £4,000 per job that ministers had claimed. The committee estimated that 60% of participants would have found work without the help of the New Deal.

The report shows that 215,000 of the 470,000 youngsters on the scheme went on to find jobs, but estimates that 40% of these lasted less than 13 weeks. The committee said it was preparing to investigate the 'high level of precarious employment' created by the programme later this year, while the National Audit Office is considering a value-for-money report.

The committee also turned its attention to the public sector's poor record of employing New Deal recipients. Just 1.2% of Civil Service employees have been recruited from the New Deal, but two thirds of those are employed by the Department for Education and Employment.

Tessa Jowell, the employment minister, admitted that Whitehall's response had been disappointing and expected employment levels to be closer to 2%. She has already held a number of informal meetings with the more reticent departments, but has refused to set any targets for improvement. 'We do not want to do anything which suggests that there is special treatment for New Dealers.'

The MPs also questioned whether the New Deal was reaching the most disadvantaged people and those from the ethnic minorities.

A separate report from the National Institute for Economic and Social Research, also published this week, suggests that the impact of the New Deal has been much more modest than the government has indicated, creating just 13,000 extra jobs for youths in its two-year history.

Education and Employment Secretary David Blunkett moved quickly to limit the damage. Unveiling the latest employment figures, Blunkett claimed that policies such as the New Deal have helped to create an extra 1m jobs since 1997.

'We have carefully invested in programmes to help people into work, these have helped bring more people into the active labour market than ever before,' he said.

Far less has been spent on the programme to date than the government envisaged – only £1.4bn by 2002 of the £5bn originally set aside. But a substantial cash boost is now expected in the forthcoming spending review.


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