Select Committee on Education and Employment First Special Report

Second Report: The New Deal (HC 263-I)

Second Report: The New Deal (HC 263-I) Published:19 November 1997
Government Reply: Second Special Report, Session 1997-98 (HC 496) Published: 27 January 1998


Government Response

Further Government Action

We recommend that the Government publicise its response to the Task Force's proposals on defining objectives for the New Deal (para 8).

We agree, and we shall write again as soon as we are in a position to publish this (which we expect to be in the near future).

New Deal for long term unemployed people introduced in June 1998 and further enhanced in April 2000. Objectives: to help long-term unemployed people into jobs, to improve their prospects of staying in and progressing in employment, and to enhance their employability; thereby contributing positively to sustainable levels of employment. This New Deal has helped over 53,000 people into work (to August 2000). In April 2001 further changes are scheduled to based on the New Deal for young people and the most successful elements of the New Deal 25 plus pilots.

We recommend that the Government designate, as a further objective of the New Deal, a sustained reduction over the economic cycle in the numbers of long-term unemployed aged 25 or over, to be achieved within a specific time frame (para 8).

It is not Government policy to publish forecasts of unemployment and, as the Report itself acknowledges, the number of factors which affect employment and unemployment make it impossible to predict levels of unemployment, or to set numerical targets with any accuracy. Our aim is to improve the changes of unemployed people of all ages, and it is against that aim that we will be judged.

We welcome the Minister's indication that New Deal resources could respond to changes in unemployment trends. We believe that the New Deal should respond to changes in the relative sizes of the four different target groups (para 11).

We shall keep allocations of resources to our welfare to work policies under review in the light of the state of the labour market, lessons learned from the 18-24 New Deal and the available resources. The intention is to pilot broader provision for older long-term unemployed people. The Government is considering the introduction of variants of the New Deal through pilots including older age groups who have been out of work for a year or eighteen months, and testing proposals in selected areas.

New Deal 25 plus pilots were introduced in November 1998 in 28 areas of England Scotland and Wales to test innovative and flexible ways of improving the employability of long-term unemployed people and to help them into sustainable jobs. The pilots, originally due to end in May 2000, were extended to March 2001. Pilots have successfully helped over 17,000 people into jobs (to August 2000) and have informed the policy development and continuous improvement of the New Deal 25+ mainstream programme.

We recommend that the DfEE set out its strategy for evaluating the New Deal (para 17).

The DfEE has set in place a comprehensive programme of evaluation to assess participants' and employers' experience of the New Deal. Thorough research has been produced by a wide variety of research organisations and this will contribute to the shape of the New Deal in the future.


Evaluation of the job subsidy element of the New Deal for the young unemployed and of the New Deal for the long-term unemployed aged 25 or over should include an assessment of whether subsidies are effective for the most disadvantaged within each group (para 17).

We reviewed evidence of the effectiveness of previous job subsidy programmes, in the UK and overseas, in advance of the New Deal. The New Deal evaluation strategy will continue to address the effectiveness of separate elements of provision, as well as the effectiveness of the New Deal overall.

The evaluation report "New Deals for Young People and for Long-Term Unemployed People: Survey of Employers", published in September 2000 says "in that there was evidence of substantial additional employment, the way in which this New Deal option has worked seems to be well justified".

Employers reported that around 1 in 5 participants had no qualifications and many, especially those under 25, had little previous work experience.

The Employment Service should identify best practice in drawing upon the strengths of existing partnerships and should disseminate guidelines among all Employment Service districts. It is essential that the Employment Service should involve as far as possible relevant private sector bodies (such as local businesses) in decisions on how the New Deal should be delivered locally (para 19).

The Employment Service commissioned an independent study of partnerships in Pathfinder areas from KPMG, which verified the validity of the partnership concept and identified strengths, good practice and areas for consolidation and improvement. The findings have been sent to ES Districts and to partners and are being acted upon. As arrangements are developing, especially in Pathfinders, the ES has established mechanisms for constantly identifying and disseminating ideas and practices.


All Employment Service personal advisers should undergo a training programme specifically designed to help them develop their awareness of clients' needs and strengths (para 23).

Personal Advisers are either already trained and experienced ES advisers or have been recruited having particular regard to their counselling role. They have experience of diagnostic interviews and are trained in interpersonal and interviewing skills, objection handling and dealing with difficult clients. To build on that firm foundation, we have also developed additional training specifically tailored to their New Deal role. This will focus particularly on the new culture that New Deal demands, including how to work effectively with the many different partner organisations who will deliver the New Deal. There will also be provision within the training programme to remind Personal Advisers of the importance of working closely with young people and to identify their needs and strengths.

ES have recently completed a thorough review of training support products for New Deal advisers. Revisions to products have now been made and issued to the ES field.

We believe that it is important to experiment with alternative forms of delivery of the Gateway, by sub-contracting parts of the Gateway function to organisations which are seen by New Deal participants as more credible, accessible and independent that the Employment Service (para 25).

Each New Deal partnership is making its own decisions about delivery arrangements for the Gateway, and it is already clear that there will be many local variations in the way the Gateway works. These will be evaluated. We are certain that allowing this local flexibility will bring together local knowledge, understanding and experience which will help to ensure quality.

We recognise the importance of working with others to deliver New Deal and have taken this forward in our work to introduce more intensive Gateway activity. Advisers are actively encouraged to make best use of partner organisations to assist young people. In addition, the new Gateway to work Course is being delivered by a diverse range of organisations many of whom have not previously been involved with New Deal.

We recommend that a guidance and support service similar to the Gateway be built into the New Deal for the long-term unemployed (para 26).

We are considering whether Gateway type of provision can be made for this group. (See response to recommendation in para 11).

New Deal 25 + introduced in June 1998 included a 6 month period of Advisory Interview support, similar to the New Deal 18-24 Gateway. This was further enhanced in April 2000, with duration reduced to 4 months to give more pace and purpose and introduction of access to specialist services aimed at tackling barriers to employment experienced by long-term unemployed people.

A strategy for monitoring partnerships, which are delivering the New Deal for the young unemployed, should be clearly and publicly stated (para 28).

We have robust arrangements in place to monitor local New Deal delivery. The emphasis is on local strategic and planning partnerships carrying out the monitoring with the aim of ensuring that local arrangements fit local requirements. Where consortia are involved, we are drawing on the experiences of others who have been involved in this type of contracting. We will learn from the experience of the Pathfinder areas and are developing further arrangements to maximise the extension of strategic partnerships in local monitoring of local delivery to supplement national monitoring arrangements.


We recommend that Regional Assessment Panels should consider bids from potential partnerships and providers on a rolling basis (para 29).

To meet the requirements for Pathfinders to start on 5 January and for the main roll out to take place in April, a contracting timetable was drawn up. Extensive advertising enabled those who wished to be involved as providers to have every opportunity to do so. The essence of the New Deal is flexibility and innovation. We would not want to restrict bids or stifle innovation by the imposition of unrealistic timetables. Consortia have been given extra time to put together proposals and have the opportunity of post tender negotiations. As the delivery of New Deal gathers pace, we will welcome additional proposals from existing and future delivery partners.

We have developed a staged approach to the bidding and selection process for the Innovation Fund 2000 which enables potential partnerships and providers greater flexibility in the time available for the preparation of bids. Bids are currently being assessed against the prospectus criteria by Regional and National panels. Those bids which meet the criteria will be invited to submit full proposals. Full proposals will then be assessed by a National panel on a rolling basis. In addition, partnerships and providers who wish to submit non-funded proposals may now do so at any time. These proposals will be considered individually as they are received.

We note that education and training also forms a major component of the New Deal for the three options which are not full-time education options. We recommend that the promotion of the New Deal options should also emphasise this key element of the proposals to assist in enhancing employability (para 32).

All publicity about the New Deal, from the early Press Notices onwards, has made it clear that education or training is a fundamental element in every New Deal option The document "Design of the New Deal for 18-24 year olds", which was published in October last year, contains a separate section on the education and training element of these options, to emphasise the importance that we place on it.


The Government should state clearly why existing legislation prevents the pooling of funds from different budgets (para 45).

Money voted by Parliament for one purpose cannot be used for a different purpose. Pooling of different funds is possible in certain circumstances, for example, the Single Regeneration Budget. However, Personal Job Accounts are intended to bring together a wider range of funds including benefit and training expenditure. For example, money voted in order to support people on Jobseekers Allowance (JSA) could not at present be used to fund a provider of a training course. We are currently considering with colleagues how most effectively to make progress on this issue.


We encourage the Government, if it is persuaded of the merits of benefit transfer, not to be deterred by administrative difficulties and by a reluctance to change (para 45).

The Government is happy to assure the Committee that we will not be put off by administrative difficulties from making progress.


We conclude that, if the Intermediate Labour Market approach is to make a major contribution to overcoming social exclusion in the most deprived areas, then particular attention will have to be paid, when allocating budgets, to training managers and to developing the necessary infrastructure (para 46).

In our prototype Employment Zones plans are in place for training and developing staff to run Neighbourhood Match (ILM) schemes and to develop projects clearly matched to the needs of local people.

An important legacy of the prototype Employment Zones was the establishment of Neighbourhood Match ( ILM ) schemes in each of the 5 Zones. Clearly the training and development of staff to run these schemes during the life of the prototype contributed significantly to this achievement. Neighbourhood match took many forms within the Zones some closely focused on community regeneration, others to stimulate community enterprise. The common thread was to provide work experience which both matched community needs and helped people into employment. "Learning From Experience : the Lessons of Employment Zones" published by the Glasgow Development Agency on behalf of the Zones suggested that there were some concerns about the cost of ILMs and that they tended to keep people out of the real labour market for too long.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 27 February 2001