Select Committee on Public Accounts Sixty-Second Report


The Committee of Public Accounts has agreed to the following Report:



1. The New Deal for Young People is the Government's main welfare-to-work programme. It aims to help long-term unemployed young people move away from dependency on unemployment and social security benefits and into worthwhile employment.[1]

2. The programme is mandatory for young people aged 18 to 24 who are unemployed and have been claiming Jobseeker's Allowance continuously for more than six months. It provides participants with a range of advice, training, support and other assistance, including work experience, and aims to place into suitable employment those participants who are judged to be job ready or almost job ready. For those who are not job ready, the programme seeks to identify and break down the barriers to employment, and develop appropriate skills and characteristics so that participants will be in a position to compete more effectively in the labour market.[2]

3. Policy responsibility for the New Deal for Young people rests with the Department for Work and Pensions (the Department). Jobcentre Plus (until April 2002, the Employment Service) has overall responsibility for the programme's delivery.[3]

4. On the basis of a Report by the Comptroller and Auditor General,[4] we examined the impact that the New Deal for Young People has had, and how the programme is being developed in the light of changing economic circumstances and an increasing proportion of participants who are harder to help.

5. In the light of our examination, the Committee draws four overall conclusions:

  • The New Deal for Young People met its target of getting 250,000 under 25 year- olds off benefit and into work before the end of 2001-02. However, the cost per participant can be high (up to £6,000) and many of these young people would in any event have found a job in a growing economy. The programme has been effective in reducing long-term youth unemployment, and most young people who have participated in the programme have benefited in some way. In its first two years, the programme also had a positive impact on levels of youth employment and on the economy overall. The Department now need to develop effective ways of measuring the longer-term impact of the programme on the employability of participants, including those who do not enter the job market.

  • An increasing proportion of participants are harder to help because they experience severe or multiple barriers to employment. The Department have tailored the programme to better meet the specific needs of such participants, for example in conjunction with other agencies to offer support to groups of people who are not part of the benefits system, including ex-offenders before they have been released from prison and rough sleepers. The impact of these initiatives is unclear, however, and early evaluation is needed.

  • While the New Deal for Young People has had a positive impact for many, the outcomes for certain ethnic minority groups have been poorer. The Department's "Outreach" programme focuses particularly on the five conurbations with the biggest concentrations of ethnic minorities, and they should see what lessons can be drawn from it.

  • It is important to track the destinations of those leaving the programme, to identify both its success and participants who need further help. Yet the destinations of 30 per cent of leavers are recorded as unknown by the Employment Service, and the findings from two surveys of leavers to unknown destinations are not wholly reliable. The Department and Jobcentre Plus should conduct further research into why people leave, to ensure that they are better able to identify participants who need further advice and support.

6. Our more specific conclusions and recommendations are as follows.

On the impact of the programme

  (i)  Variations in performance between the Employment Service's Units of Delivery are strongly related to local economic circumstances, and there is less success in areas of higher youth unemployment and a higher concentration of people with particular problems, such as homelessness or addiction. There are a range of other programmes, such as Action Teams for Jobs, Progress to Work (offering extra help for people with drug problems), Ethnic Minority Outreach and the Step Up pilots that help address these issues. The Department should evaluate the effectiveness of these programmes, individually and collectively, in tackling unemployment in the more deprived areas, including inner cities.

  (ii)  Getting young people into jobs is a central aim of the programme. But it also seeks to improve their prospects of staying and progressing in employment, thus increasing the long-term employability of young people and making a positive contribution to sustainable levels of employment and a reduction in social exclusion. As yet, only the first objective has a specific, quantified target. The Department should develop targets for the full range of programme objectives, differentiating between outcome targets for which they are responsible, and the operational targets used to incentivise and measure the performance of Jobcentre Plus.

  (iii)  Measuring changes in employability has proved difficult. The Employment Bill, when enacted, should help Jobcentre Plus to monitor systematically the progress in employment of those young people who find work. To measure the employability gains made during the programme, the Department should develop a new range of performance targets and measures relating to the distance travelled towards employment by participants who have not found work, as recommended by the Select Committee for Work and Pensions.

  (iv)  In addition, Jobcentre Plus should regularly monitor other aspects of employability for those who obtain work, including the qualifications and skills gained while participating in the programme and the nature and quality of the jobs obtained.

  (v)  In the longer term, one of the keys to reducing the number of young people with barriers to employment is improving performance in schools. We have reported separately on some of the main actions needed there, in our Report on Improving Student Achievement and Widening Participation in Higher Education in England.


(a)  Getting people off benefit and into work

7. In September 2000, the Government met its target of getting 250,000 under 25 year- olds off benefit and into work before the end of 2001-02. By the end of March 2002, almost 700,000 young people had participated in and left the New Deal for Young People, of whom 363,000 had ceased claiming Jobseeker's Allowance and had experienced at least one spell in employment. Of these, 263,000 had left the programme for unsubsidised jobs that lasted for more than 13 weeks (Figure 1).[5]


8. Young people from ethnic minorities have not secured the same level of outcomes, particularly in terms of job entry, as white participants. The evidence suggests that young Caribbean men and women of Pakistani and Bangladeshi origin are particularly disadvantaged, whereas Indian men and Afro-Caribbean women do relatively well. The Employment Service assured us that from the outset it had put significant effort into trying to ensure that New Deal participants from ethnic minorities secured at least the same outcomes as their white counterparts. The Employment Service (now Jobcentre Plus) is now carrying out further research into the labour market and ethnicity, building on work with the Cabinet Office, and is also putting resources into an Outreach programme that will focus particularly on the five conurbations with the biggest concentrations of ethnic minorities.[6]

9. The destinations of 30 per cent of leavers from the programme are unknown. Research suggests that 56 per cent of them had in fact entered employment, but a significant proportion subsequently reverted to the benefits system, including Jobseeker's Allowance. However response rates to the survey were just over 50 per cent, which limits the usefulness of the results as indicators of the destinations and activities of participants.[7]

10. The New Deal for Young People is mandatory for those who meet the qualifying criteria, and there is a series of sanctions for people who try to stay on Jobseeker's allowance and not participate in the New Deal.[8] Only 0.2 per cent of participants have suffered benefit sanctions, and the surveys of leavers to unknown destinations do not suggest that there is a substantial number of young people who had been forced off Jobseeker's Allowance because they have chosen not to participate. Inner cities and some ethnic minority groups are more likely to leave for unknown destinations, but for them there are other programmes available, which are not confined to people who are on benefits, such as Action Teams for Jobs in the most deprived labour markets.[9]

(b)  Variations in performance at local level

11. The New Deal for Young People is delivered across Great Britain through a network of 142 Units of Delivery (now Jobcentre Plus Districts).[10] The Comptroller and Auditor General found significant variations in the outcomes achieved by Units of Delivery in 2000-01. The percentage of leavers recorded as having obtained a job of any description ranged between 37 per cent and 71 per cent, while the percentage who had left to enter unsubsidised jobs that lasted for more than 13 weeks ranged from 25 per cent to 52 per cent. The size of the variation is reduced when account is taken of the different contexts within which different Units operate, such as the characteristics of the local youth unemployed population and local labour market conditions.[11]

12. The Employment Service monitors these variations and has taken a series of actions to reduce them. These include action plans for performance improvement, and, by promoting the sharing of good practice through conventions and workshops and by twinning Units of delivery, those performing less well can learn from the better performers. However, there is still scope to reduce these variations further.[12]

13. The New Deal for Young People is planned on the basis of an average cost per participant, and the basic allocation of funds to Units of Delivery is related to the number of long-term unemployed young people in an area. So Units that have relatively high levels of long-term youth unemployment receive relatively high levels of provision, both in terms of the number of personal advisers and amounts under the Options. In areas with a higher concentration of people with particular problems, such as homelessness or addiction, further provision is made available to reflect the higher unit cost of tackling their problems.[13]

14. Expenditure can vary quite markedly between participants, mainly because the help an individual receives depends largely on his or her particular circumstances and needs, and is not constrained by any personal cash limit. Linked to this, different participants access the various parts of the programme to differing degrees and leave at different stages. For example, an individual with relatively modest barriers to unemployment may find work relatively quickly with the help of their personal advisor during the Gateway stage and without any additional programme support. In these circumstances, New Deal expenditure could be less than £100. By contrast an individual with greater barriers to employment, or living in a less buoyant labour market, may require help from each element of the programme and the cost of providing help could be £5,000-£6,000.[14]

15. Despite these factors, the Employment Service has not found it necessary to refine the national allocation model. Some regions have altered allocations to Units of Delivery to reflect expected demand, but this has not been widespread because few allocations have been exceeded. In addition to the New Deal for Young People, other welfare to work schemes are targeted on deprived areas and clients with especially severe barriers to employment. These include Action Teams for Jobs, Progress to Work (offering extra help for people with drug problems), Minority Ethnic Outreach and the Step Up pilots which, from the end of April 2002, provide transitional employment opportunities in some areas of particular disadvantage. The Department told us that in this way, the resources made available to a client should meet their needs in their particular labour market.[15]

16. To test other delivery models, 10 Units of Delivery are led by the private sector. They receive broadly the same level of resources, although under their contracts with the Employment Service they receive incentives for increasing the number of young people going into work. They also have greater flexibility in determining how the programme should be delivered in their areas, and the Employment service is drawing on their experience in developing Action Teams. Overall the performance of these 10 Units has been similar to their public sector counterparts although their unit costs per job placement are slightly higher.[16]

(c)  Impact on the national economy

17. Between March 1998 and March 2002, claimant unemployment in the 18 to 24 age group fell by 102,000. The fall was larger for long-term unemployment: claimant unemployment fell by over three quarters amongst those unemployed for six months or more (the client group for the New Deal for Young People), compared with a fifth of those below six months (Figure 2). Over the same period the level of employment amongst the 18 to 24 age group increased by 165,000.[17] The Department told us that the growth had been relatively even across the country, although areas with the lowest employment rates tended to do slightly better than others.[18]

Figure 2: UK claimant unemployment - 18 to 24 year-olds

18. It is inherently difficult to evaluate with any degree of precision the extent to which the New Deal for Young People has contributed to these changes and its impact on the economy overall.[19] However, evaluation evidence suggests that over the first two years of the programme:

  • 60,000 participants found work sooner than would have been the case without the programme;

  • youth unemployment fell by between 25,000 and 45,000; and

  • youth employment increased by between 8,000 and 20,000.

19. Taking account of the wider impact of the programme on the national economy, the Comptroller and Auditor General estimated that as a result of the additional jobs created national income had increased by more than £200 million a year.[20]

20. As with other labour market interventions, many of those who participated in the New Deal for Young People and found employment would have found a job anyway because of natural labour market turnover, the help available through other employment programmes and the general expansion of employment in the economy. This is known as "deadweight". Also, some might have displaced other workers from their jobs, and some would have returned to benefits following a spell in employment.[21] The Department told us that deadweight was at a relatively low level for the New Deal for Young People, compared to other programmes. Moreover, in addition to changes in employment, the Department saw one of the successes of the programme as increasing the longer-term employability of those with serious barriers to employment.[22]

21. By March 2000, £668 million had been spent on the programme, compared with the £1.6 billion expected. This underspending arose mainly because the buoyant economy meant that fewer young people had been required to participate in the programme. By March 2002, the underspending was some £2 billion (expenditure of £1.2 billion compared with £3.15 billion planned) Taking into account the programmes' impact on other parts of the government budget, including extra tax and reduced benefits, the net cost was £140 million a year.[23]

(d)  Performance monitoring and evaluation

22. The stated objectives of the New Deal for Young People are: to make a positive contribution to sustainable levels of employment and to a reduction in social exclusion by helping young unemployed people into jobs and improving their prospects of staying and progressing in employment; and by increasing the long-term employability of young people.[24]

23. The target of getting 250,000 under 25 year-olds off benefit and into work before the end of 2001-02 was linked to the first objective. Although no new medium-term target was set following the achievement of the 250,000 job placements target, the Annual Performance and Resources Agreement for Jobcentre Plus includes an overall target for the job entry outcomes achieved. Included within this, is a sub-target (85,000 job entries in 2002-03) for placing participants on the New Deal for Young People into work.[25] No targets were set for the other objectives because they were difficult to quantify and their achievement difficult to measure.[26]

24. The Department accept that the short-term impact of whether participants move into work in a buoyant labour market is not an adequate measure of the programme's effectiveness. The programme is also concerned with improving the employability of the long-term youth unemployed, so that they can participate in the labour market in a more meaningful way.[27] The characteristics of employability include the ability to gain and hold a job, to progress in a job, to earn more and the qualifications and skills held.[28]

25. For those participants placed in employment, improvement in employability is monitored to the extent that the achievement of a job and whether or not the job lasts for more than 13 weeks are recorded. At present, it is difficult to monitor progression in employment once a young person's dependency on benefits ceases without relying on young people themselves to continue providing information or imposing an additional burden on employers. The Employment Bill presently at the Report stage provides for Jobcentre Plus to access the Inland Revenue records of participants who have left the programme. This will enable them to track systematically some of their employability improvements.[29]

26. For participants in the New Deal for Young People who are not job ready, the programme seeks to identify and break down the barriers to employment, and develop appropriate skills and characteristics so that participants will be in a position to compete more effectively in the labour market. For the substantial number of participants who are not placed into employment, however, there is no systematic monitoring of the benefits, in terms of their improved employability, that they might have gained from participating in the programme. For example, all four Options under the New Deal for Young People include a training element intended to lead to a recognised qualification,[30] but the number of participants achieving a qualification is not monitored.

27. A recent Report by the Select Committee for Work and Pensions recommended that "the Government seeks to develop and pilot a new range of targets aimed at measuring the "distance travelled" towards labour market participation by clients who are not immediately job-ready. These targets would aim to measure improvements in employability achieved by the intervention of Jobcentre Plus, either alone or through referral to external agencies. Key measures might be improvements in work skills, attitudinal skills, personal skills, and practical skills - as steps along the way to more tangible targets such as qualifications and jobs".[31]


28. The Comptroller and Auditor General concluded that, by March 2001, the programme had largely reached its limit for reasonably attainable improvement.[32] The New Deal for Young People has now entered a more challenging phase, where economic conditions are less favourable and an increasing proportion of participants are facing severe or multiple barriers to employment (Figure 3). Moreover, an increasing number of participants have been through the programme before.[33]

Figure 3: Examples of barriers to employment faced by participants who are harder to help into employment

lack of basic literacy and numeracy skills
drug or alcohol dependency
criminal records
behavioural or mental problems
physical disability
caring responsibilities

29. The March 2001 Green Paper "Towards full employment in a modern society" contained proposals to improve the programme's performance. These included: increasing the flexibility within the programme; increasing the participation of employers and the use of subsidised employment; and additional resources focused on those participants who have particular barriers to employment and are harder to help.[34]

30. The Employment Service has recognised, particularly as the programme has gone on, that there is a group of people who have serious barriers to employment and who need more help. Eighteen per cent of participants, many of whom are amongst the hardest to help, have been on the programme before. Over time an increased the amount of specialist support and help has been provided for these young people, both in the Gateway and the Options stages, and an important element of the Gateway stage is establishing in each individual case the main barriers to a young person going into employment.[35]

31. About seven million adults in Britain who have a basic skill deficiency of one kind or another, and a significant number of entrants to the New Deal for Young People lack basic skills. The Employment Service has introduced basic skills screening for all new participants to try to identify their needs at the outset. Where such needs are identified, provision at first is heavily biased towards strengthening basic numeracy and literacy skills before participants are moved on to provision that would not otherwise have been suitable.[36]

32. The Employment Service does not differentiate between participants, in terms of the help provided under the programme, on the basis of the benefits to society that are likely to be gained from them getting a job. However, certain disadvantaged groups, including ex-offenders, can gain early access to the programme if they so wish, and there is additional help available for those with particular barriers to employment (such as dependency on drugs). One of the initiatives being taken forward in the development of the New Deal for Young People, in conjunction with other agencies, aims to reach out and offer support to groups of people who are not part of the benefits system. These groups include, for example, ex-offenders before they have been released from prison and rough sleepers. But they also include young people, where the Service is strengthening the links with the Connexions Service for 14-19 year-olds, so that people who have most disadvantage can move smoothly into support from a New Deal advisor when they get to 18.[37]

33. We asked whether the Employment Service offered any guarantees of compensation to encourage employers to take on programme participants who are more difficult to place because, for example, they have a criminal record. The Employment Service explained that responsibility for employing a participant rested with the employer and they offered no guarantees about performance in a job. The Service is very open with employers about the background and circumstances of the young people coming through the programme. There had also been increased use of three-week work trials so that employers could experience an individual before committing themselves to taking him or her on as an employee.[38]

1   C&AG's Report, para 1 Back

2   ibid, paras 1.1-1.2 Back

3   ibid, para 1.15 Back

4   C&AG's Report, The New Deal for Young People (HC 639, Session 2001-02) Back

5   Department for Work and Pensions, New Deal statistics to the end of March 2002 Back

6   Qs 136-138 Back

7   C&AG's Report, para 2.13; Qs 80-82; Ev 21-22 Back

8   C&AG's Report, para 1.11 Back

9   Qs 139-143 Back

10   C&AG's Report, para 1.15 Back

11   ibid, paras 4.9-4.13 and Appendix 3 Back

12   ibid, paras 4.4-4.5 and Box 2; Qs 92-95 Back

13   Qs 96-99, 103; Ev 23 Back

14   C&AG's Report, paras 3.16-3.17; Qs 97, 99, 103; Ev 23 Back

15   Qs 96-99, 101-103, 147-148; Ev 23 Back

16   C&AG's Report, para 1.15; Qs 104-111 Back

17   Labour Market Trends, Tables B2, C12; Qs 36-37, 46-58; Ev 20-21 Back

18   Qs 114-115; Ev 23-26 Back

19   C&AG's Report, para 3.7 and Box 1 Back

20   ibid, paras 3.8-3.15 and Figure 10; Qs 17-19, 41-42; Labour Market Trends, Tables B2, C12 Back

21   C&AG's Report, para 3.2 Back

22   Qs 3, 9, 17, 59-61 Back

23   C&AG's Report, paras 3.16-3.17; Qs 16, 19, 66, 83-84 Back

24   C&AG's Report, para 2.2 Back

25   Q26; Jobcentre Plus Performance and Resources Agreement 2002-03 Back

26   C&AG's Report, paras 2.3-2.5; Qs 26-35, 77, 157 Back

27   Qs 9, 21, 60 Back

28   Qs 2, 23-26, 31, 74-79  Back

29   Qs 26, 77, 79, 89 Back

30   C&AG's Report, paras 1.1-1.2, 1.14 and Figure 5 Back

31   1st Report from the Work and Pensions Committee (HC 426, Session 2001-02), 'One' Pilots: Lessons for Jobcentre Plus, para 85 Back

32   C&AG's Report, paras 4.5-4.6, 4.14-4.16 and Box 2 Back

33   ibid, paras 2.7, 3.23-3.24 and Figure 6 Back

34   C&AG's Report, paras 5.18-5.19 Back

35   Qs 4-8 Back

36   Qs 70-73 Back

37   C&AG's Report, para 1.11; Qs 122-128 Back

38   Qs 133-135 Back

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