New Deal A Shambolic Failure

4.15.00pm BST (GMT +0100) Tue 21st Sep 2004

The Liberal Democrats today announced their new plans to reform the New Deal making it more focused on individual needs and relevant to local employment opportunities.

Liberal Democrats would dramatically reform the system giving JobcentrePlus the gatekeeper role of advice, support and training that is required to get the majority of jobseekers into employment. The New Deal would be refocused into new 'Individual Work Schemes' for the less job ready replacing the 'one size fits all' which currently exists.

Paul Holmes MP, Liberal Democrat Shadow Minister for Work, also issued a damning report on the Government's flagship New Deal and attacked it as a "shambolic failure". The New Deal costs taxpayers £791 million a year but has a very high failure rate.

The report, based on official figures, finds:

" LOW RATES OF SUCCESS - Just over one third of 18-24 year olds on the New Deal for Young People (NDYP) go into employment - the worst since the scheme began. Just under half go onto benefit or 'unknown' destinations.

" NO ADDED VALUE - 61% go into employment from the first stage - the Gateway - without having to go onto any of the four options. Arguably these would have found employment without the NDYP.

" BACK ON BENEFITS - Most options on the Enhanced New Deal 25 Plus have more than half of people returning to Jobseekers Allowance. Latest figures for the Education and Training option show 53% returning to Job Seekers Allowance compared to 14% gaining employment.

" REVOLVING DOOR - 41,190 have gone through the NDYP three or more times - of these only 40% have gone into employment.

Paul Holmes MP, Liberal Democrat Shadow Minister for Work, said:

"These shocking figures prove that the New Deal is shambolic and simply not working. Tinkering with the system is not enough. It must be scrapped and replaced.

"Making people jump through unnecessary hoops in a 'one size fits all' system is not the way to tackle entrenched unemployment. The system we propose is focused on individual needs and making the most of local employment opportunities.

"The New Deal needs complete and total reform. Flexibility is the key with training programmes linked to the local labour markets."

ENDS

Notes to Editors:

1. A Liberal Democrat analysis of official figures has shown glaring problems in different areas of New Deal - New Deal for Young People, Enhanced New Deal 25 Plus, New Deal for Lone Parents and New Deal for Disabled People. The DWP Annual Report Table 7 shows that for 2004/5 New Deal and Actions Teams will cost £791 million.

Low rates of success:

In 2003 35% of jobseekers participating in the scheme entered employment - falling from nearly half in its first year - nearly two thirds of participants in the scheme do not enter employment on leaving. Since it began in 1998 just under 1 million 18-24 year olds have been through the main New Deal programme - New Deal for Young People (NDYP) - less than 40% going into employment.

In 2003 34% of jobseekers left NDYP for unknown destinations and 11% left to go onto other benefits.

For ND25plus just 23% have left for employment in 2003 - falling from 32% in its first year.

Since changes were introduced in April 2001 just over 250,000 participants have been through this programme - overall only 25% have gone into unsubsidised sustained employment. Approximately one in five participants have left for unknown destinations having not been reduced in the three years of the enhanced programme.

No Added Value:

In total 384,980 participants in NDYP have left the programme for unsubsidised employment. Of these 235,000 left from the Gateway - a period of advice and guidance - not needing to move onto an option. This represents 61% of the total leavers into employment with only a third of those going onto an option leave it to enter employment - bringing into question the added value that participating on options has.

For ND25plus of the 63,774 who have left the scheme for employment under a sixth (8,690) did so through the scheme do so from an option - with just over 75% (48,610) gaining employment during the gateway.

Back on Benefits:

On ND25plus of the 116,312 who have left the scheme, one in three leavers (34%) have merely returned to claiming jobseekers allowance - a figure that has nearly doubled from 16% in the last three years. In the Basic Skills Training, Education and Training, Work Experience , Intensive Activity Period options over 50% of leavers returned to Jobseekers Allowance.

Revolving Door

In answer to a Parliamentary Question ( HC Deb 19 Jan 2004: Column 1081W - see below) figures show that since 1998 148,640 NDYP participants have not gained employment on their first try in the scheme and have been required to re-enter the scheme. 41,190 (35,080+6,100) jobseekers have been through the scheme three or more times. Only 12090 of those participating for the third or more time gained employment on leaving the scheme - this represents 40% of the total number on their third or more time on the scheme. (HC Deb 21 01 2004 col 1343w, see below)

Sanctions:

In the five years of NDYP only around 81,000 incidences of benefits being withheld have been recorded, 32,852 of these have been given to participants of the Environmental Taskforce - around 1 sanction for every two participants and this option has only 29% success rate of participants gaining employment. The employment option has had only 5544 sanctions applied to participants - out of nearly 700,000 participants - 45% of whom have gained employment.

New Deal for Lone Parents.

On this programme only half of participants leave income support and enter employment - just under half of all leavers remain on Income support and around 1/3 of participants are withdrawn from the programme.

New Deal for Disabled People

Figures from July 2001-March 2003 show that although 41% of leavers from NDDP went into employment - this still represents only under 30,000 with just under 70,000 joining the programme since it began in 2001. This is in contrast to the 2.7 million people with disabilities claiming incapacity benefits - 1 million of whom say they would like to work.