New Deal (United Kingdom)

From Wikipedia, the free encyclopedia
Jump to: navigation, search

This article is about a government policy introduced by the Blair Government. For other uses, see New Deal (disambiguation)

The New Deal (renamed Flexible New Deal from October 2009) was a programme of active labour market policies introduced in the United Kingdom by the Labour government in 1998, initially funded by a one-off £5 billion windfall tax on privatised utility companies.[1] The stated purpose is to reduce unemployment by providing training, subsidised employment and voluntary work to the unemployed. Spending on the New Deal was £1.3 billion in 2001.

The New Deal architecture was devised by LSE Professor Richard Layard, who has since been elevated to the House of Lords as a Labour peer. It was based on similar active labour market policies in Sweden, which Layard has spent much of his academic career studying.[citation needed]


The New Deal introduced the ability to withdraw benefits from those who refused "reasonable employment". A complementary project was introduced in 1999, the Working Families Tax Credit. This is a tax credit scheme for low income workers which provides an incentive to work, and to continue in work.

Professor Richard Beaudry, from the Department of Economics at the University of York, defined as follows the New Deal in a 2002 paper, Workfare and Welfare: Britain’s New Deal (pp. 8–9) : "The New Deal reforms promise eventual reform of welfare assistance for all benefit recipients."

New Deal Programmes[edit]

Although originally piloted on the youth unemployed (18- to 24-year-olds), the New Deal programmes have now been expanded to include many different groups. These include:[1]

New Deal for Young People (NDYP) – has received by far the greatest proportion of New Deal funding (£3.15 billion through to 2002[citation needed] ). It is targeted to unemployed youth (aged 18–24) who have been unemployed for 6 months or longer.

New Deal 25+ – is targeted to adults (aged 25+) who have been unemployed for eighteen months or more. In terms of funding, £350 million was allocated through to 2002.

New Deal for Lone Parents – addresses, as the name suggests, the employment reintegration needs of single parents with school age children. £200 million was directly allocated to the program, not including additional assistance for child-care.

New Deal for the Disabled – assists those receiving disability benefits to return to work. £200 million has been budgeted for this program through 2002 (Peck, “Workfare” 304-305).

New Deal 50+ - for those aged 50 years and above.

New Deal for Musicians - for aspiring unemployed musicians.

Referral procedure[edit]

The greatest emphasis of the government so far has been the NDYP, which is a pilot phase for more ambitious New Deal reforms with other groups. The NDYP begins with an initial consultation session, referred to as Gateway, that focuses on improving job search and interview skills. This training is provided by an external organisation such as a4e, CSV or YMCA Training. If the search for employment is still unsuccessful after the Gateway sessions, to continue to receive unemployment benefits, one of four options must be chosen:

• A subsidised job placement. The subsidy is £60 per week, and lasts 6 months; a £750 training allowance is also available to participants. Clients are not paid a wage from the employer.[citation needed]

• Full-time education and training, for up to 12 months.[citation needed]

• Work in the voluntary sector, the client is paid JSA plus a £15 training allowance. This is called Community Task Force.

• Work with the Environmental Task Force.(DWP website; Peck, “Workfare” 304; Glyn 53)

Participation in one of the four options is mandatory to receive benefits, refusal to participate will lead to the benefit being stopped and will be referred to a Decision Maker who will decide whether a recipient should receive a sanction should they decide to reclaim.

Flexible New Deal[edit]

A new scheme, called the "Flexible New Deal", was introduced in October 2009, which has revamped the service.[2] In October 2010 Chris Grayling cancelled the Flexible New Deal scheme,complaining it had cost over £31,000 per job placement. Although the figure quoted by Mr. Grayling was correct at the time, the project was front loaded in costs and lagged in results, given another 11 months the cost per head would have been roughly half of the quoted figure.[3] The New Deal is due to be replaced by Summer 2011 by the Coalition Government's Single Work Programme [2]

Steps to Work[edit]

Steps to Work is the brand name for the New Deal in Northern Ireland and is administered by the Department for Employment and Learning through its Jobs and Benefits Office network. Steps to Work came into effect in 2008 and consists of many of the same provisions of the New Deal with the exception that payment by the Department is now more focused towards employment outcomes for participants than previously.

Northern Ireland does not have control of its own social security legislation, these functions having been retained by DWP and Westminster, however the Social Security Agency works in tandem with DEL to ensure welfare-to-work participants still receive state-funded benefits.


Critics claim that participants fail to see the value in the programmes, and the programmes are not effective in equipping participants for work.[4] Critics have tried to establish that attendees often end up feeling less motivated than they did to begin with. The sufficiency of the staffing for these programs has also been called into question.[5]

Another criticism is that unemployed people attending the Options stage of the NDYP are not counted towards the Government's official figures for people of working age who are claiming unemployment benefit[citation needed]. Some say[who?] that New Deal was designed with this in mind, to allow the Government to release lower figures for unemployment. However the NDYP has led to a considerable decrease in JSA claims for 18- to 24-year-olds[citation needed].

Statistics of NDYP states that almost 1 in 3 people on NDYP leave benefits without securing a job or receiving education or training. 42.89% went in to employment (no mention of sustainability), 25.84% stayed on benefits and 31.27% never reclaimed benefit or found employment.

Moreover the statistics tool on the DWP website has been criticised as difficult to use, which reduces the transparency of the programme. The DWP data shows that around 30% of leavers of the NDYP prior to 2005 left to an "unknown destination".[6] According to the DWP data, around 42% went into employment while 44% of leavers of the NDYP remained on benefits.[7]

Another criticism of New Deal concerns the Gateway To Work two week course towards the end of the Gateway stage of New Deal (NDYP only). Even though new participants see the course as helpful in the search for employment, other participants who have done the course before see it as pointless and a waste of time if they have already attended it, but are forced to go on it to continue claiming Jobseeker's Allowance. The Option stage has also drawn a lot of criticism since this stage is when the New Deal puts participants with a training provider to find them work placements. This stage lasts for 13 weeks (26 weeks for NDYP) and it has been known that the work placements see the participants as free labour and don't hire them after the Option stage is finished. This stage has also been criticised by participants who the New Deal makes them work full-time with the work placements for only £60 a week and thinks that they should only work part-time to get better experience, though it depends on which Option the client is participating in.

Further criticisms have been aimed at the increasing number of 'retreads' on the NDYP. Figures suggest that around one third of all NDYP clients have returned to the program for a second time after another 6-month period of sustained unemployment. Whether the figure of a third displays the program's success is debatable. It is for these retread figures that the 2 in 5 people securing employment is probably unsustainable zero-hour agency jobs as highlighted in Episode 2 of Benefit Busters on Channel 4.

See also[edit]


  1. ^
  2. ^ "Jobless training courses 'demoralising'". BBC News. 2009-04-04. Retrieved 2010-05-20. 
  3. ^
  4. ^ "New focus for New Deal". BBC News. 1999-08-26. Retrieved 2010-05-20. 
  5. ^
  6. ^
  7. ^