New Deal (United Kingdom)

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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 workfare programme introduced in the United Kingdom by the first New Labour government in 1998, initially funded by a one-off £5 billion windfall tax on privatised utility companies.[1] The stated purpose was to reduce unemployment by providing training, subsidised employment and voluntary work to the unemployed, although many saw it has much more of a neo-liberal policy aimed at disciplining the reserve army of labour. Spending on the New Deal was £1.3 billion in 2001.

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


The New Deal had as its signature, the power to withdraw benefits from those who 'refused' 'reasonable employment', though it remains unclear what exactly is meant by that, since no government can compel an employer to hire people or create jobs when none exist. Indeed, 'Workfare' in the UK can arguably be traced back to 1986, and compulsory 'Restart' interviews for claimants after a certain period, and as such the first introduction of 'conditionalities' with the possible outcome of 'sanctions' for non-compliance.

A further project was introduced in 1999, the Working Families Tax Credit, a tax credit scheme for low income workers which was meant to provide an incentive to work, and to continue in work.

Professor Richard Beaudry, from the Department of Economics at the University of York, defined the New Deal as follows 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 targeting the young unemployed (18-24-year-olds), the New Deal programmes subsequently targeted other groups. These include:[1]

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

New Deal 25+ targeted aged 25+ unemployed for eighteen months or more. In terms of funding, £350 million was allocated up to 2002.

New Deal for Lone Parents targeted 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 targeted those with disabilities in receipt of Incapacity and similar benefits. £200 million was budgeted for the program up to 2002 (Peck, “Workfare” 304-305). This was superseded by the notorious 'Work Capability Assessment', introduced by the Brown government in 2008, and administered by Atos Healthcare. The disputed test on the supposed 'eligibility' of the disabled, sick, and those with incurable conditions for Employment Support Allowance, and Disability Living Allowance, has mostly found claimants made to go through it as being 'Fit for Work', thus rendering them ineligible for ESA and DLA, and making them into 'Job Seeker's'. Claimants unable to walk, talk, and requiring 24-hour care have been just the more shocking and absurd examples of those found 'Fit for Work', who are very obviously anything but. In March 2014, Atos announced it was exiting its contract with the DWP more than 12 months before it was due to end, because of protests against the organisation, and the storm of negative publicity it has been beset by.

New Deal 50+ targeted those aged 50+.

New Deal for Musicians was a little-known element aimed at unemployed musicians.

Referral procedure[edit]

The greatest emphasis of the first New Labour government was the NDYP, which was a pilot phase for more ambitious New Deal reforms with other groups. The NDYP began with an initial compulsory 'consultation session', referred to as 'Gateway', that focused on improving job search and interview skills. This training was provided by a third-party organisation from the workfare industry such as a4e, a quango such as CSV or a charity spin-off such as YMCA Training. If an employment search still proved unsuccessful after the Gateway sessions, to continue to receive Job Seeker's Allowance, one of four options had to be chosen:

• A subsidised job placement. The subsidy being £60 per week, and lasting 6 months; a £750 training allowance was also available to participants. Those taking part were not paid wages.[citation needed]

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

• Work in the voluntary sector, called the 'Community Task Force': those taking part were paid JSA plus a £15 training allowance.

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

Participation in one of the four options was mandatory in order to be still able to claim JSA, refusal to participate lead to 'sanctions' - withdrawal of JSA, and referral to a 'Decision Maker' who decided the outcome of 'sanctions' on the claimant.

Flexible New Deal[edit]

A new scheme, called the 'Flexible New Deal', was introduced in October 2009, aimed at revamping the programme, that had by then been in existence for more than a decade.[2] Following the formation of the Conservative-led coalition government after the General Election of May 2010, Tory minister Chris Grayling announced the end of the New Deal that October. Grayling said the scheme had cost over £31,000 per job placement. Although the figure quoted was correct at the time, the project was front loaded with 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 was replaced in the Summer of 2011 by the Coalition Government's Single Work Programme [2]

Steps to Work[edit]

Steps to Work was the replacement for the New Deal in Northern Ireland and is still in existence. It is administered by the Department for Employment and Learning through its Jobs and Benefits Office. Steps to Work came into effect in 2008 and consists of largely the same provisions as the New Deal with the exception that payment by the Department is now more focused towards employment outcomes - and thus payment to workfare third parties - than previously.


Critics claim that participants failed 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 highlighted.[5]

Another criticism is that unemployed people obliged to attend the 'Options' stage of the NDYP were not counted in the Government's official figures for people of working age who are claiming unemployment benefit[citation needed] - a habit of incumbent governments. Some also say[who?] that New Deal was designed with this in mind, to allow the Government to release lower figures for unemployment: a criticism of all workfare programmes. New Labour claimed the NDYP led to a considerable decrease in JSA claims for 18- to 24-year-olds[citation needed], something not lost on critics, who have cited the mandatory nature of such schemes as an additional veiling of the actual rate of unemployment.

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 was criticised as difficult to use, further reducing the transparency of the programme. DWP data shows that around 30% of leavers of the NDYP prior to 2005 left for an "unknown destination",[6] while around 42% went into employment and 44% remained in receipt of JSA.[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 some new participants saw the scheme 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 third-party sub-contractor to find them 'work placements'. The stage lasted 13 weeks (26 weeks for NDYP) and it was widely known that the organisations involved saw participants as free labour who they were under no obligation to hire as employees. Further criticisms have noted the increasing number of 'retreads' on the NDYP, that is those returning to the scheme. Figures suggest that around one third of all NDYP participants returned to the program for a second time after another 6-month period of sustained unemployment. The New Deal was also criticised by participants made to work full-time for only £60 a week. Whether the figure of a third displays the program's success is debatable, and it is for these retread figures that the 2 in 5 people securing employment in usually unsustainable zero-hour agency jobs that were highlighted in Episode 2 of Benefit Busters on Channel 4 in late 2009.

The coalition's own policies further accelerated and intensified workfare, but have met with what many consider abject failure - as the DWP has found to its cost - once the full punitive nature of these schemes emerged.

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. 
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