New Deal (UK)
Encyclopedia
The New Deal is a programme of active labour market policies
introduced in the United Kingdom
by the Labour government in 1998, initially funded by a one off £5bn windfall tax
on privatised utility companies. 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.
. 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 for Young People (NDYP) – has received by far the greatest proportion of New Deal funding (£3.15 billion through to 2002 ). 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.
, 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 paid a wage from the employer.
• Full-time education and training, for up to 12 months.
• 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.
cancelled the Flexible New Deal scheme,complaining it had cost over £31,000 per job placement. It is due to be replaced by Summer 2011 by the Coalition Government
's Single Work Programme
http://www.regen.net/news/ByDiscipline/Economic-Development/1009458/Flexible-New-Deal-contracts-risk-cancelled/
and is administered by the Department for Employment and Learning
through it's Jobs and Benefits Office network. Steps to Work came into effect in 2008 and consisits 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.
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 . Some say 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 .
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". According to the DWP data, around 42% went into employment while 44% of leavers of the NDYP remained on benefits.
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.
Active labour market policies
Active labour market policies are government programmes that intervene in the labour market to help the unemployed find work. Many of these programmes grew out of earlier public works projects designed to combat widespread unemployment in the developed world during the interwar period...
introduced in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
by the Labour government in 1998, initially funded by a one off £5bn windfall tax
Windfall Tax (United Kingdom)
The Windfall Tax was a tax on what were claimed to be "the excess profits of the privatised utilities" , introduced by the Labour government in 1997. It followed from their manifesto commitment made during the 1997 general election campaign to impose a "windfall levy" on the privatised utilities...
on privatised utility companies. The stated purpose is to reduce unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
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
London School of Economics
The London School of Economics and Political Science is a public research university specialised in the social sciences located in London, United Kingdom, and a constituent college of the federal University of London...
Professor Richard Layard
Richard Layard
Richard Layard, Baron Layard is a British economist. He was founder-director in 1990 of, and is a current programme director at, the Centre for Economic Performance at the...
, 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.
Purpose
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 CreditWorking tax credit
The Working Tax Credit is a state benefit in the United Kingdom made to people who work on a low income. It is a part of the current system of refundable tax credits introduced in April 2003 and is a means-tested social security benefit...
. 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
University of York
The University of York , is an academic institution located in the city of York, England. Established in 1963, the campus university has expanded to more than thirty departments and centres, covering a wide range of subjects...
, 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
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:http://www.jobcentreplus.gov.uk/JCP/Customers/New_Deal/• New Deal for Young People (NDYP) – has received by far the greatest proportion of New Deal funding (£3.15 billion through to 2002 ). 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
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 a4eA4e
A4E is a training company based in the United Kingdom. The company began in Sheffield in 1991 to provide redundant steelworkers with training so that they could find new jobs...
, CSV
Community Service Volunteers
Community Service Volunteers is the UK's largest volunteering and training charity.CSV was founded in 1962 by Mora and Alec Dickson, who also founded Voluntary Service Overseas . In the 2004/2005 financial year, CSV had six operating companies with a total expenditure of £43 million, employing 944...
or YMCA
YMCA
The Young Men's Christian Association is a worldwide organization of more than 45 million members from 125 national federations affiliated through the World Alliance of YMCAs...
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 paid a wage from the employer.
• Full-time education and training, for up to 12 months.
• 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
A new scheme, called the "Flexible New Deal", was introduced in October 2009, which has revamped the service. In October 2010 Chris GraylingChris Grayling
Christopher Stephen "Chris" Grayling, PC, MP , is a British politician. A member of the Conservative Party, he served in the Shadow Cabinet from 2005 to 2010 and was the party's Shadow Home Secretary from 2009 to 2010. Following the 2010 general election, he was appointed a Minister of State in the...
cancelled the Flexible New Deal scheme,complaining it had cost over £31,000 per job placement. It is due to be replaced by Summer 2011 by the Coalition Government
Coalition government
A coalition government is a cabinet of a parliamentary government in which several political parties cooperate. The usual reason given for this arrangement is that no party on its own can achieve a majority in the parliament...
's Single Work Programme
http://www.regen.net/news/ByDiscipline/Economic-Development/1009458/Flexible-New-Deal-contracts-risk-cancelled/
Steps to Work
Steps to Work is the brand name for the New Deal in Northern IrelandNorthern Ireland
Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...
and is administered by the Department for Employment and Learning
Department for Employment and Learning
The Department for Employment and Learning , formerly the Department of Higher and Further Education, Training and Employment , is a devolved Northern Ireland government department in the Northern Ireland Executive...
through it's Jobs and Benefits Office network. Steps to Work came into effect in 2008 and consisits 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
Social security
Social security is primarily a social insurance program providing social protection or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may refer to:...
legislation, these functions having been retained by DWP and Westminster
Westminster
Westminster is an area of central London, within the City of Westminster, England. It lies on the north bank of the River Thames, southwest of the City of London and southwest of Charing Cross...
however the Social Security Agency
Social Security Agency
The Social Security Agency is a government agency in Northern Ireland. It is a department within the Department for Social Development , dealing with social security.-Services:...
works in tandem with DEL to ensure welfare-to-work participants still receive state funded benefits.
Criticisms
Critics claim that participants fail to see the value in the programmes, and the programmes are not effective in equipping participants for work. 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.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 . Some say 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 .
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". According to the DWP data, around 42% went into employment while 44% of leavers of the NDYP remained on benefits.
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
- Jobseeker's AllowanceJobseeker's AllowanceJobseeker's Allowance is a United Kingdom benefit, colloquially known as the dole . It is a form of unemployment benefit paid by the government to people who are unemployed and seeking work. It is part of the social security benefits system and is intended to cover living expenses while the...
- Jobcentre PlusJobcentre PlusJobcentre Plus was a government agency for working-age people in Great Britain. The agency was formed when the Employment Service, which operated Jobcentres, merged with the Benefits Agency, which ran social security offices, and was re-named Jobcentre Plus on 1 April 2002...
- WorkfareWorkfareWorkfare is an alternative model to conventional social welfare systems. The term was first introduced by civil rights leader James Charles Evers in 1968; however, it was popularized by Richard Nixon in a televised speech August 1969...
- Welfare-to-work
- Poor Law Amendment Act 1834Poor Law Amendment Act 1834The Poor Law Amendment Act 1834, sometimes abbreviated to PLAA, was an Act of the Parliament of the United Kingdom passed by the Whig government of Lord Melbourne that reformed the country's poverty relief system . It was an Amendment Act that completely replaced earlier legislation based on the...
- Work for the doleWork for the doleWork for the Dole is an Australian federal government program that is a form of workfare, work-based welfare. It was first permanently enacted in 1998, having been trialed in 1997....
(AustraliaAustraliaAustralia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
) - CentrelinkCentrelinkCentrelink is the trading name of the Commonwealth Service Delivery Agency , a statutory authority responsible for delivering human services on behalf of agencies of the Commonwealth Government of Australia. The majority of Centrelink's services are the disbursement of social security payments...
(AustraliaAustraliaAustralia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
)