S P & A  0144 – 5596
V. 37, No. 7, DECEMBER 2003, . 709 – 724
Original
Article
Blackwell
Oxford,
Social
SPOL

©
December

Blackwell
–
Policy
UK
Publishing

Publishing
& Administration
LtdLtd. 
The “Employment-first” Welfare State: Lessons from
the New Deal for Young People
Dan Finn
Abstract
New Labour is constructing an “employment-first” welfare state. It plans through Jobcentre Plus
to transform the passive culture of the benefit system by creating more explicit links between
individual behaviour and engagement with labour market programmes. The New Deal for Young
People (NDYP) has been at the forefront of these changes. This paper reports on the findings from
four case studies that explored how the NDYP has changed young people’s experience of the welfare
state. It establishes that NDYP offers a mixture of employment assistance and “pressure” and has
made progress in developing front-line services and helping young long-term unemployed people
into work. NDYP does not, however, work for all. In areas of high unemployment and for some
disadvantaged groups intermediate labour markets could enhance the New Deal and make real
the offer of “employment opportunities for all”.
Keywords
Young people; Employment; Welfare state; New Labour policies
Introduction
Britain’s Labour government is constructing an “employment-first” welfare
state (DfEE ). A new agenda of “rights and responsibilities” brings more
explicit links between individual behaviour, benefit entitlement and engagement with the labour market.
The first phase of New Labour’s welfare reform ( until ) witnessed
the introduction of New Deal employment programmes alongside tax and
benefit changes aimed at “making work pay”. A second phase, outlined in a
 Green Paper, linked welfare reform with restoring full employment.
The prime minister announced a “historic opportunity” to build on “economic stability and reform of the welfare state” to secure “employment
opportunities for all”—New Labour’s “modern” definition of full employment (DfEE : vi).
Address for correspondence: Professor Dan Finn, School of Social, Historical and Literary Studies,
University of Portsmouth, Milldam, Burnaby Road, Portsmouth, PO AS. E-mail: [email protected]
© Blackwell Publishing Ltd. ,  Garsington Road, Oxford OX DQ , UK and
 Main Street, Malden, MA , USA
Following the  election victory the government set targets to increase
employment rates, reduce child poverty and tackle social exclusion. Key
policy developments have included increases in cash benefits for children; the
extension of tax credits that now cover low-paid workers without children;
the intensification of New Deal programmes; and the introduction of mandatory “work-focused interviews” for working-age benefit claimants.
Welfare reform has been accompanied by institutional change. A Department of Work and Pensions has been created and the Employment Service
(ES) and Benefits Agency (BA) merged into “Jobcentre Plus”. By  the
new agency will integrate the work of nearly , staff, bringing together
job-search support and benefit payments for over  million people in a
network of some , district and local offices. The agency has annual
performance targets designed to ensure that it acts as an “enabler” for those
without work, especially the most disadvantaged, while simultaneously
“policing” the benefit system (Price ). The tensions in delivering this
dual role are reinforced by the less explicit role that Jobcentre Plus plays in
maintaining work incentives and labour discipline, albeit in a minimally reregulated labour market (King ).
This strategy has proved controversial. There has been support for the
ambition to sustain full employment, end long-term unemployment and
tackle child poverty, but vigorous opposition to aspects of the “employmentfirst” strategy. Much of this opposition has been expressed by groups working
within or reliant upon the most affected services (Taylor-Gooby ). Critics
have questioned the equity, viability and limitations of the broad strategy,
arguing that it places a disproportionate focus on improving employability
and on paid employment being the primary route to social inclusion for all
working-age people (Lister ; Williams ).
This paper is concerned primarily with the impact of the “employmentfirst” strategy on the group that New Labour put at the forefront of its 
programme: the younger long-term unemployed. The lessons from the
NDYP should, however, highlight the challenges facing New Labour’s overall
strategy as the “employment-first” approach is extended to all those of working age who rely on the benefit system.
The government has claimed much success for the NDYP and it has been
the template for many of the other New Deal programmes delivered by
Jobcentre Plus. Critics, however, have argued that the main impact of the
programme has been to intensify the “stricter benefit regime”, introduced
under the Conservatives, to put pressure on the unemployed to compete for
low-paid jobs in a deregulated labour market (see, for example, Tonge ;
Gray ). Others have argued that, in areas of low labour demand, the
NDYP’s focus on improving employability will result in young people being
“churned” through employment programmes and short-term jobs (Turok
and Webster ). Some have even suggested that the programme may
prove responsible for “driving young people out of the system” (Willets et al.
: ).
This paper assesses the validity of the arguments on both sides. Has New
Labour largely consolidated the neo-liberal “workfare regime” that it inherited from the Conservatives (Peck ; Grover and Stewart ), or has it

© Blackwell Publishing Ltd. 
started to deliver the “ethical employment policy” of which White suggested
it was capable (White )?
The paper draws on the results from the qualitative and quantitative
official evaluations that have been published on the NDYP as it evolved
during –. It draws most extensively, however, on the findings from
four independent case studies carried out in different cities between  and
. Its objective is to assess the statistical “impacts” of the programme and
to explore the ways in which the new welfare regime has reshaped the daily
interactions between bureaucrats and citizens.
New Labour, Full Employment and the Stricter Benefit Regime
In the s, the leadership of the Labour Party changed its approach to unemployment and the welfare state. New Labour abandoned overt Keynesian
demand management but rejected the neo-liberal views of the Conservatives.
Instead, New Labour turned to the work of economists that challenged the
view that the “NAIRU” (the non-accelerating inflation rate of unemployment) had to be as high as it was in the UK. The new approach suggested
that “supply-side” measures such as investment in human capital and labour
market programmes could lower the NAIRU. The stricter job search regime
introduced by the Conservatives was to be retained but was to be supplemented by a minimum wage and a “New Deal” for the long-term unemployed. This “synthesis” would require individuals to compete for and
obtain jobs but also would invest in improving the “employability” of those
furthest from the labour market. This increase in labour supply would, it was
argued, allow the economy to operate at a higher level of overall employment
and output without creating inflationary pressures (Layard et al. ).
New Labour endorsed the obligations that had been imposed on the
unemployed through the  Jobseeker’s Allowance ( JSA), but if it was to
deliver its own strategy it would have to counteract many other aspects of
this “inheritance”. The “stricter benefit regime” of the Conservatives had
helped to reduce long-term unemployment through its combination of
stricter eligibility rules, six-monthly Restart interviews and compulsory jobsearch courses, but the legacy also included a front-line ES that was poorly
regarded by staff and claimants alike. The target regime of the ES allowed
little time for personal contact between the unemployed and advisers, and
this was exacerbated by high staff turnover and large caseloads. The ES
performance regime also encouraged staff to divert the long-term unemployed on to other benefits and to place claimants in any job, no matter how
short-term (Price ). By the mid-s qualitative research revealed that
many of the long-term unemployed and those working with them were cynical
about “schemes” and perceived the ES as more concerned with “policing”
the benefit system than with helping people into work (Blackmore ).
The New Deals
In a world of limited resources, Conservative spending plans, and four
electoral defeats, New Labour’s  programme was cautious and targeted.
© Blackwell Publishing Ltd. 

The New Deal, though, was to be financed through the most overt redistribution of wealth in Labour’s first term in office. A £ billion “windfall tax”
was levied on the profits of privatized utilities and the tax effectively paid for
all the New Deal programmes between  and  (HM Treasury ,
table .). Priority was given to the young unemployed, with the incoming
government pledged to finding jobs for , - to -year-olds out of
work for over six months. This was followed by a range of other “New Deals”
and by  there were “New Deals” for long-term unemployed adults aged
over , lone parents, disabled people, those aged over  and the partners
of unemployed people.
Each New Deal addresses the particular problems of a specific group, but
all have been based on the principles implemented first in the programme
for young people—“more help, more choices, and the support of a Personal
Adviser . . . matched by a greater responsibility on the part of individuals to
help themselves” (DfEE , para. .). Despite the common framework,
however, there remain significant differences in the level of resources allocated
for each programme. Nearly  per cent of the proceeds of the windfall tax
was spent on mandatory New Deals for the long-term unemployed, whereas
just under  per cent was spent on the voluntary programmes aimed largely
at lone parents and people with disabilities (HM Treasury , table .).
These employment programmes have supplemented other, costlier parts
of the strategy, especially the developing system of in-work tax credits and
childcare provision.
Rights and Responsibilities in the New Deal
All unemployed young people claiming JSA for six months are now entitled to
intensive employment assistance. Young people who face particular barriers,
such as the young homeless, can opt to take advantage of this assistance from
the onset of unemployment. The social contract offered by New Labour is
one of employment-relevant, client-centred assistance but without an option
of continuing, simply, to receive JSA.
In practice, unemployed people who do not comply with JSA or New
Deal requirements face sanctions that terminate all cash assistance. If an
unemployed person is unavailable for work, fails to attend a meeting with
their Adviser or to “sign on” without good cause, they lose their entitlement
to benefit. Alternatively, an individual can lose cash assistance for up to
 weeks if they leave, are dismissed, or refuse a job without good cause.
The penalties for not attending or being dismissed from an employment
programme without good cause escalate from a two-week sanction, to four
weeks for a second penalty, rising to  weeks for the third instance of
non-compliance. Specified groups can claim hardship payments and
Housing and Council Tax benefit is only withdrawn for the first type of
sanction.
Participation in the New Deals for the registered unemployed commences
with a “Gateway” process where a New Deal Personal Adviser (NDPA)
tackles employment barriers and provides assistance with job search and
careers guidance. This interview takes up to an hour and is followed by

© Blackwell Publishing Ltd. 
regular contact with an NDPA. This contrasts with the “one-off ” - to minute Restart interview typically available under the stricter benefit regime.
If a young unemployed person is unable to get an unsubsidized job during
their time in the Gateway they must participate in a full-time employment
or training option. This has included an Employment Option with a subsidized, waged job for six months with an employer; an Environmental Task
Force (ETF ) or Voluntary Sector Option (VSO) that gives up to six months’
employment, and most participants are paid their benefit plus a small
premium; and a Full-time Education and Training Option (FTET ) that
may last for up to a year, mainly restricted to those who lack basic skills. All
the options involve vocational training. Those who do not get a job after
participation are entitled to “follow-through” support where NDPAs try to
place them in unsubsidized jobs.
Most of the young people engaged in the New Deal at any one time are
in the “Gateway”. In March  there were nearly , young people
on the NDYP of whom just over  per cent were in the Gateway; about a
quarter were in options; and about  per cent in “follow-through” (detailed
New Deal statistics are published every quarter at http://www.dwp.gov.uk/
asd/ndyp.html).
For long-term unemployed people over , a revamped New Deal was
implemented in April  guaranteeing them the right to intensive employment assistance after  months’ unemployment. This New Deal was based
on NDYP with an initial Gateway phase, followed by more intensive options
and a follow-through. Long-term unemployed people aged up to  must
now participate or face the benefit sanction regime that applies to younger
people.
The “Front-line” Experience of the New Deal
The “employment-first” welfare state aims to change the culture of Benefit
Offices and Jobcentres. In Jobcentre Plus offices, all working-age claimants
have access to personal advisers, with specialist New Deal advisers for the
long-term unemployed and for those lone parents and people with disabilities
who choose to enter the programme. The template for this “cultural revolution” has been both the NDYP and the programme for lone parents.
The remainder of the paper draws on the findings from four research
projects that explored the introduction of the NDYP and the extent to which
the new approach had reshaped interactions between front-line staff and
clients. The case studies were carried out in Manchester, Portsmouth, London
and Coventry, between  and . Two were independently funded and
two were commissioned. Each involved interviews and focus groups with frontline advisers, providers and young unemployed people (Finn and Simmonds
; Finn and Blackmore ; CESI ; Perkins-Cohen ).
There are, of course, significant differences between the case study areas.
Those individuals interviewed were also not chosen randomly. In London,
some young people were interviewed in the Gateway phase, but most of the
interviews in each area were carried out with young people in the ETF and
VSO. They were some of those facing the greatest employment barriers.
© Blackwell Publishing Ltd. 

The Gateway, Job Aspirations and Matching
The Gateway combination of advice, support and “pressure” has been seen
as one of the most effective innovations in the programme (Millar ). It
is the New Deal experience for the two-thirds of young people who leave the
programme during this phase. The evaluation evidence shows a “carrot and
stick” effect, with most young people intensifying job search as a result of
increased motivation and new techniques, and others doing so in order
either to avoid joining an option or benefit sanctions (Ritchie ). About
one in ten young people never attend a first interview and about  per cent
of those who attend a first interview leave before entering an option.
In the case study areas the front-line staff confirmed that the Gateway
enabled NDPAs to offer advice and assistance unavailable under the previous
regime. The NDPAs said they were able to provide individualized services
for the young person such as identifying barriers to work, helping with
applications, contacting employers and discussing employment goals. There
was, however, evidence that NDPAs focused more on those deemed most
“job-ready”.
Many of the young people were appreciative of the support they were
given—a finding reflected in national surveys (Hasluck ). Some complained, however, that they were being “pushed” into things. Others said
there was little difference to “signing on”. For one young man “the only
difference is that I go up two extra flights of stairs”.
The aim of “joining up” NDYP with other services proved more difficult.
In each of the areas NDPAs acknowledged problems in making successful
referrals to other services needed by the most disadvantaged. In some cases
local services were either unavailable or had long waiting lists. In other cases
clients, and sometimes NDPAs, found it difficult to identify or tackle deepseated barriers, especially literacy, numeracy, health and behavioural problems.
In all four areas the young people were clear that their aim from the New
Deal was a “reasonable job”—generally defined as one that would offer
employment security and opportunities for enhancing skills and earning power.
They believed that they should be able to choose what work they did and
should not be expected to take short-term “agency work” or any “crap” job:
“No one at this table wants to work at McDonald’s, nobody here thinks ‘yes, I’d like
a career at McDonald’s’ . . . If they were given the opportunity to do something in
the areas that they want, then they’d take it . . . Give people the opportunity to do
something they are really good at rather than a crap job—then there’d be a rush to
get off the dole.”
There was little evidence, however, that the young unemployed were being
forced to take jobs. Most of the young people interviewed said that their
advisers had taken their interests and career aims into account. While some
had experienced “pressure” to consider jobs they did not want, most criticism
centred on how they were forced to join an option as the Gateway progressed.
Advisers seemed keen to place young people in their preferred jobs
but were clear that not all clients could be so matched. A key part of their

© Blackwell Publishing Ltd. 
task was to tackle expectations. The NDPAs aimed to persuade clients to
expand the type of vacancies they would consider and to guide them on the
importance of acquiring work experience to improve their employability.
While advisers acknowledged putting “pressure” on some young people
to take jobs that they did not want, they appreciated the limits to what
they could achieve. Inappropriate matching or pressure could result in
someone not turning up or leaving a job or option early. “Agency jobs”,
which were abundant, were thought appropriate only in very limited
circumstances.
During the fieldwork period there was evidence that, as the programme
moved from its innovative phase to more routinized implementation, it was
losing some of its distinctive features. Advisers pointed to several trends:
• they did not have enough time to do follow-up with clients placed in jobs
or options;
• too much time was absorbed by frequent changes in complex procedures
and processes and by excessive paperwork; and
• their caseloads were difficult to manage as they contained a greater proportion of clients with complex employment barriers.
There was concern that the individual focus of the New Deal was giving way
to an increased emphasis on placements, especially into unsubsidized jobs,
driven by performance targets:
“The message has changed now. We were trying to get at their issues, trying to
understand their problems, build up the relationship, but that’s gone now. They just
want them off the register.” (NDPA, London)
The “Hardest to Place” and “Hard Core”
Most young people entering NDYP leave quickly, mainly into jobs. According
to NDPAs, there were two groups however, that did not make a rapid transition. One group, the “hardest to place”, often had employment barriers
that could not be tackled during the Gateway phase and/or required other
significant interventions. These included those clients without accommodation or those with debt or child support issues. There were those too with
learning or behavioural problems:
“We are not trained counsellors and we need to be for a lot of the people we see. We
try but these people need specialist help and it isn’t always available locally.”
(NDPA, Manchester)
Another group were characterized as “hard-core”. A small but significant
minority of clients were thought to be “working the system”. It was thought
that these clients supplemented their income through hidden employment,
“benefit-surfing”, and activities as diverse as “booze-running”, petty theft or
“dealing”. Other “hard-core” clients came from “tough” estates or particular
families where there was deep antipathy to “schemes”:
© Blackwell Publishing Ltd. 

“Most of our time is taken up dealing with the  per cent hard core who are
deliberately finding ways to beat the system and avoid being put through the programme.” ( NDPA, Portsmouth)
“Some of these clients are very wary; there is a lot of mistrust. The bulk of the
problems now are because we are dealing with stock . . . Some of these people are
second and third generation unemployed and there are entrenched attitudes. In some
places there is a benefit mentality.” ( NDPA, Manchester)
Notwithstanding the controversial sanctions regime associated with the NDYP,
the advisers remained sceptical about its power to change the behaviour of
the “hard core”.
The Options: Employability or Work First
The role of the options is to improve the employability of those young people
who cannot obtain unsubsidized jobs. The evidence on New Deal employment subsidies supports their value as an “effective way” of getting (both
young and old) New Deal clients into “sustainable employment” (Hasluck
: ). The non-employer-based options have, however, been criticized
for not securing the level of job entries expected, with fewer than one in five
leavers going directly into a job.
Providers attribute this to their clientele, who are significantly more disadvantaged than those who entered earlier programmes, and who had not
been adequately prepared for work through the Gateway. Providers reported
particular problems with young people who were unmotivated, lacked social
skills, had turbulent personal lives, and found it difficult to work with others.
Despite these problems, the providers interviewed were generally positive
about the impact they could have through the New Deal:
“A lot of these New Dealers come here with a history of failure—and we can turn
them round . . . we can’t turn them all around, but we turn a good number around.”
(ETF provider, Manchester)
The young people endorsed the perceptions of the providers. Many of those
on an option agreed that participation gave them routine, increased selfesteem and confidence, and hoped it would improve their job prospects.
Levels of satisfaction were highest among those who were able to do something of interest to them. Those who were mandated to participate expressed
most dissatisfaction. In Manchester, those required to participate were highly
dissatisfied with carrying out unpleasant tasks (for example, washing floors in
blocks of flats and picking up needles and nappies from the surrounding
gardens). This group were highly negative:
“New Deal is a training scandal—it’s a way of cutting down the numbers and
getting you out of the way for six months . . . by that time other people are going to
be slammed on it. It’s just a way of making the government look good . . . ‘Oh look
what the government are doing. Look at our New Deal badges.’ ”

© Blackwell Publishing Ltd. 
Many providers expressed concern that their capacity to change such attitudes
was undermined by pressures to boost their employment outcomes. Some
were anxious that linking more of their funding to job entry would lead to
encouraging young people to take less satisfactory jobs when they might gain
more (in terms of longer-term employability) from longer on their option.
Others believed that the job entry focus was devaluing their success in
improving life skills and motivation:
“What are the priorities of New Deal? It seems to be about targets for jobs and less
about employability and a client-centred approach. The government needs to make up
its mind. I’m getting mixed messages.” (VSO provider, Portsmouth)
Advisers and option providers acknowledged that job entry was important,
but emphasized that it should not be the only criterion on which their work
is judged. They emphasized that some of the least employable young people
made significant progress in the New Deal, without necessarily getting a job,
and this had a social return as much as an economic one:
“Sometimes it’s not the job that is the priority, because they’ve got so many other
additional problems. For some it’s an achievement to get them to stay for the whole
course . . . If you look at how poor their record was before they started, the fact that
they’ve lasted six months or a year is a real achievement.” (FTET provider)
“Jobs can’t be the only test. We have helped change people’s lives . . . It’s very, very
difficult to show it. They might not move on into work but they’ve moved on. They’ve
gained such a lot. They’ve got more confident. They are able to talk to other people.
It’s that kind of thing, and I don’t think New Deal gets enough credit for that.”
(ETF provider)
The New Deal and Sanctions
There has been concern about the impact of the New Deal sanctions regime.
Initially NDYP operated within general JSA regulations but in March 
the regime intensified and after a “third offence” an individual may now have
their benefit suspended for up to six months. The Social Security Advisory
Committee (SSAC) expressed concern that although the severity of the
sanction could be warranted for deliberately flouting the rules, it “might unintentionally penalize a higher than expected number of other groups who,
for a mixture of social, educational or health reasons, were unable to comply
with the requirements of New Deal Options” (quoted by Britton : ).
It is difficult to measure the extent to which young people have been
sanctioned through the New Deal, but one estimate suggests that some
 per cent of those called to attend may experience a benefit reduction
during the Gateway phase (Gray : ). During the option phase the
evidence on sanctions is clearer and the rate at which sanctions have been
imposed has increased, with over , reported in the first quarter of 
(Bivand , table ). These sanctions, imposed for either failing to attend
or leaving options without good cause, are experienced mainly by poorly
© Blackwell Publishing Ltd. 

educated and less motivated young men with regard to participation in the
ETF (Bonjour et al. : –). The number who experience a third
sanction is small. Some of those affected quickly obtain a job but a followup survey found a minority of vulnerable young people, as predicted by
SSAC, lost their benefits for six months (Saunders et al. ).
Front-line experience from the case study areas portrays a more complex
scene than that suggested by characterizations of an authoritarian regime.
Among the young people themselves there was a range of responses to
sanctions. Some resented their new responsibilities. Most, however, accepted
that sanctions were justified either to put pressure on those not seeking work
and /or to maintain discipline while participating in the programme. These
comments were made by ETF participants, most of whom had been required
to join the New Deal:
“If you’re constantly unemployed they have got a right to push you.”
“People should make the effort to work, not just sit around.”
“Sanctions are a fair way of stopping people from messing around. You have to have
something otherwise people would just stop whenever they felt like it.”
Most of the NDPAs agreed that sanctions were necessary to test willingness
to work and to convince young people that they should attend an option.
They were, however, critical about the processes involved. In their view the
regime was administratively complex, hard to implement, and generated a
disproportionate amount of paperwork. The eventual outcome was often
uncertain and, if a sanction was overturned, it damaged their credibility with
the client. Even when a sanction was imposed many clients could fall back
on family or friends or claim “hardship”, so, in their view, the penalty was
minimal:
“Frankly, sanctions don’t affect the hard core much because of hardship payments.
Sanctions are more of an inconvenience than a deterrent—a slap on the wrist,
and one that they seem to be able to accommodate quite comfortably.” ( NDPA,
Portsmouth)
This frustration with the sanctions regime was balanced by “front-line”
concern with the negative impact a tougher regime could have:
“I’m against imposing benefit sanctions because four months’ trust can go out the
window . . . I would prefer to use more intensive help.” (NDPA, Manchester)
Advisers also wanted discretion. They wanted to be able to extend the
Gateway rather than require a client reluctantly to join an option. Others
complained of an absence of suitable placements for the hardest to help. In
their view sanctions were too blunt an instrument to deal with individuals
with disruptive or chaotic lifestyles. There was a danger that the use of
mandatory referrals merely shifted “problem cases” to option providers.

© Blackwell Publishing Ltd. 
Other front-line providers warned that a harsher approach could impact
most on those with disadvantages rather than on those who understood how
to work the system. Some were concerned about stigmatizing young people
who, given additional time and resources, could be “turned around”:
“I’m not always sure that those branded as ‘hard core’ or ‘stroppy’ etc., haven’t
got deep-rooted problems that could be sorted out given more time and support.”
(Portsmouth voluntary sector provider)
Unknown Destinations
There has been considerable debate about the number of young people who
leave NDYP to enter an “unknown destination”. A variety of administrative
and other reasons account for the lack of information on the destination of
at least one in four of those leaving the New Deal.
This effect was not evaluated under the previous “stricter benefit regime”
but concern about this group prompted a large-scale NDYP follow-up survey
(O’Donnell ). The response rate was just below  per cent and the
researchers suggested there was no discernible evidence that the most disadvantaged were disproportionately represented among those who could not
be contacted. Of those contacted,  per cent initially had left the New Deal
to enter employment and just over  per cent reported that they had not
been entitled to claim due to sanctions. Some continued to “sign on”, others
were ill, and some entered education or otherwise left the labour market. At
the time of the survey the status of the young people had changed, with 
per cent reporting they were in work and  per cent claimant unemployed.
The researchers found that far fewer of those experiencing at least one of the
conditions associated with disadvantage (been in custody; slept rough; lived
in a hostel/foyer; been in care)—less than  per cent—had left NDYP to
enter employment.
The front-line agencies reported no “surge” in cases, comparable to that
in  when benefit entitlement was withdrawn from - and -year-olds.
They stressed, however, that many of their clients were only tentatively
engaged with the labour market. They were likely to move in and out of jobs
quickly and to engage sporadically with the New Deal. The challenge for
NDPAs and Jobcentre Plus was to integrate their employment assistance with
a network of services provided by other agencies and the voluntary sector.
The chief concern among these agencies was that sanctions might exacerbate
rather than ameliorate the social exclusion of their clients.
The Employment Impact of the New Deal
At the end of  the Labour government announced it had achieved its
first target and assisted , young people into jobs (DfEE ). Longterm youth unemployment, as measured by the receipt of JSA, had fallen
dramatically, and macro economic evaluations had demonstrated that the
programme was cost-effective, that youth unemployment was about ,
lower than it would have been without NDYP, and that , participants
© Blackwell Publishing Ltd. 

were in work six months after joining the programme who would not
otherwise have been so (White and Riley : ). Evaluations of the New
Deal programmes for the older long-term unemployed and for lone parents
have also demonstrated “net” additional employment effects (Blundell ;
Lessof et al. ).
These data mask some critical issues. Firstly, large numbers of young
people do not get jobs after they participate in the programme. Of the
, people who had started on NDYP by March  only  per cent
were known to have entered unsubsidized employment, and nearly one in
five of these jobs ended within  weeks (the measure of job retention). If half
of the  per cent of leavers who entered unknown destinations left to take
a job this suggests that less than half those going through NDYP leave to take up a
job. A consequence is increased numbers of unemployed young people enter
the NDYP for a second or third time.
Another trend seems clear. By the start of  there was evidence that
the job entry rate for NDYP was falling as advisers struggled to place clients
with complex employment barriers into sustained employment in a labour
market showing the first signs of an economic downturn. Whereas in 
just over  per cent of NDYP leavers got unsubsidized jobs, by March 
the unsubsidized job entry rate had slipped to . per cent (TUC ).
The impacts of NDYP also vary geographically. The programme was
most successful in rural areas, especially in the South of England, where over
half of participants typically entered jobs. Performance was worst in highunemployment industrial cities and in the inner city of London. Job entry
rates there could be as low as  per cent and retention rates were lower
because of the relatively poor quality of jobs available. This performance in
high-unemployment areas stemmed from an interplay between local labour
market conditions, the characteristics of participants and the capacity of local
delivery systems (Sunley and Martin ). Whatever the economic circumstances of a particular area, the job entry rate for minority ethnic group
NDYP participants has been lower than that of their white counterparts
(Strategy Unit : ).
The government has responded to these challenges in two ways. Treasury
and Departmental economists argue that labour market turnover and
economic change generate a wide range of vacancies in most parts of the
country and that buoyant labour markets exist close to areas of high unemployment (ESC ). The issue, they suggest, is employability and physical
access to jobs (such as transport links) rather than job creation. The economists
emphasize that NDYP participation has also reduced the “scarring” effect of
long-term unemployment with those re-entering the programme exiting at
the same rate as the newly unemployed rather than becoming “detached”
and experiencing longer spells of unemployment (Wells ).
The other response has been to redesign elements of the NDYP to make
it more flexible and relevant to employer demands. The National Employment Panel in particular has initiated a range of employer-led innovations
aimed at improving retention and the quality of the jobs available to
New Deal participants (see, for example, the description of its work and the
“Ambition” initiatives at www.cesi.org.uk/events/events_/ndic/presentations/

© Blackwell Publishing Ltd. 
Cay_Stratton.ppt). The government has also made significant changes in
its performance target regime and in allocating funding. Job entry targets
are now geared to improve performance in the lowest-performing areas,
especially those with high concentrations of minority ethnic groups. The
targets also encourage Jobcentre Plus to work in partnership, rather than in
competition, with other organizations. Extra emphasis is placed on counting
job entries that are actually sustained (albeit the four-week criterion adopted
still seems somewhat limited).
There have been successive initiatives aimed at giving NDPAs more
flexibility and tools to work with those “hardest to help”. Perhaps the most
significant of these pilots is a programme called “Step Up”, which is a oneyear temporary job creation programme targeted at high-unemployment
areas and aimed at those unemployed New Deal participants who would
otherwise be requalifying for a second or third stint in the programme.
Conclusion
As New Labour developed its “employment-first” strategy, Michael White
suggested that if initiatives like the NDYP were to become more than just
another “modestly effective” employment programme then the strategy would
need to establish a “fresh ethical code” for British employment policy (:
). He identified three criteria to help distinguish NDYP as an ethical as
against an instrumental policy: that it is rights-based; that it prioritizes
increased well-being for disadvantaged individuals or groups; and that some
cost “trade-off ” is acceptable between economic efficiency and equity.
This paper has shown that the NDYP contains these three, sometimes
contending, objectives. The programme has generated modest improvements
in employment outcomes and the front-line, client-centred experience of
NDYP seems to be far more positive than the monolithic instrument of social
control suggested by some critics. The programme has also been changed
rapidly to make it more flexible and responsive to the needs of employers
and particular localities.
NDYP has, however, struggled to assist those “hardest to help” into jobs
and this has been exacerbated by the hierarchy of options, the increased
emphasis on unsubsidized job entries, and the often blunt application of
benefit sanctions. Jobcentre Plus faces a major challenge to integrate and
sequence job search and placement alongside the other services necessary to
tackle social exclusion.
The radical potential of the NDYP will be undermined without that other
key to delivering an “employment-first” strategy—jobs. In many localities
the NDYP struggles to deliver the job entry rates essential if the programme
is to undermine the popular perception that such “schemes” are designed to
massage the unemployment figures. If the UK is to create something like the
ethical employment policy of countries such as Sweden and Denmark, then
it will need to create a viable intermediate employment sector for the hardest
to help. This does not necessitate a return to the “make-work” schemes
associated with old-style job creation programmes but a harnessing of the
potential of Intermediate Labour Market projects that have developed in
© Blackwell Publishing Ltd. 

high-unemployment areas to deliver transitional waged jobs for the longterm jobless (Marshall and MacFarlane ).
“Modernization” itself may also create new barriers and reinforce existing
ones. The integration of Jobcentre Plus involves the planned closure of at
least  local offices and an increased use of call centres and computerized
access points. This significantly reduces front-line contact for those with
limited English or keyboard skills. This challenges Jobcentre Plus both to
provide effective outreach services and to work in partnership with local
networks.
This assessment of the NDYP has implications for the broader “employmentfirst” strategy now being extended to cover working-age benefit recipients.
Paid work may offer a route out of poverty for many unemployed people,
especially when combined with an effective “make work pay” strategy. New
Deal programmes, however, struggle already to place those with multiple
employment barriers and there is much resistance to the extension of work
obligations to groups like lone parents (Dwyer ). When combined with
the modest improvements in employment rates generated by the New Deals
this suggests that many British citizens with caring responsibilities or with
disabilities or health problems will continue to rely on the benefit system.
Improving their living standards and life chances will require more than the
offer of employment assistance every year or so.
References
Bivand, P. (), Rights and duties in the New Deal. In Working Brief, , London:
Centre for Economic and Social Inclusion.
Blackmore, M. (), Mind the gap: exploring the implementation deficit in the
administration of the stricter benefits regime, Social Policy and Administration, , :
–.
Blundell, R. (), Welfare to Work: Which Policies Work and Why? Keynes Lectures in
Economics, London: University College and Institute for Fiscal Studies.
Bonjour, D., Dorsett, R., Knight, G., Lissenburgh, S., Mukherjee, A., Payne, J.,
Range, M., Urwin, P. and White, M. (), New Deal for Young People: National Survey
of Participants: Stage , ESR , Sheffield: Employment Service Research and
Development.
Britton, L. (), Sanctions and the hard to help. In Working Brief, , London:
Centre for Economic and Social Inclusion, pp. –.
CCSU (), Evidence Submission, Public Administration Committee, House of
Commons, accessed on  July at www.publications.parliament.uk/pa/cm/
cmselect/cmpubadm//ap.htm
CESI (), Job Retention and Upskilling in the NDYP, Unpublished report for London
and South East Region of the Employment Service, London: Centre for Economic
and Social Inclusion.
DfEE (), New Deal Facts and the Future: , off Welfare and into Work, London:
Department for Education and Employment.
DfEE (), Toward Full Employment in a Modern Society, Secretary of State for Education and Employment, Cm , London: Stationery Office.
Dwyer, P. (), Making sense of social citizenship: some user views on welfare
rights and responsibilities, Critical Social Policy, , : –.

© Blackwell Publishing Ltd. 
ESC (), Employability and Jobs: Is There a Jobs Gap? Fourth Report of the Education
and Employment Committee, Session –, vols  and , HC –I&II,
London: Stationery Office.
Finn, D. and Blackmore, M. (), Next Steps for Welfare Reform: Lessons from the New
Deal for the Young Unemployed in Portsmouth, Portsmouth: Portsmouth University.
Finn, D. and Simmonds, D. (), Improving the New Deal: Community and Environmental
Employment Across City Pride (Manchester, Salford, Tameside and Trafford), Manchester:
Employment and Regeneration Partnership.
Gray, A. (), “We want good jobs and more pay”: a participants’ perspective on
the new deal, Competition and Change, , : –.
Grover, C. and Stewart, J. (), The Work Connection: The Role of Social Security in
British Economic Regulation, Basingstoke: Palgrave.
Hasluck, C. (), Lessons from the New Deal: finding work, promoting employability, New Economy, , : –.
HM Treasury (), The Changing Welfare State: Employment Opportunity for All, London:
HM Treasury and Department for Work and Pensions.
HM Treasury (), Pre-Budget Report, London: HM Treasury.
King, D. (), Actively Seeking Work? The Politics of Unemployment and Welfare Policy in
the United States and Great Britain, Chicago: University of Chicago Press.
Layard, R., Nickell, S. and Jackman, R. (), Unemployment: Macroeconomic Performance
and the Labour Market, Oxford: Oxford University Press.
Lessof, C., Miller, M., Phillips, M., Pickering, K., Purdon, S. and Hales, J. (),
New Deal for Lone Parents Evaluation: Findings from the Quantitative Survey, WAE ,
Sheffield: Department for Work and Pensions.
Lister, R. (), New Labour: a study in ambiguity from a position of ambivalence,
Critical Social Policy, , : –.
Marshall, B. and MacFarlane, R. (), The Intermediate Labour Market: A Tool for Tackling
Long-term Unemployment, York: Joseph Rowntree Foundation, York Publishing Services.
Millar, J. (), Keeping Track of Welfare Reform: The New Deal Programmes, York: Rowntree
Foundation, York Publishing Services.
O’Donnell, K. (), New Deal Survey of Leavers to Unknown Destinations, ORC International, ESR , Sheffield: Employment Service Research and Development.
Peck, J. (), Workfare States, New York: Guildford.
Perkins-Cohen, J. (), What to Do When the Clients Don’t Show:  Ideas to Improve
Participation in Welfare to Work Programmes, Atlantic Fellowships in Public Policy,
London: Foreign and Commonwealth Office.
Price, D. (), Office of Hope: A History of the Employment Service, Policy Studies Institute,
London: University of Westminster.
Ritchie, J. (), New Deal for Young People: participants’ perspectives, Policy Studies,
, : –.
Saunders, T., Stone, V. and Candy, C. (), The Impact of the  Week Sanctioning
Regime, ESR , Sheffield: Employment Service, Research and Development.
Strategy Unit (), Ethnic Minorities and the Labour Market, London: Cabinet Office.
Sunley, P. and Martin, R. (), The Geography of Workfare: Local Labour Markets and the
New Deal, Project Report, Economic and Social Research Council, Swindon,
accessed via http://www.regard.ac.uk/research_findings/R/report.pdf
Taylor-Gooby, P. (), Blair’s scars, Critical Social Policy, , : –.
Tonge, J. (), New packaging, old deal? New Labour and employment policy
innovation, Critical Social Policy, , : –.
TUC (), New Deal: An Occasional Briefing, no. , London: Trades Union Congress.
Turok, I. and Webster, D. (), The New Deal: jeopardised by the geography of
unemployment? Local Economy, , : –.
© Blackwell Publishing Ltd. 

Wells, B. (), Worklessness and deprived areas: what’s the problem? Contribution
to plenary session at joint Department of Work and Pensions, Treasury and
Neighbourhood Renewal Unit, conference on How Can Policies on Labour Markets
and Neighbourhood Renewal Best Work Together? London,  May.
White, M. (), New Deal for Young People: towards an ethical employment
policy? Policy Studies, , : –.
White, M. and Riley, R. (), Findings from the Macro Evaluation of the New Deal for Young
People, Research Report no. , London: Department for Work and Pensions.
Willets, D., Hillman, N. and Bogdanor, A. (), Left Out, Left Behind: the People Lost
to Britain’s Workforce, London: Policy Exchange.
Williams, F. (), In and beyond New Labour: towards a new political ethics of
care, Critical Social Policy, , : –.

© Blackwell Publishing Ltd. 