The BBC's Jonty Bloom: The real challenge lies ahead for New Deal

It claims that the New Deal, a multi-million pound programme launched nationwide earlier this year, has cut youth unemployment by more than a quarter in a year.

The New Deal is targeted at 18- to 24-year-olds who have been out of work for more than six months and older unemployed who have been out of work for two years.

Employers are subsidised to take on the young jobless

According to the TUC, youth and long-term unemployment fell by around 28% in 1998.

The latest figures from the government showed that youth unemployment is at its lowest for 20 years.

But Jonty Bloom, of the BBC's economics staff, says the problem with such figures is that it is almost impossible to tell how many of those finding a job would have done so anyway.

"Certainly the overall jobless rate has been falling for most of this year, and that is bound to bring down youth and long-term unemployment.

"The real challenge for the New Deal will come now that overall unemployment has started to rise, making finding work for the young, long-term unemployed all the more difficult."

£3.5bn levy

Options for the young unemployed under New Deal include a job, full-time education, voluntary work or a place with an environmental taskforce.

Some companies take the young unemployed on subsidised work placements.

Financed by £3.5bn of the windfall levy on the privatised utilities, New Deal is supported by a host of large employers including Jaguar, London Transport, Barclays Bank and Peugeot.

Employers receive a £60-per-week subsidy and £750 towards training for each young person on New Deal.

The scheme also aims to prepare the long-term unemployed for work by giving them up to four months of intensive "gateway" support.

Advisors help people deal with problems ranging from a simple lack of work experience to illiteracy and homelessness.