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Wednesday, 14 March, 2001, 09:11 GMT
Is Labour working?
Labour isn't working poster
The poster which helped usher in 18 years of Conservative government
Coming on top of the Winter of Discontent, which saw troops put on standby and even gravediggers go on strike as protests against pay freezes took hold, rising unemployment was the last straw.

"Labour isn't working", Conservative banners famously declared in 1979 as the number of dole claimants increased to 1.1 million.

(Ironically, in the period of Conservative rule which followed, the UK unemployment rate passed the 3 million mark.)

So does the fall in the number of jobless below 1 million for the first time since the mid-1970s indicate that Labour, New style, is working?

The government itself believes so.

"Our policies... are tackling joblessness at all ages and in all parts of the country," Employment Minister Tessa Jowell said last month.

David Blunkett, Education and Employment Secretary, says investment in the government's welfare-to-work programmes is "turning our wasted youth into working youth".

Behind the data

But how much of the shortening in dole queues can be credited to what the government has done - introduced a raft of job promotion policies - and how much to what it has not done - squandered the "golden economy legacy" it inherited in 1997?

Phil Willis, Liberal Democrat spokesman for education and employment
Phil Willis: boom responsible for jobless drop
"Unemployment has decreased to some 6% not because of government policy, but because of the general rise in economic activity," Phil Willis, Liberal Democrat spokesman for education and employment, told his party's annual conference last year.

And he had some justification.

Official statistics show that the number of Britons in work rose faster in the last three years of Conservative rule, between 1994 and spring 1997, than it did during the first three years of the current Labour administration.

Crucially, unemployment also fell faster, although this would be expected when starting from a higher base - the number of dole claimants stood above 3 million as late as 1993.

Key initiative

It is not, however, the headline figure which prompts the most furious data duels between the major parties, but data surrounding the New Deal - an initiative Labour regards not just as key to its record on tackling unemployment, but as a measure of its overall success in government.

New Deal programmes
18-24: Compulsory scheme for young people. Launched April 1998
25 plus: Compulsory from April. Launched June 1998
50 plus: Voluntary. Aimed at older jobless. Launched April 2000
Disabled People: Voluntary scheme, piloted from April 1999. To be extended from July
Lone Parents: Voluntary. Being extended in April
Partners: Voluntary. To help partners of long-term jobless find work
A promise to shift 250,000 young people from benefit and into jobs was among five key pledges Labour made before the 1997 election.

And, with health and education promises proving more difficult to achieve, it was not without a little self-congratulation that the government revealed that the New Deal target was reached in September last year.

"This government made a promise to cut youth unemployment within this parliament and we've kept it," said prime minister Tony Blair, who has hailed the New Deal as "one of the government's proudest achievements".

'Spin operation'

Conservatives, eager to hit Labour where it hurts, have dismissed the claims as an "expensive failure".

The New Deal is a spin operation. It claims credit for finding people jobs they would have found anyway

Conservative Party briefing
"The New Deal is a spin operation," the party says in a document outlining its own employment scheme.

"It claims credit for finding people jobs they would have found anyway, and it fails to address the problems faced by unemployed people... who have been out of work for long periods."

The number of young people without jobs, which had fallen from 600,000 when the New Deal was unveiled in 1995 to 350,000 at its launched three years later, was dropping rapidly anyway.

And independent think tank the National Institute for Economic and Social Research estimates that the New Deal has been responsible for shifting 60-70,000 young people into work.

Yet by the government's own admission, the New Deal, which has been expanded to cover groups including single parents, the over-25s and the disabled, will by the end of the year have cost 1bn on its young people programmes alone.

Quickie jobs

Is this a price worth paying?

Even a superficial analysis of headline New Deal data reveals that the scheme's effect on reducing unemployment among 18-24 year olds is not as large as the government has claimed.

New Deal spending - 2001
18-24: 1bn
25 plus: 270m
50 plus: 50m
Disabled People: 60m
Lone Parents: 130m
Under the New Deal, people who have been claiming unemployment benefit for six months are put through a four-month "Gateway" programme, in which they taught basic skills and helped with job seeking.

Those who are still jobless at the end of the Gateway stage are offered a subsidised job for six months, or options such as voluntary work or further training.

Of the 274,000 participants who had left the New Deal's young people programme for work by the end of December, almost one quarter went into jobs lasting less than three months.

And of those finding "sustained" jobs, one-in-eight was relying on state subsidy to keep it.

'Pays for itself'

The government countered this claim in January with a survey showing that of a further 150,000 people who have left the New Deal for unknown reasons, more than half have gone on to full time employment or education.

David Blunkett, Education and Employment Secretary
David Blunkett: "Turning wasted youth into working youth"
As for the scheme's cost, the government counters as simplistic efforts to evaluate the scheme on a cost-per-person basis by dividing the 1bn invested by number of people helped.

"It would appear that there are actually net gains from people coming off benefits and paying tax," a DFEE spokesman told BBC News Online.

"The programme ends up paying for itself."

MPs investigate

Nonetheless, the success or not of the initiative has warranted MPs on the Education & Employment select committee, responsible for scrutinising government initiatives in the sector, to launch an investigation: "New Deal: an evaluation".

The New Deal is in danger of missing the point that the most disadvantaged people still remain disadvantaged

Victor Adebowale, Centrepoint
Witnesses to the inquiry have, unsurprisingly, failed to provide neat answers to the central questions.

But they have broadened arguments about the scheme's record from simple people-in-work calculations to issues such as quality of employment.

The NIESR's Rebecca Riley said that, through the New Deal, "there had been a rise in average employability", so reducing the chances of long-term unemployment and its associated "scarring effects".

The NIESR also believes the programme has added about 500m a year to the UK's economic output.

Unemployment Unit director Paul Convery pointed out that while many New Deal participants may have found work without it, the programme has helped them get jobs "where the match has been much more effective, where what the employer requires and what the young person can offer are better matched".

But Centrepoint's chief executive Victor Adebowale warned: "The New Deal... is in danger of missing the point that the most disadvantaged people still remain disadvantaged and we do not actually have a mechanism for getting them into the New Deal."

Social exclusion

More light will be shed on Mr Adebowale's concerns later this year when the results come through from pilot schemes on a Recruit initiative aimed at making "a real difference to some of our most deprived communities".

Indeed, infuriating though it may be, it is difficult to judge policies dealing with a factor such as the employment rate, which is dependent on so many issues, until long after their introduction.

The real test of the New Deal will come when it confronts rising unemployment which, even if the current economic slowdown develops into a full blown recession, will not occur for a number of months, when employers really feel the pinch.

What is easier for Labour to accurately number is its blessings.

Ministers can count themselves lucky that they introduced their benchmark employment policy when the winds of fortune were set behind it.

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See also:

19 Feb 01 | Business
Taking job losses to task
16 Feb 01 | Business
Why did unemployment really fall?
19 Sep 00 | Liberal Democrats
Scrap New Deal, say Lib Dems
14 Jul 00 | UK Politics
Tories 'will scrap New Deal'
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