Welfare isn’t working – new deal for young people


Rarely have the conditions been more favourable than when Labour began its welfare reform programme in 1997:

  • The economy was in a period of sustained growth, which has since produced 2.9 million additional jobs;
  • record sums were put aside for reform – £3.5 billion for the New Deal alone, of which £1.9 billion has been spent on the New Deal for Young People;
  • the electorate was up for reform and anxious for the Government to succeed; and
  • the bureaucracy welcomed in a new administration with open arms and was keen for its abilities to be harnessed in a great programme of welfare reform.

The New Deal programme is very much the Chancellor’s brain child. Gordon Brown’s laudable ambition has been to make life on benefit a thing of the past.

The results of the New Deal for Young People have however been modest, to put it mildly. Some young people have been found work, but the vast majority of them would have done so without the New Deal. Moreover the number and proportion of young people finding work as a result of their New Deal has collapsed from 51 per cent in 1998 to 34 per cent in 2005.

In a recent speech, the Employment and Welfare Reform Minister, Jim Murphy, claimed that “youth unemployment has been virtually abolished”. The figures disprove this statement.

Youth unemployment is higher than when Labour was elected in 1997, and rising;

  • Overall; up 140,000 on its lowest point in summer 2001,
  • worklessness up to six months; up 101,000 on the lowest point in summer 2000,
  • worklessness between 6 and 12 months; up 28,000 on the lowest point registered in winter 2002-03,
  • worklessness over 12 months; up 43,000 on the lowest point registered in summer 2002, and
  • worklessness over 24 months; up 19,000 on the lowest point in spring 2002.

A third of New Deal programmes are now completed by retreads and the proportion of young people on the New Deal has fallen as a proportion of the numbers claiming benefit.

The numbers not in education, employment or training (NEETs) are similarly on the rise: up 246,000 on the low point recorded in summer 2001, and up 131,000 above the level Labour inherited in 1997.

Inactivity of 18 to 24 year olds shows a similar trend: up 283,000 on the 1997 level inherited by Labour.

More of the same will not work.

A key part of Labour’s renewal in government has to be to take its youth employment strategy back to the drawing board. More of the same will not work, even if the money was available to continue to finance the New Deal. The New Deal, so far, has had only a modest impact on unemployment, on the numbers not in education, employment or training, and therefore the numbers recorded as inactive. Part of the Government’s renewal must be to begin to construct a more effective New Deal for the future.

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