Despite a shaky start, New Deal has survived – and through the lessons learnt in its first two years, new targets are being set. Philip Whiteley and Gill Sargeant report
When 18 months ago Personnel Today reported that employers were having difficulties with New Deal job applicants and that Allied Carpets had withdrawn from the scheme, it drew an angry response from the Department for Education and Employment.
The then New Deal minister Andrew Smith accused the journal of “negative carping” and denied that Allied Carpets had pulled out. On the latter case he was correct only technically; the retailer remained a subscriber, but was not taking on any young people because it was disappointed with the suitability of candidates.
Such ministerial defensiveness did not augur well. There were real problems with the programme, which were not going to be resolved by angry denunciations of the messengers. Many employers had reported that a high proportion of New Deal candidates were scarcely capable of work or simply did not show up.
Youth unemployment was going down, but the rate had not accelerated since the introduction of the programme. There was a possibility that the £4bn was being spent on people who did not need it – or on those with problems too great to be affected by a back-to-work initiative.
Research published by the Industrial Society today (5 September), however, shows that the scheme has some hidden strengths which have saved it. Prior to inauguration the Employment Service had undergone a massive training exercise of its own staff to change the task from one of administering benefits and encouraging the pursuit of jobs, to an active assistance in making people more employable.
What the Industrial Society found was that some Employment Service staff have grasped the opportunity to be far more active in helping people look for work.
One New Dealer, now an enthusiastic staff member at Asda in Wallasey, explains, “I didn’t want to be there on the New Deal. The adviser didn’t just win me over, she pushed me in. I’m not complaining because I’m made up now. It was her enthusiasm that really helped.”
Another says, “The New Deal was the best thing that ever happened to me. A few of my mates are on the dole and are not getting jobs because the dole people are not giving them experience. New Deal advisers are different to other advisers.”
By contrast, a single mother who did not qualify for the New Deal says, “I went to the JobCentre. I didn’t find them very helpful. There were a lot of jobs in shop work. The woman in the JobCentre said I shouldn’t bother with those, but that I should go to college. If I had a partner, going to college wouldn’t have been so bad, but when you’re on your own you can’t go to college.”
The National Institute of Economic and Social Research report into the New Deal calculated that 30,000 of the 110,000 young unemployed who moved into work in the year ending April 1999 did so because of the New Deal. The examples Personnel Today encountered give an indication as to how that can come about.
This also indicates that the scheme did not fail in its early months because of too much help, but because of too little – or, at least, too little assistance in the most difficult cases. There may have been excessive help for more motivated young people.
New Deal advisers therefore achieve most where they have taken the trouble to show a personal interest in the individual and tailor their efforts to that individual. This means the advisers must have the best training possible and the freest hand.
The other hidden strength has been the imagination and commitment of many employers. This research supports findings from earlier reports in Personnel Today and elsewhere that the scheme works well only where there is a strong partnership between employers and the Employment Service. There is no point sending people to places for which they are ill-suited.
Drop-out rates and failure to attend interviews remain formidable problems, however.
“I would like people to feel that if an appointment is made for them then they ought to keep it. The level of drop-outs is massive,” says Graham Finegold who runs Workforce, an independent New Deal services provider in London.
Peugeot, one employer featured in our study, went to great lengths to work with the Employment Service. But it still found high drop-out rates. Of the 15 people it took on, seven dismissed themselves or had been dismissed within a few months.
“When we have someone we fail with – dismiss themselves or have to be dismissed, that it is an opportunity someone else could have had. It is a bit of a waste of time,” says personnel manager Julie Timings.
Nonetheless, she adds, “We have had some fantastic unemployed people, so you cannot generalise.” Moreover, to move eight people from the dole queue with little employment history to holding down demanding, well-paid industrial jobs is quite an achievement.
What emerges from the experience of employers is that simply signing up to the New Deal and hoping for streams of job-ready candidates to come through does not work. Firms need to be fully committed to devoting management time and consider mentoring, or not bother at all. More generally, as we near full employment, it becomes apparent that an ultra-lean staffing operation is not very efficient because skills are not available. In practice, firms have to build in some slack and be prepared to train people.
So why should a company bother with New Deal? Because those candidates who do make it become first-rate employees.
Business author Clive Morton says of his experience at Anglian Water, “We took on 43 New Dealers and it was very successful. “We appointed a buddy to every New Dealer, which not only helped the New Dealer but helped the buddies. People who had been with the company for years would inevitably come to the conclusion that these youngsters who couldn’t find jobs weren’t making the effort. Dealing with the youngsters they found out how difficult it is to get a job,” he says. “We looked for a personality that would fit with the organisation. It is not the skills – they can be added later.”
Scottish & Newcastle describes its early experience of the New Deal as a “nightmare” but subsequently a success. It found initially that candidates simply did not turn up for interview, but realised that this was because the opportunities were not being sold to them.
Last year it overhauled its approach and has begun working in much closer partnerships with JobCentres. It has taken on at least 200 through the New Deal, and one has reached assistant manager. The firm works closely with job centres to ensure that only suitable can- didates are referred.
These are the hidden strengths in the scheme. There are also hidden weaknesses. We came across one anecdote, and some hard evidence, revealing a tendency of Whitehall to put pressure on the Employment Service to get unemployment figures down quickly with inappropriate placements.
First, the anecdote, which came from a manager at an Asda store in Maidstone, Kent: “[Regarding] some of those who have dropped out, the JobCentre had said to them ‘There’s nothing else, why don’t you try Asda?’ One said they told him ‘I know you don’t want the work but just turn up because it makes our figures look good’.”
Playing the numbers game
This pattern was confirmed by Nick Edwards of Disability Matters, Winchester, which places people with disabilities in employment, both through the New Deal and other funding arrangements.
“The Department of Social Security, which was funding us to run the New Deal project, was wanting us to use Treasury models. We said we could put 165 people through the training programme, and would put 50 to 60 into work. They said it was too expensive; we said ‘yes, but it is breaking new ground’. After a year we have put 165 through the programme and 60 have gone into work. The interesting thing is that through the year other projects were saying the same thing to the DSS, and the DSS has become less interested in the numbers.” The heartening aspect about this development is that the Government – at any rate the DSS – is learning the message.
Another chastening finding was further confirmation of the high levels of illiteracy and innumeracy in the UK. The definitive work on this was last year’s Moser report, which found that around a quarter of the UK adult population is innumerate (the figure for Germany is only 7 per cent) and that about 7 million people are illiterate.
“We have sent people with GCSEs to a college, they were tested by the college and were not up to standard on numeracy and literacy. The college had to throw in basic skills as well as an NVQ,” says Zanny Lomas, New Deal project manager at Coventry Employment Service.
Back to basics
New Deal minister Tessa Jowell told the Commons select committee in May, “An estimated 40 per cent of young people on the New Deal Gateway cannot read basic instructions on a medicine bottle. If you look at the kinds of jobs available in the modern labour market you can see how many jobs those young people are excluded from.”
Basic skills training is now compulsory on the Gateway, and this is arguably the most important development since the scheme came in. There are still 1 million unemployed adults in Britain, at the same time that skills shortages hinder development of one quarter of firms, according to the CBI human resources survey. If the New Deal did not exist, something like it would have to be invented.
• The New Deal: A Good Deal Better is available from the Industrial Society 020-7479 2000 www.indsoc.co.uk