Select Committee on Education and Employment First Special Report

Eighth Report: New Deal for Young People: Two Years On (HC 510)

Eighth Report: New Deal for Young People: Two Years On (HC 510)

Published: 11 July 2000

Government Reply: Eighth Special Report

 Session 1999-2000


Published: November 2000


Government Response

1. Just over 215,000 NDYP participants have found work, and 162,000 young people have obtained jobs which lasted for more than 13 weeks. Of these, 139,000 were sustained, unsubsidised jobs.

Now (end of August) over 244,400 NDYP participants have found work. Over 186,000 young people have obtained jobs which lasted for more than 13 weeks. Of these, over 160,700 were sustained and unsubsidised.

2. The Minister told us that the average cost of each job outcome was just under £4,000. We note that the average cost of unsubsidised, sustained jobs, which NDYP participants would not have obtained without the help of the programme, will be much higher than £4,000.

The cost of each job outcome, quoted by the Minister, was based on the average amount spent on each New Dealer being £2,000. Since more than 50 % of young people on the New Deal have so far gone on to find employment that would mean a cost per job figure of around £4,000. That figure counts all jobs so far gained from the New Deal, including those jobs that are not sustained and those jobs that are subsidised. If we were to count just unsubsidised and sustained jobs the figure would of course be higher but the Government believes that the basis for that calculation would be wrong. Cost per job calculations should include those young people who move in to unsustained and subsidised employment. Those jobs are valuable for the young person's job prospects and future employability.

Ultimately, the cost of New Deal should be judged on how successfully the programme reduces unemployment and increases employment and the net effect that has on the economy. Independent research has shown that New Deal has been successful in helping to reduce unemployment and increase employment to the extent that it has substantially paid for itself.

3. We welcome the Government's commitment to achieving value for money in the NDYP programme. This is a complex area and one in which independent analysis is essential. We look forward therefore to the further assessment of the macroeconomic impact of the programme by NIESR and to the National Audit Office (NAO) value for money study of NDYP.

The macroeconomic analysis is ongoing and the NIESR report will be published later this year. Ministers will consider carefully the report's findings.

Work by the National Audit Office on their study is proceeding and has reached the preliminary study stage.

4. We expect that the NAO's forthcoming value for money assessment of NDYP will want to examine the reasons for the inflexible nature of the contracts under which the private sector led NDYP Units of Delivery have operated and the cost of this inflexibility

Contracts for private sector led NDYP units of delivery allow them access to the same level of resources that are available to other units of delivery. This allows them to apply the resource in ways which they feel will offer young people in that area the best prospects of moving into, and staying in, work.

The costs agreed in the contracts were based on initial planning assumptions of the number of participants who were expected to enter each element of New Deal and this was then calculated into a unit cost, generally payable to the PSL UoD on a young person starting the New Deal. Numbers progressing into the more expensive elements has been lower than projected originally. In PSL units this has meant that resources could be transferred to areas where more appropriate and, in some cases, innovative help can be given.

5. We are concerned by the relatively high level of moves into unsustained jobs and this is an issue that we will return to in our inquiry into NDYP.

Seventy-five per cent of young people who find a job through the New Deal, find one that lasts for at least 13 weeks. For the twenty-five per cent of young people whose job is not sustained, the experience may still transform their confidence, their ability to work, and their prospects of getting another job with recent work experience to show to their next employer. Further, when they return to claim JSA they return to the New Deal where they will receive further assistance to find that next employer.

The Government's view, therefore, is that jobs that are not sustained are still of value to the young person. The point of the New Deal is that it increases a young person's employability and finds real job opportunities for young people who have been out of the labour market for some time.

6. We welcome the Government's commitment to improving the provision in the Gateway. In our inquiry into recruiting unemployed people we will be examining the role of intermediaries in strengthening this provision.

The Government's memorandum to the select committee's examination into recruiting unemployed people outlined its support for the use of intermediaries as a valuable way of building on the support already available from the ES and, in many cases, adding a local dimension to these arrangements. As the Policy Action team on Jobs found, there is not just one way of bridging the gap between those without work and employers that was better than another—different approaches worked with different communities.

We therefore want to test the concept of using intermediary organisations in helping unemployed people move into and keep good jobs. To achieve this, we have used the Innovation Fund to promote intermediaries with a particular focus on inner cities and in specific industry sectors.

7. Future developments of NDYP must be aimed at improving its performance in helping the most disadvantaged participants and participants from non-white ethnic minority groups to obtain sustained jobs

The Government agrees. The New Deal has a strategy for achieving equity of outcome for young people from ethnic minority communities. We are also looking to increase assistance for those young people at a disadvantage for example through homelessness or drug dependency. The Employment Service is working with partners who have expertise in these areas to build performance. In addition, the New Deal Innovation Fund has a key objective to assist disadvantaged jobseekers to get jobs that lead to economic self-sufficiency. Funded projects are required to achieve significant and measurable performance increases against the indicator of equality of access and outcomes for ethnic minority participants.

8. We welcome the Minister's personal commitment to ensuring that nobody leaves NDYP illiterate or innumerate. We also welcome the use of additional funds to enhance the Gateway programme and to help train personal advisers in the identification of basic skills gaps.

The Government is committed to addressing the needs of young people who enter New Deal with poor reading, writing and number skills. We want to ensure that they receive the most appropriate help and that their ability is raised to a level that enables them to compete for jobs and develop their career.

The Employment Service now has a range of initiatives to help improve the early identification of young people with basic skills problems including: a Client Progress Grid with which New Deal Personal Advisers are able to identify young people who are likely to have difficulty with reading, writing and the use of numbers; a wide range of Gateway provision to help young people improve their basic skills; help on New Deal Options either integrated into vocational training and work experience or as a separate intensive course for up to 20 weeks prior to vocational training; training for over 1,000 New Deal Personal Advisers in the identification of basic skills problems and in how to provide ongoing support; and volunteer mentors recruited and trained to provide independent and impartial support for young people throughout their time on New Deal.

9. We recommend that the Government should publish data on the number of moves into jobs from the FTET option that are sustained for more than 13 weeks and for more than 26 weeks.

The Government Statistical Service's monthly release of New Deal statistics contains a table (table 11) which shows the immediate destination of young people on leaving New Deal by stage of New Deal process reached. From July 2000, the table has shown job outcomes from the FTET option along with other New Deal options. It also shows the destination of young people leaving from follow through by last option entered: it is important to use the two figures to get a true picture of option performance since the effect of the option will be felt both immediately and in the following weeks and months.

The job outcomes from the options and follow through, by definition, are sustained and last for at least 13 weeks because if someone leaves and then returns to New Deal within 13 weeks they return to the programme. For consistency, we believe it is appropriate to maintain the sustainability job marker for New Deal we have set at 13 weeks; 26 weeks is too long a sustainability job marker given the volatility in the labour market that there has always been for this age group in particular.

10. We welcome the Government's recognition that intermediate labour markets have been effective in increasing the proportion of young people going into work and we look forward to their increased use in the options stage of NDYP.

Intermediate Labour Markets (ILM), which are currently part of the Environment Task Force Option, can be successful in preparing young people for the regular labour market. This is particularly the case where they are linked to known opportunities with employers or the self-employment route. Any increase in the volume of the ILM provision depends upon local demand for such projects and their relevance to local labour market conditions. Local New Deal partnerships are best placed to advise, in consultation with the Employment Service, on the nature of local provision.

11. Changes to the follow-through stage of the New Deal must take into account the need to provide a fresh approach for those clients for whom the follow-through was ineffective the first time around. We welcome the Minister's indication that proposals have been forwarded to the Treasury to increase the involvement of personal advisers in the follow-through stage of NDYP.

We have been examining the effectiveness of the Follow-through, and will ensure that examples of good practice are disseminated throughout the Employment Service. Improvements to the operation of the Follow-through will also be developed as part of our overall work to improve the New Deal. We recognise that, for those who may go through the New Deal more than once, the Follow-through is a period to undertake further training or to receive further help to increase their employability. We are considering further how the Follow-through might contribute more positively to a fresh approach for young people embarking on the New Deal again.

12. We welcome the Minister's announcement that forthcoming survey data of leavers to unknown destinations will include details of job duration.

The ongoing research into leavers into unknown destinations will include data on job duration. The research should be published early in the new year.

13. In our first report on the New Deal we welcomed the inclusion of public sector employers in the subsidised employment option of NDYP and in a subsequent report on the New Deal Pathfinders we highlighted the lack of engagement with NDYP by the public sector and some of the reasons for this outcome. We are very disappointed that, almost two years on, the public sector has not proved more willing to offer job opportunities to NDYP participants. We welcome the Government's commitment to improving the performance of the public sector, and we urge the Government to bring forward plans to explain how its expectations of raising, from 1.2 per cent to 2 per cent, the percentage of employees across the Civil Service who are recruited from NDYP shall be met.

We agree with the New Deal Task Force that rather than focus on national targets for public sector organisations or sub-sectors eg (Civil Service departments), it is preferable, following discussions with local ES offices, for organisations at the local level to set themselves targets for New Deal recruitment. There are some excellent examples where the public sector is making strenuous and successful efforts to recruit from the New Deals. Whilst many in the public sector feel a sense of social responsibility to participate, many public sector employers see the strong business case for their commitment to New Deal. Many also realise that in labour markets with very high rates of structural unemployment, and fewer private sector opportunities, their role is likely to be particularly significant. Over 4,000 young people have now been offered opportunities by local authorities with some 30 per cent signing employers agreements.

Work with the Civil Service continues to be encouraging. Recruitment practices are under review, and the Employment Service continues to work closely with the Cabinet Office in diverse activities to raise awareness and increase New Deal job starts. In March this year they jointly delivered a successful one day workshop for over 50 departments and agencies to discuss New Deal recruitment issues. As a direct result of this event, a Development Forum has now been established to improve dissemination of good practice across the Civil Service. ES Large Organisations Unit has worked with 20 key departments to improve the quality of management information available on previously unidentified unsubsidised job starts. As a result, recently published figures show nearly 3,000 Civil Service job opportunities have now been filled by New Deal candidates. The last quarter has shown an increase from 1.2 per cent to 1.3 per cent. The Minister for the Cabinet Office wrote to Cabinet colleagues in June to advise them of the improved position and reaffirmed the need for continuous effort, particularly from those departments with no or few New Deal employees to date.

14. The Government has announced that it intends to publish a qualitative study of the 10 private sector-led NDYP Units of Delivery which involved "interviews with key players about how the New Deal is being delivered". Although we welcome this announcement, in our view, a full evaluation of the private sector-led Units of Delivery should be undertaken and published, which compares the performance of the private sector-led Units of Delivery with the performance of the other NDYP Units of Delivery. It would be useful to have such an evaluation in the public domain before the completion of the new contracting round.

A qualitative approach was adopted to make the best use of resources, and to meet the time constraint of making findings available by the end of this financial year. It was also felt that this approach would help ES make the best decisions when entering into future contracts. The qualitative study covers the performance of the private sector-led Units of Delivery, as well as highlighting good practice and lessons learnt.

15. We welcome the Minister's commitment to improving the career opportunities for personal advisers. Firm proposals to achieve this aim should be brought forward at the earliest opportunity and we recommend that the Government should consider introducing reduction in turnover targets for those areas where turnover is particularly high. In addition, we recommend that the Government should publish every year turnover rates for each Jobcentre.

A new post of "senior adviser" will be trialled this year in 37 locations across the country. These new posts offer both a route of progression within advisory work for the best and most experienced advisers and a source of support and coaching for other advisers. They continue to maintain their own caseload and as part of that will often deal with the more difficult clients. The effectiveness of senior advisers will be evaluated in order to inform a decision about their wider use.

The Government does not consider it worthwhile to publish turnover rates for each jobcentre. Many staff leave one jobcentre to take up a post in another office in the same district and region. Several offices are also small by comparison to the larger inner city offices and no significant comparable trends could usefully be gained. It would be more appropriate to look at trends in staff turnover on a district and regional basis. ES have recently introduced a new Human Resources data collection system which will enable more robust information to be provided in the future. This information will show staff turnover on both a district and regional level and should provide an indication of trends that will be monitored by ES Personnel staff.

16. We commend the Government for instituting such a comprehensive programme of evaluation. We recommend that summaries of the research reports should be posted on the New Deal web-site.

Full evaluation reports, with Executive summaries, are now being published on the Employment Service's web site at


Note: The Recommendations and Government Response of this Report are included in this volume for the sake of completeness; but the DfEE was not asked to update its response because it was so recent.

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