Select Committee on Education and Employment Appendices to the Minutes of Evidence


Memorandum from Dr Anne Gray, LEPU, South Bank University



  This report presents a "claimant's eye" view of the New Deal in and around Chesterfield in North Derbyshire. It is based on a survey of 84 New Deal participants, interviewed by volunteers from the Derbyshire Unemployed Workers Centres. The centres worked in partnership with South Bank University, which invited them to contribute to a wider project funded by the European Commission. The study of the New Deal forms one part of the work being done by the Local Economy Policy Unit at the University within a four-country study of benefits systems and welfare to work programmes which also covers France, Belgium and Germany[44].

  Whilst broadly consistent with most of the official evaluations which DfEE has commissioned on the New Deal, the survey highlights certain aspects and possible interpretations of those larger studies. In particular, it draws attention to the following key points:

    —  the unsustainability of many exits into unsubsidised jobs in a difficult local labour market

    —  the poverty trap as a barrier to work for young unemployed people

    —  the unpopularity of the "benefit plus" options and their lack of value as work experience in a considerable number of cases

    —  how sanctions and the fear of sanctions affect participants' relationship to the New Deal in unhelpful and sometimes perverse ways

    —  the need for more financial support for trainees with extended study periods in some cases.


  The survey was carried out on the basis of a quota sample, with targets reflecting the different stages and options of the New deal for Young People and the NDLTU[45].

  The sample contained 84 people, of whom 69 were on, or had been on, the NDYP, the programme for the under 25s. the remaining 15 were on, or had been on, the NDLTU, New Deal for the long-term unemployed over 25. Forty five per cent of respondents had not been an "option", at least so far, they had experienced only the Gateway or its equivalent for the over 25s, the Advisory Interview Process.

  Out of all 84 people, 51 were still on their New Deal programme and 33 had finished at least one period on the New Deal. Only ten of these (30 per cent) were working when interviewed, but 19 (57 per cent) were still looking for work, and would be described in the national statistics as "on follow through", the final or post-option stage within the New Deal. The rest had stopped signing on because they were studying or sick.

  The proportion of NDYP leavers who were working when interviewed was less than the proportion shown leaving to jobs in the national monitoring statistic or in the N Derbyshire delivery unit—but the difference is not large enough to suggest that the sample is unrepresentative

[46] Over 60 per cent of interviewees who had left the NDYP had held a job at some time since starting the programme. This compares to 55 per cent of all those who had left the New Deal at least temporarily when interviewed for the National Participants' Survey (Bryson et al., 2000, p. 143). Most of the jobs found by the Derbyshire survey respondents outside of the Employer Options were very short-term, as described later on.

  All but 10 of the sample were male. Thirty-five were living with their parents (or with other relatives or friends). Forty were tenants in their own right, and only four (two of whom were over 25) owned their own homes. Two were homeless and sleeping rough. Eight of the sample were fathers, and six of these were under 25, so that around 10 per cent of those on the "youth" programme already had families to support.


  The emphasis of the New Deal is on improving "employability"—on changing people rather than the job market which they face. The survey asked New Dealers what they thought were the biggest barriers they faced, choosing one or more from a list of possibilities. The possible barriers fall into the two main categories; those which can be addressed by training, advice and work experience and those which are inherent in the local labour market. Over three quarters thought that although they had some "employability" problems, like lack of experience or qualifications, they would still face an overall shortage of jobs even if these problems were resolved, particularly secure jobs with adequate pay.


  For 45 per cent of the sample, the Gateway (or Advisory Interview Process for the over 25s) was the only part of the New Deal they had experienced; they were still on it or had left before getting as far as an "option" placement. Nationally up to two thirds leave the NDYP without entering an Option[47]. This emphasises how for many participants, the initial counselling process is the New Deal and what happens during this phase, rather than the options, colours their overall view of the programme and what they have gained from it by the time they leave.

  Asked what was their initial reaction to being put on the New Deal, around half the sample were broadly positive, with expectations that it would help them to get a job or obtain useful training. However, about one in six hoped for a job but feared being pushed into low paid opportunities or poor quality "schemes". A quarter of the under 25s were even more negative at the outset, fearing pressure to take a "dead end job" or a "useless course", with the risk of benefit sanctions if they refused.

  The fear of being pushed into a low paid job was a common one in respondents' experience during the Gateway. Thinking of vacancies which had been suggested to them by their Personal Adviser, during the pre-option stage of the New Deal, only a third of respondents could recall being directed to particular vacancies. Two merely said that many vacancies had been suggested and that this was helpful. Only half of those who mentioned specific examples of vacancies said that at least one of the jobs proposed was the kind of work they were looking for, or which at least they would accept. However, half said they had been submitted only to jobs they did not regard as suitable. Altogether there were 11 examples of wanted or "acceptable" jobs and 16 unwanted ones. Both "acceptable" and unacceptable" vacancies had offered wage rates at or close to the legal minimum, and half in each group were temporary. Acceptability seemed to depend on the jobseeker rather than the job.

  The system of New Deal Personal Advisers was generally well liked, but with some caveats; in this respect the survey echoes official evaluations of the New Deal. Well over half the sample (49) felt that their New Deal Personal Adviser was definitely more helpful than job centre staff whom they had seen before, and 17 said "slightly more helpful". However, there seemed to be insufficient help with long-term career planning. Asked whether the adviser offered any advice about their future careers, in terms of long term planing, half said yes and half said no. Nine thought their adviser did not offer enough advice or was not sufficiently well informed about particular jobs to give the kind of advice they wanted. Five people felt their adviser just wanted to place them into an option or a job regardless of their real needs or wishes.


  Two thirds of respondents were broadly satisfied with the information they had received about the options available on the New Deal and the rights of participants, but one third felt they had not been offered enough information.

  Out of 69 people who had got as far as discussing options with their PA, one in four wanted a choice but were offered none. In particular there was a shortage of subsidised jobs, and considerable resentment on the part of some people who were placed in the ETF or Voluntary Sector.


  Twelve people (14 per cent) had had their benefit stopped for some period as a result of the application of sanctions, and 15 (18 per cent) said they had been threatened with sanctions although their benefit had not actually been stopped. Thus one third of the sample felt some degree of concern associated with the New Deal. It is interesting that in the national survey of NDYP participants (Bryson et al. 2000) 21 per cent of al NDYP participants had experienced sanctions, a much higher proportion than in Derbyshire sample. Out of the twelve in the Derbyshire survey who had been sanctioned, four had refused to take part in option placements which they felt were unacceptable or unsuitable—in two cases the EFE and in two the VSO. The others revealed, in various ways, the fragility of the right to an income when a person is caught between the sanctions rules and a diversity of problematic personal situations. Examples included a telephone message from a sick New Dealer which was allegedly not passed on; a sick person who experienced difficulty notifying his absence from a coin-box telephone; someone who left the ETF when he was arrested; a man who missed the first day of this training course due to what he described as "family reasons". Two of those sanctioned were sleeping rough when interviewed; we do not know how long they had been homeless or to what extent losing benefits contributed to this. In at least one other case benefit stoppage had led to rent arrears.

  A disturbing finding is that only 6 out of 13 ETF or VSO participants could remember having had a formal written agreement about their rights and conditions in their placement. This may have led to some ambiguity about procedures to be followed in the event of sickness or any other type of absence—a major issue in view of the risk that sanctions might be applied for unjustified absence. Despite the importance of sanctions as an issue, 19 people in the sample as a whole said they did not fully understand the rules, or that they had not received much explanation of them. A further three people had learnt about the sanctions rules from college or from a source other than the job centre.


  Twelve people had found unsubsidised jobs, other than through the Employer Option, since starting the New Deal. In seven cases this was whilst they were still in the Gateway, and some of these had agency or part-time work in response to the prospect of being sent to an option placement they did not want. Most of the unsubsidised jobs did not last long; four were temporary contracts, and three resulted in "being laid off" after a few weeks. Three jobs were only part-time. These experiences seem to illustrate respondents' view that the local labour market offers mainly badly paid and insecure work to people in their position. Out of the twelve who had found an unsubsidised job at some stage, only three were still working when interviewed, one was at college and the remaining eight were back on JSA. The overwhelming impression is that jobs found outside the Employer Option were often "false starts" which merely interrupted the individual's New Deal trajectory rather than providing a long-term solution. Moreover all of those who had found these jobs thought they would have done so without taking part in the New Deal.


  The Employer Option jobs, on the other hand, were rather more successful, albeit low-paid. Seven out of the nine people who had obtained subsidised jobs gave the impression that it was a real gain, which all but one attributed to the New Deal. There was a major contrast between the quality of the unsubsidised jobs and those on the Employer Option. This was more a question of job security and training opportunities than pay. Most of the Employer Option jobs seemed likely to last year, whilst only one of those who had obtained an unsubsidised job expected to be there a year from now. However, the sample yielded one example of a person who had complained to the Employment Service that his employer had not provided the promised training, and another of someone who had been laid off before the end of the subsidy period because of the weakness of his employer's order book. Both of these examples involved private sector employers.

  An interesting feature of the local situation is a much greater role of the voluntary sector in the Employer Option than is found at national level. There are three local ILMs, represented by four out of the nine Employer Option jobs, which the survey picked up. These, and one other person with a voluntary sector job, all believed that their jobs had not existed before a New Dealer came into post. This underlines a point made in the national Employers' Survey (Hales et al. 2000); that voluntary sector organisations are more likely than other employers to use New Deal subsidies to create new vacancies which would not have been created otherwise. This does not however imply that New Deal subsidies are sufficient on their own to create ILM jobs, which in the Chesterfield area are supported by a variety of complementary funding sources.


  The training options was very popular. Most trainees chose the course for themselves, and four out of five said they entered the course of their first choice. The same proportion said they liked it once they started. The range of courses was by no means confined to NVQ1 or NVQ2; they included university access courses, accountancy and environmental management qualifications. One in five or six of those who were on the training option had embarked on programmes of study which could not be finished within the New Deal, but which could open up major new career perspectives if they could obtain follow-on funding to continue. However, follow-on funding was a problem. One person started a course, which led to an NVQ3 after two years, but only completed the first year because she feared getting into debt if she continued after the New Deal year ended. In another case, the training provider had attempted to arrange extension of the New Deal study period through the European Social Fund, but at the last moment no funding was available.

  Provision of books and materials was a problem for one in three or four trainees. About the same proportion had not seen their Personal Adviser during the training period, suggesting that arrangements for providing help with individual training needs may not have been working very well. Buying books and stationery, as well as buying meals in a student canteen, may be a big financial strain for New Deal trainees because they have to find these costs out of their already meagre JSA. Unlike the earlier Training for Work scheme, the NDYP does not provide trainees with a "top-up" training allowance in addition to their normal JSA entitlement.

  Just over half of those no longer on the Training Option had dropped out of their course before it ended. Three of these eight people left because they were dissatisfied with the course, in particular that they had felt they had insufficient attention from tutors. One fell sick and two others could not obtain their desired qualification in a single year. Two left to get an unsubsidised job, but only one of these was still working when interviewed.


  The "benefit plus" options (ETF and Voluntary Sector) were often a reluctant choice. Four of the thirteen who went on one of these options were only offered a "benefit plus" option. Three said it was not their preferred option and two did not really want to go on any of the options. Altogether five people left their "benefit plus" placements early, of whom four were sanctioned and one, having left two placements and been dismissed from another, eventually transferred to Invalidity Benefit. Two people presented the ETF as lacking any value in terms of real work experience. One of these described his main activity as learning how to identify trees, which he felt was useless; another related how his work team had deliberately wasted time, sleeping in the van and only working when they were about to be "inspected".

  Nonetheless eight out of 13 liked their placement and were getting the kind of training they wanted, and seven said that it was the right kind of work experience for them. Nine said they were receiving a type of training in their placement, which was right for them, and six were working towards NVQs. All except one thought their training was of good quality. This is a welcome contrast to the findings of some of the official evaluation reports, which found that "the quality of training provision was widely criticised" in the Voluntary Sector option (Hasluck, p. 43).

  The local context may be important in relation to this finding about the quality of training in the Chesterfield area. Two ILMs in Chesterfield, including the largest, do not provide "benefit plus" placements within the New Deal, preferring to pay a real wage as a matter of principle. Thus, where they take New Dealers it is by making use of the Employer Options subsidies. Another ILM has provided some "benefit plus" placements, but operates in a local climate in which the voluntary sector overall prefers to have waged workers, following the lead of the local Council for Voluntary Service which is keen to ensure fair pay for the ex un-employed. A number of small organisations can receive a "free worker" from an ILM, knowing that the ILM will pay the person's wage and provide training as well as some management costs, and will also monitor the quality of the placement closely. This may have helped to lay down the basis for good training and employment practice in the local voluntary sector with regard to ex-unemployed trainees.


  One of the most controversial parts of the programme was, predictably, sanctions for people who refuse to take part. Just over half (53 per cent) thought the New Deal should be voluntary for everyone, whilst only 21 per cent thought it should be compulsory for everyone. Almost a quarter thought it should be compulsory to attend for certain groups, such as those under 22 or the very long-term unemployed. Over half of the sample (56 per cent) thought that sanctions were justified in some circumstances, in particular where people were making no attempt to find work. On the other hand 36 per cent thought that sanctions were never justified.

  Asked whether they would like to see any improvements to the New Deal, interviewees had many suggestions. The main themes were less pressure to take unwanted jobs or options, more careers advice, better pay on the options and more financial support for training.

  As mentioned earlier, the New Dealers interviewed felt that at least part of their problems lay in the local labour market. Not surprisingly, therefore, they wanted to see policies to create more jobs, both through public investment and through encouraging private investment. They also wanted the Government to address the problem of low pay and job insecurity. Several people also wanted more opportunities for training, or more investment in training, and some (as mentioned earlier) had embarked on training routes, which could not be completed within their New Deal training year.


  The survey suggests that many New Deal participants, like other unemployed people who took part in the author's focus groups in the summer of 1999, regard low pay and the "poverty trap" as one of the main barriers they face about getting a lasting job. Thus steering them towards any available job as fast as possible fails to address a major issue; the low quality of jobs on offer to them in the labour market. Insofar as the Gateway pursues this "work first" approach, it risks encouraging even lower wage levels in "entry grade" jobs, possibly to the point where these jobs may be "unsustainable" in the sense of not providing people with the means to stay out of debt, establish or keep their own home. The problem of the poverty trap calls for a different solution; a "demand side" approach based on creating more quality jobs in regions still experiencing a severe "jobs gap", and raising the minimum wage.

  Sanctions on the scale used at present, and the pressure to join unwanted placements, are not helpful insofar as they induce some people to rush into a short-term job to avoid losing their benefits. They also risk imposing hardship on those whose job search or option attendance will not be influenced by the threat of losing benefits—perhaps because they have mental health problems, addiction problems or other serious personal difficulties.

  The greatest value of the New Deal seems to be to offer an opportunity for people to upgrade their skills and escape from the lowest layers of the job market. But for their aspirations to be fully realised, more funding is required both within the New Deal for supporting trainees, and beyond their period on the programme for those who need to study for two or three years, rather than one, to complete certain courses.

  To help more people rise up the occupational ladder, and reduce the over-crowding at the bottom into low skilled and low paid jobs, would be beneficial for the economy as well as for individual jobseekers. But it may require a different approach not only to the New Deal but to JSA as a whole, giving jobseekers help to maximise their potential rather than obliging the long-term unemployed to take the first job available regardless of whatever skills and experience they may have.

Dr Anne Gray

Local Economy Policy Unit, South Bank University.

December 2000


  Bryson, Alex, Knight, Genevieve and White, Michael, 2000; New Deal for Young People, National Survey of Participants, stage 1, Policy Studies Institute/Employment Service, Employment Service Research Report ESR44.

  Hales, John, Collins, Debbie, Hasluck, Chris and Woodland, Steve, 2000; New Deals for Young People and for Long-Term Unemployed People; Survey of Employers, National Centre for Social Research/Employment Service, Employment Service Research Report ESR58.

  Hasluck, Chris, 2000; The New Deals for Young People two years on, Institute for Employment Studies/Employment Service, Employment Service Research Report ESR41.

43   The full report will be published jointly by LEPU at South Bank University and Derbyshire Unemployed Workers Centres in January 2001. Back

44   Under the title "Social Assistance Benefits and Income Maintenance; Europe seen from below" this project runs from December 1998 to November 2001, and is co-ordinated by CNRS in Paris. A number of working papers are available from South Bank University. Back

45   Potential respondents were approached outside job centres, through unemployed workers' centres which they visited for advice about job search of benefits, and through contacts which the centres were able to make with New Deal option providers, with other voluntary organisations, with a college students' union and with employers. Back

46   The two sets of figures are in any case not strictly comparable because some interviews in the local survey had just left their option and others had left many months before. Back

47   Hasluck (2000) gives the proportion of participants in the NDYP who exit from the Gateway without entering an option as 58 per cent up to July-September 1999, Bryson et al. (2000; p. 29) find 59 per cent whilst the monitoring figures for May 2000 give 68 per cent. Back

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