Chapter 1
The New Deals
8 Our new approach to active labour market policy has meant a radical transformation of the welfare state, built around a framework where rights are balanced with responsibilities. At the heart of this approach are the New Deals:
- the New Deal for Young People was introduced in April 1998 to end the prospect of a lifetime on benefits. It provides support for all people aged 18–24 who have been unemployed and on benefits for six months or more;
- the New Deal 25 plus and the New Deal 50 plus offer similar help to older age groups. Together with the New Deal for Young People and other policies described above, they have helped us reduce the number of people on unemployment benefits for a year or more by over three-quarters to less than 130,000. The number on unemployment benefits for a year or more is now less than a tenth of the peak of 1.3 million in 1986;
- the New Deal for Lone Parents has helped more than 410,000 lone parents into work. Independent evaluation shows that this New Deal doubles the chances of a lone parent getting a job, and more than pays for itself; and
- the New Deal for Disabled People has now helped almost 75,000 people into jobs, significantly improving their chances and, again, more than paying for itself.
9 Our approach has been driven by evidence, not ideology. Our New Deal programmes are independently evaluated by recognised experts, and there is strong evidence that the programmes significantly improve the chances of a participant getting a job.
Much done but much still to do
10 Compared with both recent history and other countries, the UK labour market is performing very well. However, in spite of our overall success, some groups continue to face barriers to entering and progressing in the labour market. What is more, these groups are disproportionately likely to be further from the labour market, because they are inactive rather than unemployed. Our success in tackling unemployment means we are now well placed to extend support to harder-to-help groups.
Figure 1.3: Employment rates among the Public
Service Agreement target groups
11 Recognising that some groups of people are more likely to suffer relative disadvantage in the labour market, the Government has set Public Service Agreement targets to monitor progress in raising employment among these groups and reducing the gap between their employment rate and the national employment rate. These groups are:
- disabled people;
- lone parents;
- minority ethnic groups;
- people aged 50 or over;
- people with low or no qualifications; and
- those living in the 30 most deprived local authority districts.
12 Since 1997, not only has the overall employment rate increased but disadvantaged groups have benefited the most.
13 In particular, lone parents and people aged between 50 and State Pension age have seen substantial rises in their employment rates – up by 11 and 6 percentage points respectively between spring 1997 and spring 2005. So, despite strong growth in overall employment, the gap has narrowed.
14 The problem is not a lack of jobs; indeed, employment rates are lowest in the major cities, where there is at least one job per person. However, many residents of cities do not take up these jobs even though they live within easy travelling distance of thousands of vacancies. The problem is connecting people with the work that they want and need and also with the jobs that employers need done.
15 In order to address these economic and social problems we have set ourselves the aim of an employment rate equivalent to 80 per cent of the working age population. There are groups of people locked into long-term dependency on benefits who have been denied the opportunity that work can bring. In a modern, dynamic economy no one who can work should be denied that opportunity.
16 To achieve our aim, we will need to tackle inactivity among three key groups:
- people on incapacity benefits – the number on incapacity benefits rose by almost 2 million between 1979 and 1997. Around three-quarters of claimants have been on incapacity benefits for more than two years. The number on incapacity benefits fell by over 40,000 over the year to May 2005, but we need to do much more. We aim to reduce the number by 1 million;
- lone parents – in 1997, fewer than half of lone parents had a job, compared with more than two-thirds of partnered mothers. Since then we have seen the first sustained rise in lone parent employment rates in recorded history and now more than half are in work. But we need to do much more. We aim to help 300,000 more lone parents into work; and
- older workers – the employment rate among older people is now one of the highest in Europe, but we need to do more to address the demographic challenge. We aim to increase the number of older demographic challenge. We aim to increase the number of older workers by 1 million.
