The New Deal

Abstract

The New Deal is the Labour government's flagship programme to "end the tragic waste of youth and long-term unemployment" by getting people off welfare benefits and into work. This paper argues that the principal weakness of the New Deal is that it seeks to influence the character of labour supply (i.e. the motivation and skills of the unemployed) while neglecting the state of labour demand, which varies greatly between places. The uneven geography of unemployment in the UK is likely to have a crucial bearing on the programme's impact and effectiveness, but this has been largely ignored in its development. The paper outlines some of the practical consequences of this imbalance and suggests how it could be rectified for the programme to be more effective.