Brown's New Deal off to flying start Omens set fair as jobs deal is launched

NEARLY seven out of ten jobless young people on pilot schemes for the Government's flagship New Deal initiative have found work, it was disclosed yesterday as the programme was launched nationwide.

Just over half of those have taken up subsidised New Deal jobs, while the rest have found other employment. Some have simply stopped claiming the job-seeker's allowance when they feared that the new system might uncover their work in the black economy, according to Employment Service officials.

However an internal minute leaked to the Conservative Party shows that the number of people going into orthodox jobs has been lower than expected.

In a memorandum to senior officials in the Employment Service, Leigh Lewis, the department's chief executive, said there were "fewer placings into unsubsidised jobs" than were originally estimated.

David Willetts, the Tory spokesman on employment, argued that this would mean the New Deal would be more expensive than the Chancellor of the Exchequer calculated in his Budget. "They are either going to have to spend more money or reduce the number of people they help," he said.

The Government announced that three out of ten participants had taken up one of three other options: jobs at voluntary organisations, places on the Government's environment taskforce, or full-time education and training. Some 16,000 young people between the ages of 18 and 24 who had been unemployed for six months have already gone through, or are still on the "gateway" induction process in the 12 pilot areas aimed at preparing participants for the options.

More than 118,000 will qualify for New Deal from yesterday as the initiative was extended to the whole country with some 4,000 employers agreeing to offer more than 14,000 jobs. But while each job carries a pounds 60 subsidy, concern was expressed that the supply of employment may begin to dry up as the strong pound causes a mini-recession.

Helping to launch the pounds 4bn New Deal yesterday, Gordon Brown, Chancellor of the Exchequer, said he would not be diverted from his determination to eliminate the boom-bust cycles of the past. The programme was aimed at making young people employable in the long term, he said.

Mr Brown said the New Deal was part of the Government's reform of the welfare state to ensure there was no longer any need for any young person to feel "excluded". It was the biggest employment programme ever launched in Britain, financed by a windfall levy on privatised utilities.

David Blunkett, Secretary of State for Education and Employment, reaffirmed the Government's insistence that there was no "fifth option" to remain on full benefits while refusing to take part in the New Deal. He said only those with a "valid and rational" reason would be exempt from penalties or those suffering from "personal, health or family difficulties".