New Deal (United Kingdom)

The New Deal (renamed Flexible New Deal from October 2009) was a workfare programme introduced in the United Kingdom by the first New Labour government in 1998, initially funded by a one-off £5 billion windfall tax on privatised utility companies. The stated purpose was to reduce unemployment by providing training, subsidised employment and voluntary work to the unemployed. Spending on the New Deal was £1.3 billion in 2001.

The New Deal was a cornerstone of New Labour and devised mainly by LSE Professor Richard Layard, who has since been elevated to the House of Lords as a Labour peer. It was based on similar workfare models in Sweden, which Layard has spent much of his academic career studying.

The New Deal had as its signature, the power to withdraw benefits from those who 'refused reasonable employment'. 'Workfare' in the UK can arguably be traced back to 1986, and compulsory 'Restart' interviews for claimants after a certain period, and as such the first introduction of 'conditionalities' with the possible outcome of 'sanctions' for perceived non-compliance. The 'New Deal' replaced the previous workfare programme of the then-Conservative government of John Major, 'Project Work', which had been launched in the early 90s's.

A further project was introduced in 1999, the Working Families Tax Credit, a tax credit scheme for low income workers which was meant to provide an incentive to work, and to continue in work.

Professor Richard Beaudry, from the Department of Economics at the University of York, defined the New Deal as follows in a 2002 paper, Workfare and Welfare: Britain’s New Deal (pp. 8–9) : "The New Deal reforms promise eventual reform of welfare assistance for all benefit recipients."

Although originally targeting the young unemployed (18- to 24-year-olds), the New Deal programmes subsequently targeted other groups. These include:[1]

• New Deal for Young People (NDYP) received by far the greatest proportion of New Deal funding (£3.15 billion through to 2002 ). It targeted unemployed youth (aged 18–24) unemployed for 6 months or longer.

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