4 An auditor reports
4.1 Looking at the evidence
Some analysis of the data shown in Figures 4 (a) and 4 (b) is needed to set it in a wider context. We need to know how many openings were created after the NDYP was launched, who participates in the programme, and with what outcomes. Not only would this answer questions about the significance of participations and withdrawals, it would allow insights into the rationale for NDYP. A report by the National Audit Office (NAO), The New Deal for Young People (2002), is an authoritative statement to Parliament on the programme's value and cost-effectiveness. The focus of the report is quite specific: is NDYP a good use of public funds and does it contribute to the economy?
Read Extract 1 below and make brief notes on the NAO's assessment of the value and effectiveness of NDYP, on the criteria it employs to come to its conclusion, and on the data that was used.
Extract 1: ‘NAO report on the New Deal for Young People’
How far the New Deal for Young People has met its objectives
5 The government met its target of getting 250,000 under 25-year-olds off benefit and into work before the end of the 1997 to 2002 Parliament in September 2000. By the end of October 2001, some 339,000 participants in the New Deal for Young People had ceased claiming job seekers allowance and had experienced at least one spell in employment, including subsidised employment. Of these, some 244,000 young people had left for sustained unsubsidised jobs. A further 30 per cent of leavers left to unknown destinations. Research indicates that 56 per cent of participants who left the programme and for whom no known destination was recorded (some additional 107,000 young people) had left to go into a job. However, some young people placed into sustained jobs (lasting more than 13 weeks) will have returned to unemployment within that period without reclaiming job seekers allowance.
6 A large majority of the young people placed into sustained jobs remained out of unemployment for a substantial period. However, as might be expected in a dynamic labour market, some young people placed into jobs subsequently returned to a period of unemployment. This is a positive outcome as long as they remain employable, actively seek work and do not return to long-term unemployment …
Impact of the programme on the national economy
8 The New Deal for Young People achieved its stated target of helping 250,000 young people into work in September 2000. But the economic impact of the programme cannot be measured simply in terms of the number of young people placed into jobs. For example, many of them would have found a job anyway because of natural labour market turnover and the general expansion of the economy. The overall impact of the programme therefore needs to be viewed in the context of wider labour market dynamics, as many young people will become unemployed and leave employment without any labour market intervention. Also, the headline figure of the number of young people placed into work does not measure the additional benefit for those who have participated in the programme in terms of their improved longer-term labour market position.
9 Research commissioned by the Employment Service into the first two years of the programme's operation estimated that the New Deal for Young People had reduced youth unemployment by 35,000 and increased youth employment by 15,000.
10 Our analysis suggests that these estimates of the direct effects of the programme were reasonable. Because of inherent difficulties in evaluating the programme, they needed to be placed within a fairly wide range of plausibility, but it is clear that there is a positive effect.
11 The research also estimated that the programme indirectly had increased employment in groups other than 18- to 24-year-olds by 10,000. Based on this research into the direct and indirect effects of the New Deal for Young People, we estimate that national income has grown by a minimum of £200 million a year.
12 The government had spent £668 million on the programme by March 2000. After taking into account the programme's impact on other parts of the government budget, its estimated net cost was around ±140 million a year. Applying this to our estimates of the programme's impact on levels of employment, the average annual cost per additional person of any age in employment lies within the range of £5,000 to £8,000 …
Our estimates of the effect of the New Deal for Young People on youth unemployment and youth employment
|Effect||Plausible range of estimates|
|Reduced youth unemployment||25,000–45,000|
|Increased youth employment||8,000–20,000|
The NAO's assessment is equivocal. The increase in youth employment is proportionately very small. The report is careful to differentiate new jobs from existing jobs that employers transfer to NDYP in order to gain the subsidy. It expresses concern about the 30 per cent of leavers to unknown destinations, and about the subsequent unemployment of those who get work when they leave. It draws attention to poor provision for those who are ‘harder to help’, and the declining trend in the numbers of leavers beginning jobs that results from the practice of placing the ‘easiest’ recruits first. Finally, while the net cost of £140 million is exceeded by the estimated net growth of £200 million in the national income, the annual cost per trainee of up to £8,000 is several times the cost of the trainees’ ‘allowance’, partly because of the subsidy to employers.
The criteria upon which the report bases its assessments are exclusively quantitative. Aspects of the programme that ‘were not measurable’ are ignored. Questions about how it was experienced by young people and employers are not addressed. There is therefore no measure of ‘value added’ to participants' skills. Nevertheless, the report confirms a number of important points. Few jobs are created and the impact on youth unemployment is relatively modest. There is no saving on welfare costs, but a very small gain in overall economic output. And while there is still a lack of clarity about drop-out, refusal, withdrawal and ineffective outcomes, it seems likely that the 30 per cent who left for unknown destinations were withdrawals before completion. The duration of jobs gained beyond 13 weeks is uncertain. This strongly suggests refusal or resistance alongside a substantial proportion of successful placements.
To interpret these findings, and to consider how New Deal policies constitute a response to and a shaping of personal lives, clear frameworks for interpretation are needed. We begin with two that offer opposing analyses.