Funding call over new jobs scheme

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The Work and Pensions Select Committee said it was concerned that funding arrangements for the Flexible New Deal (FND), which will replace the New Deal later this year, were "inadequate".

The committee endorsed the principles of the new scheme but warned that the number of claimants joining the programme when it starts in October will be 300% higher than first predicted.

There was a "significant risk" of market failure, said the MPs, adding that the budget must be increased to reflect the predicted rise in claimants.

The Government was called on to announce financial adjustments "as soon as possible."

"Other changes to the benefits system mean that more lone parents and disabled people will be accessing Jobseeker's Allowance and adding to concerns that the budget will not stretch to accommodate the additional customers the economic downturn is likely to generate," said the report.

Committee chairman Terry Rooney (Labour Bradford North) said: "As the labour market contracts it becomes even more important to ensure that those who have been unemployed for a long time receive the support they need to return to work.

"The Flexible New Deal has the potential to offer this, but the financial principles on which it is based must be viable

"Unless the budget for FND is increased, there is a real danger that providers will not be able to cope with the numbers of customers coming through their doors.

"The potential consequences of this for those customers who are most in need of expert support and their prospects of rejoining the labour market should give the Department for Work and Pensions real cause for concern."