Jobs report criticises 'new deal'

The Government's flagship "new deal" scheme is failing to get enough people into work because of the continuing North-South divide, MPs warned yesterday.

A hard-hitting report by the Commons Select Committee on Education and Employment said the programme was not fully addressing the problem of "slack labour markets in certain parts of the country", particularly in the North.

The report will force the Government on to the defensive because ministers have argued there is a gap between rich and poor areas throughout the country and that it is not limited to regional disparities between the North and South.

Derek Foster, the committee's chairman, said: "In recent months there has been a tendency for government ministers to take the view that there are plenty of jobs in all parts of the country. We have received a good deal of evidence that refutes that view."

The MPs argued that there should be a greater emphasis on policies to fight unemployment in such areas. "A failure by the Government to recognise this will result in a less sophisticated response to a problem which should concern us all," Mr Foster said.

The report will support critics such as Peter Kilfoyle, the former defence minister who claimed when he resigned that the Government was neglecting its core voters in the North and ignoring regional disparities. It said there were areas, particularly in the North-east, which had up to one million hidden unemployed who were on incapacity benefit and were therefore not counted in the usual figures.

Mr Foster said: "We want to encourage the Government to address this problem and not to take a rosy view. Unemployment figures have fallen to the lowest in the last 20 years but there are still huge pockets of hidden unemployment in areas such as the North-east."

The report added that the new deal was not working in areas of high unemployment such as inner cities and former coalfield communities because it was insufficiently subsidised by the private sector. Jobless people aged 18 to 24 were not finding paid, proper work.

A spokesman for the Department for Education and Employment denied there was a North-South divide yesterday, stressing that jobs had risen across the country over the past year. He added: "The new deal scheme is not about job creation but about making people employable."