A New Deal, but old money, for Lone Parents

Most single mothers are lonely and do want jobs, but the financial incentives are not good enough

Five-year-old James is careering around the place, swivelling at the Employment Services staff, running off with a clutch of official papers. The Jobcentre is not used to rowdy children - but now they have become a permanent fixture.

For two weeks now Harriet Harman's New Deal for Lone Parents has been up and running at eight local centres. This is Cardiff, and James's mother is here to talk about work. The following letter landed on her doormat unexpectedly a week ago: "Dear Janet Hayes, I am your Personal Adviser for a new service - the New Deal for Lone Parents. I am writing to you as your youngest child is now at school. I will offer you help and advice to find a job. Getting a job really does offer a better future for you and your children, and I am here to help you get one ... ."

Janet began claiming income support a year ago when she broke up, violently, with James's father, turning up penniless at a women's refuge. Sitting down with her new adviser at the computer, together they calculate how much she would end up with if she took a job. Like most other new arrivals here, she has no idea what she'd get on Family Credit. It's a fiendishly complicated sum - hardly surprising that those on benefit haven't a clue, lost in a maze of bureaucracy that even has the staff baffled sometimes. Family Credit is the benefit that tops up the income of low earners, to ensure it's always worth their while to take even a low-paid job, rather than staying unemployed on Income Support.

The computer says that if she got a job for 25 hours a week at pounds 3.75 an hour, Janet would be pounds 45.50 a week better off than she is now. She is astonished and delighted. "I thought I'd be maybe pounds 15 better off, not worth it really. That's what everyone says. I never expected it to work out like this." The word-of-mouth among single mothers about work is pretty negative, something the New Deal team hopes will change as more mothers come in and spread a different word.

Everyone in this office wanted to work on the New Deal and a missionary zeal gleams in their eyes. "I'm so enthusiastic about it, I bore everyone rigid!" Linda Badman, the project manager says. "People come in and you can change their lives. It's marvellous, it really is." Today they are celebrating their first client's first day at work, only nine days since they sent out the letters.

There are 4,000 single mothers with school age children in this area - half a million nationwide. Letters have gone out to the first 10 per cent randomly selected, but they are not obliged to respond, for this is voluntary. The manager reckons some 20 per cent of these have answered so far. She wonders how to reach the non-responders, and is sending out her advisers to proselytize in local communities. "If only we can reach them to explain what's on offer - training courses and plenty of jobs. We can help to find child care, tell them about the child care disregard amount and how it works."

Next in was Edith, a nervous middle-aged Irish woman, trembling like a leaf. Her youngest child was now 14, and when she got the letter she thought she was in trouble. "I took one look at it and it gave me such a fright, I put it aside," she said. Like most other benefit claimants, she had only the vaguest idea of the rules.

Her adviser reassured her she was under no obligation to work: lone parents are not registered unemployed or designated as Job Seekers. Years ago, Edith says, she used to be a care assistant in an old people's home and she liked it a lot - no shortage of jobs there.

When the calculation was made, she found she'd be pounds 50 better off for a 40-hour week and she was amazed. "I thought it'd only be around pounds 10 above my benefit," she said. "I'll be skipping down the road when I get out of this place. I always really liked work so there'll be no stopping me now!" It may not be much per hour, but since her child was older and she liked the work, another pounds 50 seemed to her well worthwhile. She left Linda and the other advisers beaming from ear to ear.

All this seems too good to be true. And in a sense it is. For the next client brought with her a draft of chill air to cool the enthusiasm. Maggie was bright, energetic and liked working. She'd been in and out of jobs over the last six years since her son was born. "Oh, I know all about Family Credit because I've been on it before, so I know how the sums work out," she said. She can only work 25 hours a week, as she doesn't want anyone else collecting her son from school.

She has a high rent and lives several miles out, so bus fares are expensive. On Family Credit her child gets no free school meals, so that's another pounds 5.50 to find, plus her own lunches at work. She'd also have to pay her council tax. So although the figures look good on paper at first, from her experience of the real cost of working she reckons she'd only end up with about pounds 25 more for her 25 hours: pounds 1 an hour doesn't look as enticing to her as it did to Edith. What's more, the Chancellor implemented a particularly savage, self-defeating cut when he axed the Lone Parent Benefit. As from next April, all these calculations will be minus another pounds 6 - which hardly helps the New Deal. Some mothers may drop out of jobs they dislike when they discover what Maggie has already found about the extra costs of work.

Money, though, is not the whole story. Maggie said she still wanted to work, so long as it was a job she really enjoyed: her last one had been hell. "I want to get out of the house," she said and left with a sheaf of details for jobs she might like. Most single mothers are lonely and do want jobs. If they can only get some maintenance from their child's father, the sums suddenly look very much rosier.

As it is, the current financial incentives are not good enough. Everything to do with benefit calculation is a nightmare of complexity: myriad benefits, each designed to act as spurs to this or that desired behaviour, are wasted, since virtually no one understands them. Even here, where the advisers are exceptionally good, no one could quite explain how the child care disregard worked. The DSS head office scuttled away perplexed to try to find out when I phoned, as confused as the rest. Suffice to say that disregards are very complicated, so that when they say there's a pounds 60 disregard for child care for working single mothers, that is not pounds 60 in their hand to spend, but only a maximum of pounds 42. (No, don't ask.) Family Credit itself is a niggardly benefit, which is rapidly withdrawn as you earn more. It urgently needs to be made far more generous - if, that is, we seriously intend to give more money to the poor.

Nonetheless, the New Deal is going have a terrific galvanising effect on thousands of single parents, neglected until now. It is a project that is all carrot and no stick. Mothers expressed astonished gratitude that so much help was available. It left me wondering whether welfare to work for young people would engender a similar rush of grateful enthusiasm if it were to adopt this voluntary principle. The New Deal may prove that good word-of-mouth is a lot more effective than a resented big stick.