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<jats:p>Britain’s New Labour Government has radically shifted its policy aims away from securing traditional full employment towards the improvement of “employability”. This paper briefly assesses what is meant by employability and how the Government has integrated its “supply side” approach to the unemployed with the stricter benefit regime it inherited from its Conservative predecessor. It describes the various New Deal and area‐based employment programmes that have been introduced during an intense phase of policy development and experimentation and outlines the immediate impact they have had. The Government’s long‐term aim is to build on this experience and create a “work‐based welfare state” for all those of working age who receive state benefits. In conclusion, the paper highlights some of the weaknesses of the new strategy and draws out the implications that existing evaluations of active labour market programmes have for the likely impact of the New Deals.</jats:p>