The article starts by providing a brief historical context for the introduction of the New Deal and then describes the aims and structure of the New Deal in FE (Further Education) colleges. Based on a small-scale research project on FE colleges in London and south-east England, the article analyses issues and challenges arising from the experience of the New Deal. This article argues that the New Deal did represent something different from past schemes for the unemployed and did demonstrate a commitment on the part of New Labour to social inclusion. From our research, good practice was found when the top management in colleges was committed to the New Deal and was supported by a dedicated team of New Deal tutors. Finally, the article speculates on the future shape and direction of the New Deal in the context of FE colleges.