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Just over three years ago, construction's first New Deal trainee, painter and decorator Michael Ellis, walked out on Sheffield-based contractor Henry Boot after six weeks on the job. "Embittered young drop out of Blair's New Deal", shouted the press, and many in the construction industry muttered "told you so". Compelling unskilled, unemployed under-25s to take jobs they weren't interested in did not strike many contractors as the ideal way to supplement their workforce, no matter how generous the state subsidy (Work in progress, right).

But Ellis' departure has left no scars at Henry Boot. In fact, the firm, which has 50 new dealers in its northern division, is already a model for Labour's plans to change the initiative, should it win the general election.

Under proposals announced last week, the party will revamp the New Deal to tackle construction's skills crisis. The name of the initiative will be "Ambition Construction" and the emphasis is to shift from meeting the needs of unemployed people to meeting those of construction firms choked by the tightening labour market.

The addition of this economic imperative seems to have concentrated the government's attention on the quality of New Deal training: it will propose that the training period be extended beyond its present six months and it will ask employers to allocate more management resources to their cut-price workers. And in a move mirrored by Henry Boot, it will extend the scheme to all job seekers aged over 25.

The question still remains, however: can the industry find the skills it needs in the shrinking pool of unemployed people? Adrian Harrison, Henry Boot's training manager, has no doubts that it can. He believes that, after teething troubles, employers are getting the right kind of candidates from the employment service. He says: "Before, places were just trying to be filled and fast. Now we have a good relationship with the employment service, and they know what we're looking for."

Harrison gives an example of the improvement in personnel that has encouraged Henry Boot to look for more recruits through the scheme. "I saw a young lad the other day who wants to do brickwork. Looking at the quality of his work, I would have said he had been here for at least a couple of months. But it turned out he had only started two weeks ago," he says.

"It's that enthusiasm that the new initiative has to capture, and placing the right sort of people into the right jobs so they want to be there and can prove to be a success."

Harrison firmly backs the switch to Ambition Construction. "It's what the New Deal needs. It's an excellent idea."

Keith Aldis, training director at the Construction Confederation until a week ago, believes that Ambition Construction will be a significant improvement on the New Deal. He says: "As it stood, the New Deal would provide employers with workers who didn't really want to work in construction. Some new dealers may have been more interested in catering or working in hotels and would turn up on building sites at five in the morning totally unprepared for what was ahead of them."

Aldis reckons that dealing more directly with employers will help the scheme. He adds: "Relations with employment services have been developing, but now the New Deal for construction can have greater focus on the employers and prove a real success."

We have had New Deal people in here before and I could tell you some funny stories about them

Dave Guildford, director of brickwork contractor Lesterose

The two bodies working on Ambition Construction 鈥� the Department for Education and Employment and the Construction Industry Training Board 鈥� are focusing on just such ideas, as well as giving new dealers in construction real industry qualifications.

Andrew Wootton, head of national training organisation and research for the CITB, who is also on the DfEE's New Deal for Construction steering group, says: "It's still early days and research is still being completed, but what we want to do is to bring in recognised construction qualifications so industry training can progress."

The main challenge, however, is to persuade the industry that Henry Boot's solution to the labour shortfall is the right one.

This will not be easy. Dave Guildford, a director of Tonbridge-based brickwork contractor Lesterose, is sceptical. His firm has opted for its own apprenticeship scheme rather than relying on the New Deal for recruits. The company employs more than 400 operatives and creates 16 apprenticeships every two years. Guildford explains: "At Lesterose we have apprenticeships where the youngsters get trained up properly. We have had New Deal people in here before and I could tell you some funny stories about them, but I don't think it is right to embarrass them."

He does see some potential in attracting older workers under the Ambition Construction scheme. He says: "It would be better than getting the same incompetent, uninterested people through the door." But he is wary of the spin factor that could surround Ambition. "I am wary of any new initiatives at election time, and I worry that the scheme is just policy waffle being dressed up in the guise of the New Deal."

The unions are another unconvinced group. Allan Black, construction officer with the GMB, raises doubts over the efficacy of using the New Deal as a means to overcome the sector's skills shortage. Although he welcomes the public money going into training, Black argues that a more effective way of recruiting workers is to improve the industry's image and the conditions for workers. He argues that low pay and increasing levels of casualisation are creating an unattractive working climate.

Black also points to an untapped, highly skilled workforce that will not be targeted by Ambition Construction: those in their 40s and 50s. He says: "You've got to encourage older workers to stay in the industry, because this country is littered with taxi drivers that used to be in construction but couldn't afford to stay the course."

The example of Henry Boot is a heartening one, but it remains to be seen whether the new New Deal can make a significant different to the labour shortage. DfEE figures show that, by the end of last year, 17,000 construction new dealers had been trained. That figure will need to increase dramatically to have any impact on the 74,000 workers a year that the CITB estimates the industry needs.