Labour's love affair with rock hits sour note

In its early, heady days of popularity, New Labour shamelessly deployed the stars of Britpop to drive home the message that it had captured the spirit of the age. Tony Blair told Brit Awards guests that the UK music industry was "once again in its right place, at the top of the world". Blur's Damon Albarn met the future Prime Minister in his Commons office. The Oasis frontman Noel Gallagher was among the first visitors to Downing Street after Labour's 1997 landslide.

Then the Blair Government set up a special scheme aimed at nurturing the next generation of rock stars. But a decade later, Labour's love affair with pop is over. The so-called New Deal for Musicians – which gave talented youngsters on the dole access to instruments, recording studios, industry mentors and a topped-up basic allowance – will be scrapped in the autumn.

Since its launch in 1999 with the backing of Sir Paul McCartney, it has helped more than 4,000 unemployed youngsters get a foothold in the music industry as aspiring bands, instrumentalists, singers and songwriters. Those helped include James Morrison, nominated for Best Male Artist at last month's Brit Awards, the indie rock band the Zutons, the Welsh singer Jem, Toploader and the jazz saxophonist-rapper Soweto Kinch.

Morrison was given the cash for a guitar when he joined the New Deal for Musicians, and spent all his time writing songs and playing live. Two years later his debut album, Undiscovered, reached number one in Britain and was a massive hit around the world. He told The Independent he was awarded a record deal on the strength of a song he recorded while on the New Deal. "Going on the scheme helped me out a lot," he said yesterday. "I had no money; I was signing on. I got that bit extra to help me through. I got a new guitar. Without the help from the New Deal, I would have struggled to do what I was doing."

Jem – born Jemma Griffiths – said the scheme had taught her how to use a studio, cut demos, and opened the doors of record company executives. "I wanted to be an artist; I wanted to make an album," the 33-year-old said. "But I couldn't get a bank loan and I knew it wouldn't happen if I was working. It gave me help with housing and living expenses." Her debut album sold 300,000 copies in Britain and the US.

The initiative was drawn up after the music industry argued that forcing talented people onto general jobseeking schemes stifled their creativity. In return for the support, they were expected to spend at least 30 hours a week practising or learning new skills. But in October the overall New Deal is replaced by the Government's Flexible New Deal.

The former music industry mogul Alan McGee, one of the initiative's architects,said he was not surprised, given the "economic tsunami" facing the country. "I bump into young kids all the time who say they started their bands because of the New Deal for Musicians," he said. "I'm sure a lot of music has come through because of it. It's a very bad time to be in a band with the economic collapse and the record companies in crisis."

A spokeswoman for the Department for Work and Pensions said: "If someone has a specific talent in music, their help and support would be geared to music. They will still get all the help they require."