Starmer’s new £1bn youth unemployment plan will only help a small number of young people, think tank warns
The government’s new £1bn “life-changing” youth unemployment plan will only help a small fraction of the nearly one million young people not in employment, education or training (NEETs), a leading think tank has warned.
The Institute for Fiscal Studies said the plans did not target the more than 300,000 people who already claim universal credit and do not need to look for work, mostly due to health conditions.
The measures were announced to great fanfare on Monday, with Work and Pensions Secretary Pat McFadden saying they would “give young people life-changing opportunities and significantly reverse the rise in NEETs we have inherited”.
But Xiaowei Xu, senior research economist at IFS, who wrote an article on the plans, said “the policies will only benefit a small segment of young people, numbering around one million”.
He added that the number of young people who are not forced to look for work has “increased significantly in the last few years. Stopping the increase will be important in making progress on youth employment.”
Attempt Includes a new Youth Affairs GrantIt is offering businesses £3,000 for every new hire aged 18-24 who has been unemployed for six months or more.
A new apprenticeship incentive will provide small and medium-sized businesses (SMEs) with £2,000 for every new employee aged 16-24. The current job guarantee, which offers a six-month role to Universal Credit applicants who have been unemployed for 18 months, will be extended to those aged up to 24.
As well as not targeting the 300,000 people who are not required to seek work, the IFS document points out that there are around 280,000 young people who are NEET but are not eligible for out-of-work benefits and are thought to be ineligible for most of these measures.
When it comes to wage subsidies, the report warns: “The number of job placements will be constrained by employer recruitment and – at least in the case of the Job Guarantee – the administrative capacity of the Department for Work and Pensions (DWP) and local “delivery agencies tasked with matching job seekers with employers”.
It adds: “The Government expects the Jobs Guarantee to support an average of 30,000 people a year over the next three years, which is a small fraction of the 72,000 UC applicants eligible for the policy today. “The Youth Jobs Grant is expected to support an average of 20,000 people a year over three years, taking the average annual number supported by wage subsidies to 50,000.
“For context, even if all 50,000 jobs were ‘additional’ jobs that would not exist in the absence of these policies, this would increase the NEET rate from 12.8 per cent to 12.1 per cent, well above the 11.7 per cent seen three years ago.”
The Department for Work and Pensions has been approached for comment.
