Think Tank Delivers Damning Verdict on Government's £1bn Youth Unemployment Initiative
The government's newly announced £1bn "life-changing" youth unemployment scheme will only benefit a small fraction of the nearly one million young people not in employment, education, or training, a leading economic think tank has warned. The Institute for Fiscal Studies issued this critical assessment following Work and Pensions Secretary Pat McFadden's unveiling of the plan, which aims to incentivise employers to hire young individuals.
Scheme Fails to Target Hundreds of Thousands on Universal Credit
The IFS highlighted that the measures do not even address the more than 300,000 young people currently claiming Universal Credit who are not required to seek employment, primarily due to health conditions. Furthermore, the think tank noted an additional estimated 280,000 young people classified as NEETs but not receiving out-of-work benefits, who would also remain largely unaffected by the proposed interventions.
Xiaowei Xu, a senior research economist at the IFS who authored a paper analysing the plans, stated: "These policies will benefit only a small share of nearly one million young people not in employment, education, or training." She emphasised that the number of young individuals not compelled to search for work has "increased substantially in the last few years," adding that "stemming its rise will be crucial for making meaningful progress on youth employment."
Details of the Youth Employment Package
The initiative, announced with considerable publicity on Monday, includes several key components:
- A new Youth Jobs Grant offering businesses £3,000 for each hire of an 18-24 year old who has been unemployed for six months or longer.
- A fresh apprenticeship incentive providing small and medium-sized enterprises with £2,000 for every new employee aged 16 to 24.
- An expansion of the existing jobs guarantee, which furnishes a six-month role to Universal Credit claimants unemployed for 18 months, to now encompass individuals up to 24 years old.
Pat McFadden asserted that the scheme would "deliver life-changing opportunities to young people and significantly reverse the increase we inherited in" NEETs, describing the youth unemployment crisis as pressing.
Administrative Constraints and Limited Impact Forecast
The IFS report raised significant concerns regarding the practical implementation and projected reach of the wage subsidy programmes. It cautioned that "the number of placements will be constrained by employer take-up, and – at least in the case of the Jobs Guarantee – by the administrative capacity of the Department for Work and Pensions and the local delivery organisations tasked with matching jobseekers to employers."
Government expectations indicate the Jobs Guarantee will support an average of 30,000 people annually over the next three years, a mere fraction of the 72,000 Universal Credit claimants currently eligible. The Youth Jobs Grant is anticipated to assist an average of 20,000 people per year over the same period, bringing the total yearly average supported by wage subsidies to 50,000.
For context, the report elaborated: "Even if all 50,000 jobs were 'additional' positions that would not have existed without these policies, this would reduce the NEET rate from 12.8 per cent to 12.1 per cent – still well above the 11.7 per cent observed three years ago."
The Department for Work and Pensions has been approached for comment regarding these criticisms and the projected limitations of the scheme.
