The Resolution Foundation has warned that the Universal Credit Health (UCH) component, received by 260,000 young people across the UK, "must be fixed", just days before a major report on young people not in education, employment or training (NEETs) is expected to be delivered to Downing Street.
Senior Labour figure Alan Milburn is set to present recommendations to Prime Minister Andy Burnham on how to address the issue of one million NEETs. The publication, which according to reports could result in PIP and Universal Credit being cut or replaced, is expected to be handed over next week.
Foundation calls for 'career start' approach
In an update released on Wednesday, the Resolution Foundation said: "Much of the attention on the final report will be on whether benefit support for young people is cut. But in our view the first thing to solve is the 'left alone' approach of the current benefit system."
The 260,000 young people currently receiving UCH have no requirements to engage with support to help them move closer to work, education or training. The foundation said this "must be fixed, but not through more 'work first' conditionality that pushes unemployed recipients to take any available job as quickly as possible."
"Instead, we need a 'career start' approach – permanent, positive and personalised employment support that young benefit claimants are required to engage with. Interventions should meet each young person where they are, provide genuinely helpful support to enable them to progress towards work, training or education."
What is the Universal Credit Health component?
The UCH component is an additional Department for Work and Pensions payment for those living with a health condition, disability or long-term illness. It can provide people on Universal Credit with an extra £217.26 a month if they have a health condition or disability, although the figure can be higher depending on the severity of the condition.
The think tank wields considerable influence over policy and politics in the UK. The Economist noted last year that "to understand how Britain is run, walk away from Whitehall, turn right at the Houses of Parliament and head to 2 Queen Anne's Gate." This is the headquarters of the foundation.
Recent former members include current pensions minister Torsten Bell, Treasury minister Dan Tomlinson and housing minister Matthew Pennycook. Former senior cabinet minister David Willetts serves as the foundation's president, while Sir Keir Starmer's chief economic adviser was Minouche Shafik, who previously co-chaired a Resolution Foundation inquiry, and the former PM's deputy chief of staff in Downing Street, Vidhya Alakeson, also held a position at the foundation.
Funding proposals and benefit analysis
In a new Substack published on Wednesday ahead of Mr Milburn's report, the foundation called for work to address the "huge gap" in education rates amongst young people in the UK compared to other wealthy nations, including additional funding for further education. It also called for guaranteeing apprenticeship funding reaches young people, stating that excessive amounts under the current Growth and Skills Levy are directed towards older individuals, and advocates for the apprenticeship fund to be ringfenced for under-25s.
The foundation also called for doubling funding for the Youth Jobs Grants and Jobs Guarantee to support an additional 40,000 young people into employment, and increased investment in work coaches, wage subsidies and training programmes.
On benefits, the foundation noted that the total benefits bill for young people is £8.1 billion, and said: "Can this be funded by a 'tough love' approach of lower benefit entitlement? Well, the total benefits bill for young people is £8.1 billion, so there is clearly a limit to any such hope at least in the short term (the fiscal benefits could be much bigger in the long run as upstream investment means the caseload falls)."
"Added to this, receipt of UCH and/or Personal Independence Payment (PIP) currently protects 120,000 young people from poverty. But that doesn't mean that savings are impossible. Recent RF research found that around one-in-five young people currently receiving PIP did not experience additional costs. Savings can be found here, though that's more of a question for the upcoming Timms Review."
The Timms review is looking at the future of PIP, an additional payment for people with a disability, or long-term physical or mental health condition. Sir Stephen Timms, its co-chair, said in his recent interim report that the benefit was "no longer fit for purpose".
