Young people aged under 25 without severe disabilities could be offered employment support instead of £217 a month of Universal Credit under plans for a historic change to Britain’s benefits system.
Youth employment chief Alan Milburn will publish his long-awaited report about youth employment next week where he will recommend that Prime Minister Andy Burnham design a completely new and targeted social security system for young people.
It is part of Labour’s ambition to put “work over welfare” for young people and make it harder for them to be signed off for health reasons.
Instead of the health element of Universal Credit (UCH), which is worth £217 a month to new claimants, young people without severe work-limiting disabilities could be offered education, training and employment support to make sure that they do not end up signed off.
There are currently 260,000 young people receiving UCH, according to the independent think tank the Resolution Foundation. There is no requirement for them to engage with support to help them move closer to work, education or training.
As The i Paper has reported, it is rumoured that Burnham and Work and Pensions Secretary Pat McFadden will accept Milburn’s 200-page report in full.
Last week, while on a visit to Denmark to study their social security system, McFadden told The i Paper that he thought there was “merit” in Milburn’s idea of creating an entirely “distinct” system for young people. However, he suggested that he was undecided and open to discussion about the age range it would accommodate.
A huge ‘reset’ of Britain’s welfare state
Burnham, Milburn and McFadden have all talked up the importance of “employment support” over unemployment benefits for young people, older job seekers and people with disabilities and health conditions.
However, they have also all suggested that moving to a European-style system where people are supported via subsidised job schemes could mean Labour have to spend money on reform before they can reduce Britain’s overall welfare bill.
McFadden said he would fight for more money from the Treasury for “investment” for reforms aimed at giving people “opportunities” instead of “an assessment, a cheque, and a goodbye”.
Burnham has also acknowledged that the “reset” of Britain’s welfare system that Milburn is about to recommend will require “investment up front”.
There is growing concern about the cost of Britain’s benefits bill. Total welfare spending is forecast to increase from £353 billion this year to £431 billion in 2031/32.
Just under half of this figure is spent on the state pension, which the Prime Minister has pledged to remove the triple lock on.
A lost generation of 1 million Neets
Milburn’s recommendations will come as almost 1 million 16- 24-year-olds are recorded as not in education, employment or training: Neet.
While this number was higher in the aftermath of the 2008 financial crisis, peaking at 1.25 million in late 2011, McFadden and Milburn have both acknowledged that something has fundamentally changed in recent years, which they hope to address.
This is that there has been a sharp rise in the number of teenagers and people in their early 20s claiming disability benefits, according to the Resolution Foundation.
Over the summer, Milburn travelled to the Netherlands to observe their education and employment support systems for young people. The Dutch have a far lower level of youth economic inactivity than Britain does.
The UK’s NEET rate is currently 13.6 per cent; while the Dutch figure is less than half that at 4.8 per cent. As a result, the country is being seen as a blueprint for where Britain heads next under Milburn’s recommendations.
Like Denmark, the Dutch social security system is devolved and it is thought that Milburn will recommend a more locally targeted system is set up to support young people in Britain.
This is because he is of the view that areas with high Neet rates such as Blackpool and Middlesbrough have specific issues such as poor transport links and a jobs market which is in transition due to a decline in tourism and manufacturing respectively.
McFadden, who also went to see the Dutch system on a separate visit with The i Paper, has also been gathering information about how a devolved approach to young people’s employment support, education and training could work.
It is thought that Milburn will recommend that regional mayors are given more power to support young people in his new system. This is something Burnham said that he favoured during his time as Mayor of the Greater Manchester Combined Authority (GMCA) where he set up a targeted local education system – the MBacc.
The Netherlands and Denmark also take a more “tough love” approach to social security. In both countries, where employment rates are higher than the UK’s, state support is conditional on young people engaging with work, education and training programmes.
This is expected to become the case in Britain.
As well as taking young people out of the Universal Credit “health pathway”, which means they receive £217 a month and can be signed off from work completely via a work capability assessment (WCA), it is expected that Milburn will recommend designing a system which looks at what a young person can do. This could be through a subsidised job – available through McFadden’s Jobs Guarantee Scheme which will be expanded to young disabled people next year – or as part of a supported apprenticeship or training scheme.
Which young people might actually get more support?
Milburn’s report will come before another major report which is currently being compiled by Sir Stephen Timms with a view to making changes to the way disability benefits and assessments work.
While Milburn may recommend that some young people without severely work-limiting conditions are put on a different pathway, certain groups of “vulnerable” young people may actually get more “priority support” in the new system than they currently do under his new system.
These could include care leavers, young carers, teenage parents and young people leaving custody are considered the most vulnerable Neets.
Milburn believes that care leavers, who have some of the highest NEET rates of any group, should receive sustained, personalised support, including cash, to ensure they are not pulled away from learning and work.
This could take the form of an Education Maintenance Allowance (EMA) style allowance of £50 a week for six months, for care leavers who are NEET or at serious risk of becoming so.
However, the support would be conditional on taking part in education, employment or training. This gives them breathing room to establish themselves, so financial pressure does not pull them away from learning and work.
Challenges ahead?
If they accept Milburn’s recommendations, McFadden and Burnham will need to convince Labour MPs to back their new system for young people. They will then need to secure the funding for it from Chancellor John Healey.
Alex Clegg and Nye Cominetti, economists and welfare experts at the Resolution Foundation, said that whatever happens next, Labour must not treat Neets as “a homogenous group”.
“Some are actively looking for work; others aren’t. Some claim benefits; others don’t. Some are in good health; others grapple with health conditions and disability. Some will be NEET only briefly; others face longer-term challenges,” they said.
A new system for young people will only be successful if it is designed with this in mind. But that is not quick, and it is not cheap.
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