Young people who have been on universal credit for 18 months will be offered a guaranteed job, the Chancellor is set to announce.
However, The i Paper understands that those who refuse the guaranteed job offered to them could face sanctions, including losing part or all of their benefits, if they turn it down without a good excuse.
Rachel Reeves will use her Labour Party conference speech on Monday to set out the Government’s “Youth Guarantee”, a central pledge aimed at cutting long-term youth unemployment.
“I can commit this government to nothing less than the abolition of long-term youth unemployment. We’ve done it before and we’ll do it again,” she will say.
Work and Pensions Secretary Pat McFadden will reinforce the message in his own speech later on Monday, saying: “A Youth Guarantee – meaning opportunity is not just for the few, but for all. And with that opportunity comes responsibility too – to take up the training, the apprenticeship or the work that is offered.”
Full details of the scheme, including how sanctions will operate, are due ahead of the Budget in November. Reeves will also use the Budget to set out the details of the funding settlement for the scheme.
The announcement comes amid growing pressure on the Chancellor to lift the two-child benefit cap.
The i Paper understands that ministers are reportedly weighing up a number of options — from removing the cap entirely, to restricting it to families with no working parent, or shifting to a three-child cap — but no final decision has yet emerged.
Some in government are said to be questioning whether partial changes would be defensible, arguing that only complete removal can defuse political backlash.
At the same time, dropping or altering the cap would carry a multibillion-pound price tag at a moment when Reeves is already battling tight fiscal constraints.
Work and Pensions Secretary Pat McFadden (Photo: James Manning/PA Wire)Economists fear that the black hole in the public finances is set to require as much as £40bn in tax rises or spending cuts from Reeves, and the Chancellor admitted ahead of conference that the economic outlook is “very uncertain” ahead of the Budget in November.
After a costly retreat on welfare savings earlier this year, she has warned MPs that she has limited room to manoeuvre.
Business leaders welcomed the announcement but urged ministers to ensure no one was left behind. Tina McKenzie, policy chair of the Federation of Small Businesses, said it was “a hugely important announcement – offering thousands of young people a crucial chance in life”.
But she added that the design of the scheme must provide “a backstop offer to those who are now over-25, particularly those with health challenges”, while making sure that small firms are “enabled to play a full role in delivery”.
McKenzie said the FSB would work with the Treasury on the detail and hoped the policy would herald a “pro-jobs, pro-self-employment, pro-business, pro-growth Budget”.
In her speech on Monday, the Chancellor is expected to say: “I will never be satisfied while too many people’s potential is wasted, frozen out of employment, education, or training. There’s no defending it. It’s bad for business, bad for taxpayers, bad for our economy, and it scars people’s prospects throughout their lives.
“At the Spending Review, I pledged record investment in skills to support our young people. And so today, I can announce that with that investment we will fund a new Youth Guarantee.”
Under the plans, every young person will be offered a college place, an apprenticeship or one-to-one help to find work when they leave school. Anyone still out of work and on benefits after 18 months will be guaranteed a paid placement.
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“We won’t leave a generation of young people to languish without prospects – denied the dignity, the security and the ladders of opportunity that good work provides,” Reeves will add.
The Youth Guarantee was one of Labour’s key election pledges and follows in the footsteps of earlier programmes such as the New Deal for Young People, introduced under Tony Blair in the late 1990s.
It is already being trialled in local “trailblazer” areas, where councils are testing different ways of reaching those most at risk of long-term unemployment. Ministers confirmed at the Spending Review in June that funding for these pilots would be extended.
That review also committed £1.2bn a year for skills and training by the end of the period, money Reeves said would provide the backbone of the Youth Guarantee. The package covers apprenticeships, extra college places and tailored support for those not in education, employment or training.
The Treasury described it as the most significant rise in skills funding in over a decade, expected to benefit more than 1.3 million 16- to 19-year-olds. A further £625m was set aside over four years to train up to 60,000 new construction workers, part of a broader drive to ease shortages in critical sectors.
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