All the plans to get young people off benefits and into jobs – and if they’ll work ...Middle East

Too many young people are out of work and on benefits – and this is presenting a significant challenge to the Government, and the welfare system.

Overall numbers of 16 to 24-year-olds who are not in employment, education or training – known as “Neets” – has been rising since 2021.

There are almost a million Neets (946,000), despite a modest fall of 2,000 in the last quarter, nearly 200,000 more than five years ago, according to the Office for National Statistics.

The causes of this employment crisis are complex, with a cocktail of different issues at play. These include the cost of hiring people, mental health problems, the welfare state and educational or training opportunities – which means there is no magic bullet to solve the issue.

Before the General Election Keir Starmer announced a back-to-work plan, saying: “Too many people stuck in jobs with no promise of earning a better income. Young people who are yet to experience work, at risk of falling off the radar. We can’t go on like this. It’s time for change.”

So how’s it going?

Ministers have announced a range of changes they hope will begin to tackle this issue – with more proposals on the cards.

Guaranteed jobs and more apprenticeships

The central plank of the Government’s policy is its “youth guarantee” pledge.

The policy – first unveiled by the Chancellor at the Labour Party conference – promises all young people who have been on universal credit for 18 months will have the offer of a job, work placement or training.

Those who refuse a job offer could face sanctions, including losing part or all of their benefits.

The policy is designed to both encourage and push younger people to take the first step towards getting a job, or moving into training.

In last week’s Budget, Reeves announced £1.5 billion would go into investment in employment and skills support.

This includes £820 million to cover the cost of offering six-month work placements for 18 to 21-year-olds classed as “not earning or learning” – those covered by the youth guarantee policy.

The placements will start from 2026 and the scheme will cover 100 per cent of employment costs at 25 hours per week at the relevant minimum wage. It will fund the scheme for three years.

The funding also sets aside £725 million to improve access to apprenticeships – including covering the cost of small and medium enterprise (SME) apprenticeships for people under 25.

Ministers have also said they will generally make the apprenticeship more efficient and simpler, ahead of shorter courses being introduced from April 2026.

Analysis: These policies are about more than just covering the cost of work experience and are designed to tackle the issue of the employability of younger people who have never had a job. But there have already been calls for wider investment in adult education and skills in order for the policy to really make a difference.

There are also criticisms that the quality of work offered may not lead to long-term skills or employment, that much depends on local demand as young people need to be able to easily access workplaces.

Tax cuts for hiring young workers

The Budget measures offered a financial incentive for firms to offer work placements or apprenticeships, but ministers have also looked at the possibility of expanding such schemes to help with the overall cost of hiring younger workers.

The i Paper previously revealed that officials have been considering whether offering some kind of tax exemption – or wage subsidy scheme – could encourage firms to commit to hiring younger workers on full-time contracts.

The idea is that getting more young people off benefits would cost the Government less in tax breaks than it would in welfare payments.

Tax incentives in the form of national insurance contribution rebates are already available for employers hiring under-21s and for apprentices under the age of 25 – with employee Nics reduced to 0. But officials have looked at proposals that could see a similar exemption to include all workers up to 24.

A form of this policy was proposed by the Centre for Social Justice think tank which has made the case that the high cost of hiring – partly driven by national insurance rises and the recently announced bumper rise in minimum wage for younger workers – is putting firms off hiring.

Analysis: The Government has clearly listened to concerns about the cost of hiring younger workers and is trying to take some measures to ease the financial burden – albeit relatively small fry in comparison to additional costs to employment.

Changes to benefit entitlement  

Previous attempts to save up to £5bn a year in welfare reforms – by tightening the eligibility of personal independence payments (PIP) – were thwarted earlier this year after Labour backbenchers rebelled.

But the Government successfully cut the value of out-of-work sickness benefits for new claimants of the universal credit health element (UC health), in order to try to reduce what ministers say is an “incentive” for people to be signed off sick.

The Government is also changing the way people are assessed for health-related benefits by increasing mandatory face‑to‑face assessments and increasing the frequency of such checks.

And ministers could go further and ban under-22s from being eligible for UC health – with the exception of those with some specific and severe conditions.

There are more than 60,000 people aged between 18 and 21 with health conditions or disabilities who currently receive this benefit, and could face losing it.

Government sources say these plans have been consulted on and ministers are currently considering the responses before making any decisions.

Ministers have also not been explicit in who they believe would no longer be entitled to the benefit, but they have made reference to the number of young people signed off with “milder” mental health conditions.

It comes as Health Secretary Wes Streeting is set to order a review into the diagnosis of mental health conditions, amid concern over the sharp rise in sickness benefit claims from people diagnosed with conditions such as autism and ADHD.

Finally, the Government launched the Sir Stephen Timms review into personal independence payments (PIP) which will consider how people are assessed for disability benefits and the way this could interact with out-of-work sickness welfare.

Analysis: Previous attempts to cut the welfare bill backfired massively for this Government which has left ministers treading very carefully now when it comes to trying again to restrict eligibility. Restricting UC health could be politically very challenging and save very little money in the grand scheme of the sickness and disability welfare bill – which is set to creep up to £100bn in the next 5 years.

Employment support 

Ministers already published the Keep Britain Working review, led by Sir Charlie Mayfield, which sets out a series of measures for how employers, staff and healthcare providers can work together to address health-related inactivity in the workplace – people who are not working, and not looking for work.

An independent investigation has also been launched to look specifically at the issue of youth inactivity, led by the former health secretary Alan Milburn. It will focus on why people become trapped out of work and how they can be helped into employment, the Government said.

Ministers already announced more funding for careers and Jobcentre support – and have been investing in “Swap” (Sector-based Work Academy Programmes), which offers six-week placements for over-16s on unemployment benefits, with a guaranteed job interview at the end.

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A recent example of these schemes, revealed in The i Paper, is the chance for unemployed people on benefits to have training in how to make content such as videos and graphics for social media platforms like TikTok or Instagram.

The Government is working directly with employers to target roles that are actively being recruited for in the creative industry.

Analysis: Investment in Jobcentre and employment support – specifically at a local level – is already well on the way for this Government. There is a consensus among policy experts that being able to tailor careers advice to the individual is the best approach to helping people into jobs they will actually stay in.

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