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The Labour government is set to hand businesses cash to hire benefits claimants in a bid to lower the number of under-25s not in education, employment and training, otherwise referred to as ‘Neets’.
Pat McFadden, the work and pension secretary, will unveil a new £3,000 subsidy scheme for employers taking on young people who have not been on Universal Credit for more than six months, it has been reported.
McFadden is set to announce a string of new incentive policies for small and medium-sized businesses on apprenticeships while Labour’s jobs guarantee programme will also be extended for young people.
The youth job guarantee scheme will be offered to around 40,000 more people, according to The Telegraph, with the current design of the initiative suggesting that 350,000 “training or workplace opportunities” will be made available.
The growth and skills levy, which faced criticism under the previous Conservative government over the poor usage of funds, is also expected to be overhauled, as Labour promised in its manifesto.
Reforms are expected to be laid out in a speech on Monday in London. They will be a response to intense criticism over the rising number of Neets, which is approaching 1m people.
The unemployment rate has steadily risen since Labour came into office, hitting 5.2 per cent in the three months to December.
The jump in worklessness has been due to a rise in redundancies and a slight increase in the activity rate. The youth unemployment rate has soared higher, rising to 16.1 per cent.
Recruiters have blamed Labour’s taxes and decision to raise the minimum wage for the decline in the jobs market, with the £25bn rise in employers’ national insurance contributions (NICs) squeezing hiring budgets.
Shadow business secretary Andrew Griffith linked the “broken jobs market” with the Labour government’s choices.
“Higher national insurance, new red tape and other attacks mean businesses simply are not hiring,” Griffith said.
“Rather than the economics of digging a hole then filling it in, the government need to reverse the damaging changes which mean youth unemployment is now higher than Europe.”
Labour pushes for welfare reform
There are fears that the rise in the number of Neets could add to strains on public finances, with the Office for Budget Responsibility (OBR) revising up its welfare spending forecasts for the next five years at the Spring Statement.
It is hoped that reforms this year from the Alan Milburn review into Neets and the Sir Stephen Timms review on disability benefits could relieve pressures on welfare spending, though the issue has become toxic within Labour.
Ministers have steered clear about mentioning the prospect of making savings from major welfare reforms after the government suffered a backbencher rebellion over its plans to save around £5bn from personal independence payments (Pips) last year.
In a speech after last year’s Budget, Sir Keir Starmer insisted welfare reform was central to the government’s efforts to drive growth.
