(March 16): UK employers are to be offered thousands of pounds to hire young people as part of a new drive to tackle youth joblessness, an issue that is becoming a crisis for Prime Minister Keir Starmer’s government.
The proposals, aimed at creating 200,000 new jobs, are set to be announced in a speech by Work and Pensions Secretary Pat McFadden on Monday. In a separate appearance, Starmer is expected to outline plans to help households hit by the Middle East energy shock with a pledge to support working people “whatever challenges lie ahead”.
The “new deal” jobs initiative, funded by £1 billion (US$1.3 billion or $1.7 billion) of public money, is designed to address the nearly one million young people classified as NEET — not in education, employment or training. While Starmer’s Labour government came to power promising to end youth unemployment, critics say it has contributed to the problem by making it more expensive to hire people.
“I want to prioritise young people,” McFadden said on Times Radio on Monday. “They’ve faced a very challenging labour market for some time.”
Youth unemployment is more widespread in the UK than in the European Union for the first time, with over 16% of 16- to 24-year-olds now looking for a job. Sharp increases in the minimum wage and higher payroll taxes are deterring employers from hiring young staff just as artificial intelligence threatens to take many entry-level jobs. Strict new laws under the Employment Rights Act, including day one sick pay rights, have added to employer concerns.
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The bleak outlook for young people is pushing more of them to the political fringes. The left-wing Greens are now the most popular party among young people. Meanwhile, unemployed young men are increasingly supporting Nigel Farage’s right-wing Reform UK. Last year, former Labour health secretary Alan Milburn was commissioned to study the causes of youth unemployment and inactivity.
“We are focusing funding where it’s needed most and giving employers the flexibility and support they’ve asked for,” McFadden will say, according to a statement released by his office. “These reforms will give young people a vital first step on the career ladder and help business leaders recruit the talent that will grow their companies.”
Under the proposals, businesses will receive £3,000 for every person they hire between the ages of 18 and 24 who has been searching for a job for six months or more. Some 60,000 people are expected to be supported by the proposals.
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An apprenticeship incentive of £2,000 will be paid to small- and medium-sized businesses for every new employee between 16 and 24 they take on. Meanwhile, a programme offering 18- to 21-year-olds a guaranteed six-month job if they have been looking for work for 18 months will be extended to those up to the age of 24.
Helen Whately, who shadows McFadden for the opposition Conservative Party, accused Labour of responding to a crisis of its own making. “Labour’s Jobs Tax and their disastrous Unemployment Act are holding back hiring and risk creating a jobless generation, while the welfare bill booms,” she said.
The Recruitment and Employment Confederation described the measures as sensible but said there was more to do. “The youth unemployment crisis is being exacerbated by a cost of employment crisis the government has left untackled for too long,” said Neil Carberry, chief executive of the industry lobby.
At a press conference on Monday, Starmer will promise help for people reliant on heating oil, which is commonly used in rural areas not connected to a main gas network. The price of the fuel has soared along with oil prices, but unlike domestic gas and electricity, it is not covered by the price cap that limits the amount per unit that suppliers can charge.
Starmer’s pledge follows a trip to Northern Ireland, where 60% of households use heating oil to warm their homes. The UK competition watchdog, the Competition and Markets Authority, is looking into complaints of customers having their orders cancelled before being offered new quotes at significantly higher prices.
“I will not tolerate companies trying to exploit this crisis to make money from working people,” Starmer will say, according to his office. “If the companies have broken the law, there will be legal action.”
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