Lord Young of Cookham
To ask His Majesty’s Government what steps they are taking to reduce youth unemployment.
The Minister of State, Department for Education and Department for Work and Pensions (Baroness Smith of Malvern) (Lab)
My Lords, the Government are investing over £1.5 billion through the youth guarantee and growth and skills levy to support 16 to 24 year-olds to gain the skills and experience they need to earn and learn. A key part of this is the jobs guarantee, which provides six months of paid work for every eligible 18 to 21 year-old on universal credit for 18 months, funded for 25 hours a week with wraparound support. Grant applications for phase 1 opened on 29 January to identify delivery partners, and delivery will begin from spring 2026 in six high-need areas before expanding nationally, supporting around 55,000 young people over three years.
Lord Young of Cookham (Con)
My Lords, I am grateful for that reply, and I welcome the initiatives the Minister has just mentioned, such as the youth guarantee. However, do not those initiatives need to be accompanied by welfare reform, which can quite often pull young people in the opposite direction? A few weeks ago, the Prime Minister said:
“Our welfare state is trapping people, not just in poverty but out of work—young people in particular”.
That was reinforced by Alan Milburn, the Government’s employment tsar, who said:
“We’re spending more money on health and disability benefits for 16 to 24-year-olds than we are on apprenticeships. Is that really the right priority?”
Will the forthcoming King’s Speech therefore take the difficult but necessary decisions to reform welfare and allay the concerns of the Minister’s colleagues?
Baroness Smith of Malvern (Lab)
Well, this is welfare reform. It is wrong that there are 900,000 young people who are neither earning nor learning, which is why we are changing the system. We are ensuring that there is an earlier interview for young people. We are introducing 300,000 more opportunities for young people to gain work experience or training linked to an employer. Then we are ensuring that they have a backstop work placement that they will be expected to take at the end of 18 months. That is welfare reform, which this Government are putting in place to respond to the challenges left by the previous one.
Baroness McIntosh of Hudnall (Lab)
My Lords, can my noble friend the Minister tell the House what data, if any, the Government hold on the casual employment of young people between the ages of 16 and 18? Does she agree with me that young people who are able to find employment over this period, when they are often in full-time education as well, are given a range of experience that is extremely helpful to them when they come to seek full-time employment after their education is over?
Baroness Smith of Malvern (Lab)
My noble friend raises an interesting point. There seems to be some evidence that young people are doing less of that type of work. This is part of what Alan Milburn will look at in his review, which will consider the causes of the growing numbers of young people who are neither earning nor learning. That is of course why being able to provide placements through some of the courses that young people take and the work experience that will be part of the youth guarantee gateway will be important for those young people who have not otherwise had the opportunity to understand what it is like to be in a workplace.
Baroness Smith of Malvern (Lab)
This is precisely one of the questions that Alan Milburn will consider in his review. There appears to be a growing number of young people who are out of work for whom mental health issues are part of the reason. For many of those young people, it may well be that they would be better off in appropriate work. Being clear about the nature of that problem is an important part of Alan Milburn’s review. That, of course, goes alongside the additional support this Government are providing at an earlier stage in our schools to ensure that all schools also have access to mental health professionals, so that we can stop some of these problems earlier and before they escalate to blight people’s lives.
The Earl of Clancarty (CB)
My Lords, does the Minister agree with me that a balanced school education is hugely important in this to allow the widest possible opportunities for our young people?
Baroness Smith of Malvern (Lab)
Yes, I do. That is why, through the curriculum and assessment review, we have ensured that young people are getting the skills and knowledge they need to succeed in life and in work. We will continue to ensure that that is the case throughout our schools.
Baroness Browning (Con)
My Lords, the employment of autistic adults remains at a remarkably low rate of about 30%. Each time there is a new strategy under the Autism Act, employment has been highlighted as one of the priorities. The strategy is due for renewal in July. I am sure that the Minister will be involved in the discussions for planning that strategy. How does she think we can now get autistic adults of all age groups into employment? It has been far too slow and has taken far too long, under all Governments.
Baroness Smith of Malvern (Lab)
The noble Baroness raises an important point. This is an opportunity for us to rethink how we can ensure the appropriate support, the appropriate information and understanding of employers about the way in which autistic people can make an enormously important contribution in the workplace, and the support of work coaches in DWP and others who are providing the advice to people about how to get into work. I will certainly undertake to look into this in more detail and take the wisdom of the noble Baroness, who I know has campaigned on this for many years.
The Lord Bishop of Leicester
I welcome the Government’s new initiatives in this area, particularly the youth guarantee. Can the Minister tell us how the Government are going to tackle the estimated 500,000 young people who are not in education, employment or training, and who are not claiming benefits either? Are we not at serious risk of a whole generation of young people not being able to use their gifts for the good of wider society?
Baroness Smith of Malvern (Lab)
The right reverend Prelate raises an important issue. That is why, first of all, our work to reduce the numbers of young people not earning or learning needs to start in schools. It needs to start with the better “risk of NEET” indicators that we are developing. It needs to start with a responsibility on schools to ensure that young people go into education at the age of 16 or work in an appropriate way. It means that the work—extended for another year—of the youth guarantee trailblazers, who have had £90 million spent on them, is important because they have been tasked in the eight areas in which they are operating with addressing exactly this question: how do we identify and reach those young people who are not even in touch with the benefits system?
Baroness Smith of Llanfaes (PC)
My Lords, the youth guarantee scheme is not a new idea and has been in place in Wales for several years. What lessons have this Government learned from what has not worked in Wales as part of this scheme, and how have they been applied to the scheme here?
Baroness Smith of Malvern (Lab)
We have looked at information from around the UK and from previous job subsidy schemes to help to design this. Of course, the first six job guarantee areas that I mentioned in the original Answer include one that covers a significant area of Wales. We will also use the experience of that to build the national rollout that will come in the autumn.
Baroness Stedman-Scott (Con)
My Lords, recent analysis shows that in 2025-26 the real cost of hiring an 18 to 20 year-old on the minimum wage has risen by around 13% compared with just over 3% for someone on average earnings, despite under-21s largely being outside employer national insurance contributions. In light of this, what assessment have the Government made of the combined impact of the national insurance contributions and minimum wage policy on youth employment, and how are they ensuring that young people are not priced out of entry-level work or any other part of the labour market?
Baroness Smith of Malvern (Lab)
We made a commitment to equalise the 18 to 20 national minimum wage with the national living wage. We asked, as all recent Governments have done, the independent Low Pay Commission to recommend youth rates to enable us to do that, and we also included within the remit the expectation that it would consider how to do this in a way that avoids increases in unemployment. The April 2026 uplift ensures that the Government are taking cautious steps towards achieving this commitment, and that is the way we will continue to progress.