Lord Palmer of Childs Hill (LD)
My Lords, I thank the Minister very much—she did not repeat the Statement, but we have read it—and the noble Baroness, Lady Stedman-Scott, for raising so many questions the answers to which I look forward to hearing.
We have 739,000 young people aged 16 to 24—nearly 100,000 more than last year—unemployed and sitting on benefits of £338 per month. I make no apologies for repeating this figure, but I give it in numbers and not as a percentage, because percentages are misleading and you cannot really understand what they mean. These unemployed 16 to 24 year-olds are, on average, searching and applying over five months for hundreds of roles, with less than 1% success—so they give up entirely. Yet employers report millions of vacancies remaining unfilled. This is not a shortage of jobs but a failure of matching: the right opportunities for the right candidates remain unsurfaced and undiscovered.
Given that the DWP is already piloting matching technologies at some jobcentres, for which I congratulate it—I know about the one in Leicester—can the Minister set out the department’s timeline for scaling these tools nationally across all jobcentres? Critically, what measurable improvement in time to employment does the department expect from this rollout? Additionally, can the Government explain why they are removing the funding for apprenticeships for management? Will they rethink the impact of the national insurance contribution hike on hospitality, retail and tourism? If we dealt with that, it could substantially help with youth unemployment. This is a big problem and I hope the Minister can answer the few questions I have raised and those raised by the noble Baroness, Lady Stedman-Scott.
The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, I am grateful for the questions from both noble Lords. I will come to them in a moment, but I think it is worth reiterating why we are expanding our support for young people now. While the UK’s overall employment levels are historically high, it has been a tough picture for young people in the labour market for some years. I am sure the noble Baroness, Lady Stedman-Scott, remembers that, in the three years running up to the election, the number of young people not in education, employment or training rose by 250,000, up to almost 1 million. This has not been helped by the 40% decline in youth apprenticeship starts in the space of a decade. The trends we have seen with young people in the labour market are long-term, deep-rooted and worrying. They did not start on 4 July 2024 and they are not confined to the UK, but we all have to address them.
As the noble Baroness said, and knows very well from her experience, if young people start their adult lives on the wrong foot, it has consequences for decades to come, both for them and for our country as a whole. Sir Charlie Mayfield highlighted in Keep Britain Working that, if a young person goes on to benefits in their 20s, they could lose out on £1 million of lifetime earnings and it could cost the state £1 million to support them. Tackling these trends is in all our interests and there should be good cross-party support for this, especially at the moment. At a time of rapid technological change, young people need our support.
We have already set out our reforms to refocus the apprenticeship system back on young people. I say to the noble Lord, Lord Palmer, that we have made some difficult decisions to focus apprenticeships on the young people who need this start early in their life, so we have focused our priority in that space. We had already announced a youth guarantee to help the young unemployed, including 300,000 work experience and training places and a jobs guarantee of subsidised work for 18 to 21 year-olds who have been long-term unemployed. Last week, my honourable friend the Secretary of State set out how we will go even further.
The noble Lord, Lord Palmer, asked about the timing. From this summer, we will introduce hiring bonuses of £3,000 if a business hires a young person who has been on universal credit for six months and there will be bonuses of £2,000 for small and medium-sized businesses hiring young apprentices. These bonuses can be combined if the young person hired has been out of work for six months. On top of that, we are introducing new foundation apprenticeships in retail and hospitality, as well as new short courses in AI, electrical vehicle charging point installation, electrical fitting and assembly, mechanical fitting and assembly and solar PV installation welding. We are also extending the jobs guarantee to those aged 22 to 24. Altogether, this will create 200,000 job and apprenticeship opportunities over the next three years. This represents £1 billion of new investment on top of the funding announced at the Budget, so our package of support for young people now comes to around £2.5 billion.
I am proud of the efforts we are making to ensure that young people can flourish. The noble Baroness must have got mixed up between this policy and something else, because there is no compulsion here. We are not making employers take on young people, but offering incentives for them to do so. We are offering subsidies for jobs. We are doing all the things to help make sure that the young people who are struggling most have a chance to get those jobs out there. That is not compulsion or controlling outcomes: it is giving young people opportunity, and I am proud that we are doing it.
The noble Baroness, Lady Stedman-Scott, pointed to some of the policy choices this Government have made. As I pointed out, youth unemployment has been rising since 2022 and the OBR predicts that overall unemployment will peak this year and fall in every year of the forecast. She mentioned tax rises, I am guessing in reference to national insurance contributions. She will remember that employers are exempt from paying employers’ national insurance contributions for workers under 21 and apprentices under 25, unless they are earning over £50,000 a year. She mentioned the Employment Rights Act and the reaction of employers. The problems young people are facing in the labour market go back rather further than that. They are not new. What is new is this package of support, which has been welcomed by large businesses such as Amazon, PwC and the Kier Group, and the Federation of Small Businesses, which called it a game-changer. In terms of hospitality, the chef and businessperson Tom Kerridge said that
“these incentives will give our industry a great boost”.
The noble Lord, Lord Palmer, made the important point that there are vacancies in the economy. There are 700,000, including 50,000 in manufacturing. There are jobs out there. Our job is to help young people get the support, skills, training and experience to get them and—I completely agree with him—we need to match the young people with them. He made a really important point. That is why we are setting out this package today and why it matters so much.
We have already started to reform the system, but we have to do all the things that will make the difference to help them get those jobs. The noble Lord asked about timing. The £2,000 apprenticeship incentive for small and medium-sized enterprises will take effect for those starting apprenticeships from 1 October, as long as they have joined their employer within the last three months. The £3,000 hiring incentive, the youth jobs grant, will be delivered from June this year. The expansion of the jobs guarantee to include 22 to 24 year-olds will be from this autumn, and the first set of new short apprenticeship units is launching from next month. We are not hanging around; we are getting out there to do the work.
I was really grateful to the noble Lord for acknowledging what jobcentres can do in supporting young people. We all know there are young people out there who want these jobs, but they often need the help. They may not have the skills or the work experience.
In response to the noble Baroness, Lady Stedman-Scott, different things are obviously open to different people. What I think she was asking was what would happen after somebody was put specifically into a guaranteed job. If they have been out there looking for work for 18 months and they have not got a job, we will guarantee them six months of a job. We would hope that, by the end of that, the employer would see their potential, with all the support they had getting up to that point, and would want to keep them on. If for any reason they did not keep them on, such as if it is not a good fit, or if they did not feel they had the right skills, then all the support will be there from jobcentres and the range of our youth offer, to make sure that, with their new work experience, we can get them out there and get them a new job. Or maybe they would want an apprenticeship to acquire more skills so they can build a career.
Lord Palmer of Childs Hill (LD)
I am sorry to interrupt the Minister, but perhaps at this point she could tackle the point I raised, which she touched upon, which is the matching of vacancies with jobs. I gave the example of the Leicester jobcentre, which is doing this. My question, which I hope she answers, is: how are we going to spread that out?
Baroness Sherlock (Lab)
This is already happening in lots of different places and in lots of different ways. Jobcentres are doing it. For example, we are setting up youth hubs in 360 locations across the country, where we can bring together employers and young people, as well as lots of other services, so they can meet them. We also have jobs fairs, which my colleagues have been visiting, where employers are brought in to meet with potential jobseekers. This is the everyday work of jobcentres, of going out there and matching people together. But I would be very interested to talk to the noble Lord about what he saw in Leicester and what he found particularly helpful about that, because it is really good to learn what is out there.
I have very little time left, but I will just say two other things very quickly. First, even though there are jobs out there, the challenge is always going to be that the young people who are farthest from the labour market are going to find it hard to get them. That is why we have to give particular support to them. I know these are tough times generally, but we have to try to do all we can to give those young people a chance to get those jobs. If they can get the experience at this crucial moment, it could be transformative down the line.
Secondly, we will evaluate this very carefully. We are already evaluating what is out there and we are using the evidence base. The noble Baroness, Lady Stedman-Scott, pushed me on wage subsidies, for example. We have looked at the evidence from Kickstart, introduced by her Government, and from the future jobs fund, introduced by our Government, and the evidence is really quite strong. In trying to shape incentives, we are working on what we know works. The development of the youth guarantee was underpinned by that kind of evaluation and evidence. A DWP evaluation of work experience shows its high impact on employment prospects. For example, we have assessed the sector-based work programmes, which were found to be a really effective intervention.
Finally, we are evaluating the eight youth guarantee trailblazers and will use the learning from the different things happening around the country in different mayoral authorities to work out and inform the design of the youth guarantee as it goes forward. We are using evidence from the past, evidence we are gathering now and all that we are learning to make this the best it can be. This should be a national mission, and I am proud that we are doing something for it.
Lord Reid of Cardowan (Lab)
My Lords, I first welcome this Statement. It is not only important but long overdue in the face of the facts the Minister gave, including the fact she confirmed that take-up of apprenticeships has fallen by 40% over the last decade. If we are going to address that issue, I urge her to avoid what has been suggested is a binary choice between government assistance and the market. A modern economy requires both. Yes, they have to be balanced, but it is a nonsense to argue that somehow, if we left everything up to the market, then that would solve the problems. That is patently not true; there is about 300 years of evidence to disprove it. I therefore ask the Minister to expand on how the assistance to small and medium-sized enterprises will help them to employ people and thus address the problem of NEETs—young people not in education, employment or training—because that is the kernel of the issue that the country faces.
Baroness Sherlock (Lab)
I am very grateful to my noble friend; he makes a really important point. It just is not helpful to anyone if we start getting caught in false binaries. We need to work with the grain of what employers need and support them in doing it. They want to hire whoever is best for the job. Our job as a Government in this sort of setting is to work out what it will take to help those young people who most need the help to be the person the employer needs, by getting them the skills they need, getting them in the right place and getting them work experience.
The reason why we have the particular incentive of £2,000 for SMEs to take on 16 to 24 year-old apprentices as new employees is because we know they face additional barriers and costs. We also know that the sector is likely to take on young apprentices. Apprenticeships have spread very wide, and many are prone to taking on young apprentices. We want to lean into the grain of what they naturally do anyway, take away some of the barriers they face in doing that and support them in doing what they want to do anyway, which is good for them, good for the young person and good for the economy.
The Lord Bishop of Chester
My Lords, like other noble Peers, I warmly welcome this Statement. I notice an emphasis on technical skills in the Written Statement and the Statement the Minister has made. I declare an interest: I have been married to somebody who has been a professional social worker all her life. I am interested in what we are doing to encourage young people into the caring professions, be that youth work, nursing, educative support, or social care, because it seems to me that this serves not only their good but also the good of our society.
Baroness Sherlock (Lab)
The right reverend Prelate makes a very important point. The Government have done quite a bit of work in different sectors. As I have said at the Dispatch Box before, we have done quite a bit of work in social care, looking at how we develop schemes, skills and sector-based work programmes to make sure young people can both be given the skills and also encouraged to go into the sector. This can be a really rich and rewarding career, as his wife has found out, and as I know from people who work in the sector. Initially, people may not immediately see it as an opportunity. Once they get in there, if it is a good fit and if it is right for them, it is astonishingly rewarding. They transform lives. To be given the opportunity not just to change their own life, but in doing so, to change the lives of other people, is wonderful. I therefore assure him that the Government will carry on supporting that.
Baroness Bottomley of Nettlestone (Con)
The right reverend Prelate’s wife will definitely know that being without education, employment or training has a devastating effect on young people. The consequences for social stability and the fabric of society are incredibly important, and I know the Minister is aware of that. To get a job, individuals need skills, confidence and motivation, and we expect young people to use AI and social media tools to get jobs, apprenticeships and training. But I would like the Minister to look at today’s report from Policy Exchange, which talks about “sickfluencers”: those on social media coaching people on how to make successful claims for disability benefits, mental health, neurodiversity and PIP. A quarter of the population is now classified as disabled, and there is three times the increase in those claiming disability benefits, as the Minister will know. The time has come to work with the health department to make it more stringent to assess whether people really have ADHD, autism and all the other manifold diagnoses people are taking on. There are times when a more bracing message encouraging young people into education, training or employment would be much more constructive —and I do not wish that to sound harsh.
Baroness Sherlock (Lab)
I have never regarded the noble Baroness as being harsh in the way she mentions. She has hit on the underlying question, which is a really important one. The question sometimes, when somebody encounters the state for the first time, is to look at what are the benefits to which they are entitled. That may be very important, but a much more important question is: what would it take to help change your life? What kind of support do you need to change your life? What that will be will depend on the young person’s circumstances. That is really hard, because it is a broader question, but it is a question we have to answer, and my department is on a journey towards looking at what it means to help young people. Of course, if they struggle, anyone who genuinely cannot work needs to get help. I am aware of the “sickfluencers”. This is not new; there have been different ways of doing this for some time. The department is very much focused on that and on making sure our assessment processes are robust.
We also need to get the incentives in the right place. This Government changed the incentives so that, in future, people coming on to the universal credit health journey will not get extra money for that, because we do not want to put people in a position where they have an incentive to persuade us that they can never work. It is why we are making sure that the Timms review looks carefully at PIP to see what has happened, because it has not really been reviewed since it was introduced. We have to get the incentives right and support people who need them, while also making sure that we give people a vision of what life could be in all its fullness.
Baroness Smith of Llanfaes (PC)
My Lords, the Minister referred to evidence that has been looked at to shape this new initiative. What evidence has been taken from the scheme that has existed in Wales for the last decade—the young person’s guarantee in Wales? What lessons have been learned about what did and did not work well with that? In the context of AI, what consideration have the Government given to how AI will or will not affect the graduate job market, particularly entry-level jobs in the services industry?
Baroness Sherlock (Lab)
They are all excellent questions. We have worked very closely with the Government in Wales to see what they have done—they did not need a youth guarantee because they already had one. We have looked at all the evidence, and we have worked very closely with the devolved Administrations and will carry on doing so. Most aspects of the programmes I have described are GB-wide because apprenticeships are devolved, and so we are working closely to create a localised offer. We are also working with mayoral authorities to make sure that, where appropriate, things are tailored to local areas and the local economy, because what works in Middlesbrough may not be the same as what works in Truro. We are trying to do that as well as working with devolved Administrations.
The noble Baroness asked a very important question about AI. It is already changing the world of work. To stay ahead of the changes, the Government have launched an AI and future of work unit, which is a cross-government function dedicated to ensuring that AI delivers positive outcomes for the economy, jobs and workers. It is designed to help prepare the UK for an AI-driven labour market by looking at what is driving it and what has happened to labour market practices. A key part of that involves recognising that there are lots of different kinds of AI, but, put simply, there is AI that is replacing jobs but, increasingly, there are also jobs that are working with AI. We therefore need to give young people the skills to enable them to go into jobs where they will be expected to use AI and to look at how AI enhances their job rather than simply supplanting it. That will apply to young people as a whole but also specifically to graduates. Graduates will come out with one set of skills, but graduates of the right age are in the same position as anyone else and we are really happy to help them too.
Baroness Paul of Shepherd's Bush (Lab)
My Lords, like others, I warmly welcome the Government’s ambitious new youth employment programme. Can my noble friend the Minister say what targeted measures she will take to address the acute challenges faced by boys? They are significantly more likely to be NEET, to underperform at school and to struggle with the transition into employment. How will these proposals ensure that boys, who are at the greatest risk of long-term worklessness, are effectively reached and supported in the transition to work?
Baroness Sherlock (Lab)
I thank my noble friend for an excellent question. We have to tailor this to where an individual is at. One of the real challenges is that different young people have different barriers on the way. There is an issue with boys in some parts of the country and in some communities, about either higher barriers to work, lower levels of skills or, simply, lower levels of work experience. We are aiming to make this available to every young person in this situation. If a young person is in this situation—they have been looking for work and not getting it—we will expect them to engage and we will challenge and support them. We will not simply challenge them; we will give them the help that they need. We will work with them until they get that. Some of them will want to start with motivation, skills and creating a vision of what is possible. Others will need skills—maybe school did not work for them and maybe they will need a foundation apprenticeship or a short apprenticeship course before going into a full apprenticeship. Maybe they will want an employer willing to take a risk on them—and an employer could do that with this support. I thank my noble friend for raising a very important point; I would be very willing to discuss it more with her at some point.
Lord Young of Cookham (Con)
My Lords, I welcome the foundation apprenticeships in hospitality and retail. These sectors of the economy traditionally provided the first job for young people, but they have been hard hit by changes to the minimum wage and national insurance, and so this is a welcome counterbalance. On 18 November, one of your Lordships’ Select Committees produced a report that focused on youth unemployment. We went to Blackpool and made a number of recommendations. We should have had a government response by 18 January, but four months later, we have still not had one. I know it is not the Minister’s responsibility, but I suggest that it is a discourtesy to the House. One of our recommendations was that there should be a target for reducing the number of young people who are unemployed. There is a target in the post-education and skills White Paper. If there is a target for them, why can we not have a target for NEETs?
Baroness Sherlock (Lab)
My Lords, although it may not be my responsibility, it is the Government’s responsibility, and I take responsibility for the failure to respond. I apologise on behalf of my department, and I will look into what has happened. The department is aware of the report, and I am certainly very grateful for it. I often think that we do not make enough use of the excellent reports that come out of this House, and this Government are determined to use all evidence, including the work that is already there.
We have not set specific targets, but we have set very clear measurements of the impact of what we do—that is how we will measure ourselves and hold ourselves to account. Our trailblazers are looking at localised approaches to support, including sharing information on and tracking NEET young people, which was picked up in the report. I am very happy to look at that and will take the noble Lord’s message back to my department.
Lord Rook (Lab)
My Lords, I declare an interest as a father of two young adults—an interest I have in common with people across these Houses and homes across the country, as well as a desire to see them get into work. First, will this offer arise only for those already on benefits? Secondly, while we all hope that our children will find a first job, we also hope that they will find themselves in a future of sustainable work. How might this package enable young people to find that kind of flourishing future, as well as that first step into the workplace?
Baroness Sherlock (Lab)
On the first question, we are not working only with those who are on benefits. Some of the specific elements of the programme are for those who are on universal credit, either for six months or 18 months, and looking for work. However, we are really concerned about those young people who are not in education, employment or training, who are not appearing in the benefits system and who are not on the radar—they are sometimes called “hidden NEETs”. They may not be in the system and may be living with parents or elsewhere—none the less, they are out there. The youth guarantee is about reaching all NEETs, including those not on benefits. That was a key element of the youth guarantee trailblazers, backed by £90 million-worth of funding, which sought to find innovative ways to reach young people outside the benefits system whom we do not already have on our radar. Mayoral strategic authorities are looking into ways that work in their locality. We are trying to make sure that we reach those people too.
The point about the future is very important: nobody wants to be the person who takes an apprenticeship in gas lights just at the point when electricity comes to town. We need to find a way to make sure that young people go into jobs with a future. While one can never be sure, we are developing new apprenticeship units that are aligned specifically with the priorities of the industrial strategy, and we hope that that will help. That includes AI, construction and engineering, and we will develop future units as it goes forward by going with the grain—to echo my noble friend Lord Reid’s comment—of where the economy is going and what employers need. We have to create a future for young people.
Viscount Younger of Leckie (Con)
My Lords, preparing young people for work should start within the school system—that was touched on in questions from the Benches opposite. Can the Minister say what efforts are being made, working with the DfE, to include career management and education? Surely the earlier the young are set on the right path, the better.
Baroness Sherlock (Lab)
The noble Viscount makes a very important point. We have the great advantage now that my noble friend Lady Smith is the Minister for Skills both in the Department for Education and in the Department for Work and Pensions. That synergy is already proving very helpful, and so we are able to have very good conversations with our colleagues in the DfE. As he knows, in the DWP, by creating the new jobs and careers service, we are trying to make sure that we bring these things together at the outset so that we help people to get not just a single job but the opportunity to develop a career that will carry them forward. He makes an important point, and we will keep looking at this.
Baroness Lister of Burtersett (Lab)
My Lords, I am glad that my noble friend the Minister talked about those who are not “sitting on benefits”—to quote the noble Lord, Lord Palmer—because the assumption is that all those young people are just sitting on benefits. In fact, I was shocked to find that 44% of the young people we are talking about are not on universal credit or even the health element of universal credit. Can my noble friend say a bit more about what the Government can do to reach these “hidden NEETs”, as she called them? I suspect they do not have contact with job centres, and it is important that we know more about their circumstances and that we can help them in the way that she said.
Baroness Sherlock (Lab)
I am very grateful—that is a really great question. One of the challenges across government is that if we carry on doing things in silos, we will engage only with those who are already engaged with us, and that does not solve the problem here. We are doing a couple of things. Earlier on I mentioned the work that is going on in the youth trailblazers, working with local mayoral authorities to find innovative ways of identifying such people locally. We are also trying to strengthen early identification through better data sharing and better monitoring of attendance at further education; and a range of new “risk of NEET” tools—a terrible technical term—have been developed to try to identify those who may be at risk of becoming NEET before they get to that point. So we are working with that, trying to spot disengagement earlier and target support before young people become long-term NEET.
One of the other things we are doing, for example, is creating youth hubs—360 across the country—where we can work with partners in community spaces and bring together different kinds of support in a way that will not feel like it is simply engaging with the benefits system or a jobcentre. A jobcentre may be great for some but not for others, so by trying to find innovative ways of reaching people, identifying them before they become long-term NEET, and through good collaboration when people reach it, we hope that will make a difference.
Lord Kempsell (Con)
My Lords, what a disaster it is that under this Government we have 1 million young people in Britain who are not in education, employment or training—one in eight who cannot access the life opportunities which we in this Chamber all enjoyed. Will the Minister acknowledge this reality about that generation: that they want to work and to participate in education, employment and training? The Government need to think through this problem from that starting point. It is a generation full of promise—the one most conversant with the kind of technology we have been talking about in this debate.
Secondly, does the Minister acknowledge that with this intervention, which is effectively a state subsidy to employers to try to incentivise entry-level job creation, all the Government are really doing is trying to rebalance the negative effects of the harmful policies they have introduced, be it national insurance contributions for employers, the national living wage, or other measures that have depressed entry-level job creation? That is the change that has happened in the past two years.
Baroness Sherlock (Lab)
My Lords, I can only assume the noble Lord did not hear what I said in my opening speech. If he wants to talk about having a million people who are NEET, I point out again that in the three years running up to the last election, the number of young people not in education, employment or training rose by 250,000, up to almost a million.
I am not trying to make this anybody else’s problem; I am trying to make this a problem for us as a country. We were the people who stood up and said, “This is not acceptable”. One in eight is not acceptable; it is not in the interests of our country. Where I absolutely agree with the noble Lord is that young people want a future. Our job is to persuade them that they can have it, to show them that they can have it, to give them the skills to get it, and to give them the chance to get the jobs that will give them a foot in the door to go out there and do it. This Government are investing in that because we believe in and care about our young people. Even if the country did not—and we really do—the country needs them. We are an ageing society, and we need our young people. Without their gifts, talents and future, we all suffer. So we are doing this for them and for the country, and I am proud that we are.