Welfare Reforms and Youth Unemployment

Lord Hannan of Kingsclere Excerpts

Thursday 11th June 2026 Lords Chamber

[Lord Hannan of Kingsclere (Non-Afl)]

My Lords, I declare my interest as the director of the Institute of Economic Affairs, the longest established free market think tank in the country. I recently came across something called Munchausen syndrome by proxy. The medical or legal name for it is FDIA—factitious disorder imposed on another. It means giving people poison in the guise of medicine. Sometimes, it is a mental health condition, and occasionally, it is a crime. I do not know if any of your Lordships happened to catch the dramatisation “The Serpent”, which told the story of Charles Sobhraj, who would poison backpackers in Asia and, under the guise of making them better, would give them more and more of the poison, until he was able to murder and rob them.

I will talk a little bit about the theme of giving the patient more of the medicine that sickened him in the first place. The illness here is actually very easy to identify—we have heard it from all sides: there is a rise in unemployment and, particularly, a rise in youth unemployment. Between 2021 and the present, the number of 16 to 24 year-olds out of work rose from 9.7% to 12.8%. This is since the pandemic, when we should have been in an upswing.

Some 957,000 young people, according to the latest figures, are not in education, employment or training. Why is that? It is quite obvious, if you look at cause and effect, what has caused these things. The national insurance rise has deterred firms from taking people on, through the imposition of some £25 billion on the private sector. On the Employment Rights Act, it is always an unpopular thing to say, but if we want to make it easier to hire people, we need to make it easier to fire people. The thing that will encourage employers to take people on is the knowledge that if something goes wrong, they will not be lumbered with an open-ended commitment. Therefore, all these rights are a way of building up the number of unemployed people. One thing that people do not like to talk about is the extraordinary rise in the minimum wage. The cost of employing someone has gone up by over £4,000 since the beginning of the pandemic—up 26% in three years. All these things are happening in an economy that, more widely, is failing to grow because of excessive taxation, regulation and debt.

The things that we individually complain of, such as price rises, tax rises, debt levels, worklessness and dependency on welfare, are all the symptoms of the underlying disease: excessive government—that is, Governments intruding in fields where they have no proper business and making things worse, which is what I mean by more of the medicine that sickened the patient. What are the Government’s solutions to youth unemployment? They are not to remove the things that are causing it in the first place, but to have even more expensive and intrusive measures to deal with the problems of their own creation. I am reminded of the aphorism popularised by the great African-American economist Walter Williams, who said that almost all our problems are caused by politicians trying to solve problems that they themselves created. What cures are being offered for the disease of big government? They are all more government: the jobs guarantee, the youth jobs grant, the new apprenticeship initiative, some 80 youth hubs and the Fair Work Agency, which is currently in Tashkent. Its members are off on a jolly in Uzbekistan, looking at the impact of migration. All these things are adding yet more intrusion and money, which are what caused the problem in the first place.

I finish with a heartfelt plea to all Front Benches, because some of these problems predate the current Government. Will they please spare us their however well-intentioned interventions? Will they please just leave us alone? We do not want the grants or the guarantees or the initiatives or the agencies or any of the regulation. All we ask is to be allowed to get on with our jobs.