Welfare Reforms and Youth Unemployment

Lord Shipley Excerpts

Thursday 11th June 2026 Lords Chamber

[Lord Shipley (LD)]

My Lords, it is a pleasure to follow the noble Lord, Lord Walker of Broxton. He has a huge amount of practical advice but, as he said, we cannot keep kicking the can down the road. Youth unemployment, he said, was a tragedy, and I agree with him. We have seen it rise in recent times. I thank the noble Lord, Lord Evans of Rainow, for enabling us to hold this debate, which is timely in the context of the Milburn review.

First, welfare support should not be removed from young people if there is no work for them to do. Young people do want to work; they do not prefer to live on benefits. I have been a member of two Select Committees reporting in recent years on youth unemployment. I chaired the Youth Unemployment Committee that reported Skills for Every Young Person in November 2021. It had been the proposal of the noble Lord, Lord Baker, from whom we shall hear shortly; I look forward to that. We identified a huge skills mismatch between the needs of employers and the qualifications of young people leaving school. We identified deficiencies in the digital skills of young people. We were concerned by the narrowness of the national curriculum. We saw the need for more technical and vocational education and more apprenticeships for school leavers. We understood the importance of work experience and the capacity of employers to meet demand.

I was then a member of the committee chaired by the noble Baroness, Lady Morris of Yardley, which late in 2024 produced a report, Think Work First, on the transition from education to work for young disabled people. We know from Mencap that 86% of young people with a learning disability want a job. The noble Baroness, Lady Morris of Yardley, said that the report provided a blueprint for the new Government to implement their manifesto commitment to getting more young disabled people into work, and to bridge the gap between education and work for them. Two key proposals were supported internships and better career support in schools, to which I think we should add more face-to-face assessments for those being interviewed for personal independence payments and the decisions around that.

What has happened? We heard from the noble Lord, Lord Evans, that more than 1 million are not in education, employment and training and the number is growing. Youth unemployment today stands at 16.2%. The long-term impact of Covid, the rise of AI and the lack of entry-level jobs all add together to make the picture worryingly bleak. Crucially, half of those not in education, employment and training have never worked. Yet the cost of youth unemployment is £125 billion in benefit payments and lost tax revenues taken together. DWP statistics show that for every £25 spent on benefits, only £1 is spent on helping young people into work; I find those to be astonishing figures. I have concluded that the DWP is too centralised: we need to devolve now to combined authorities and mayors and to give them a clear responsibility to deliver a reduction in NEETs and a real increase in youth employment in their areas.

We can compare ourselves with the Netherlands, where there is stronger vocational education and better, more targeted financial support for business. There is a work experience system and a welfare system that promotes engagement by young people. Municipal authorities, not central government, run welfare programmes.

The noble Lord, Lord Walker of Broxton, was very helpful about the need to support employers. The Government’s youth guarantee is good but it needs to be part of a package of tax incentives, and the truth is that the national insurance rise has been a significant disincentive. To conclude, too many young people are leaving school without the skills that they need to succeed or that employers need. Support through coaching is insufficient. I remember our taking evidence from young people who said that the jobcentre saw them as statistics. The jobcentre’s objective was to get the young person into a job, whether or not that job was suitable for them or might lead them to a career. We have to get coaching of individual young people so much better.