Welfare Reforms and Youth Unemployment

Baroness Shephard of Northwold Excerpts

Thursday 11th June 2026 Lords Chamber

[Baroness Shephard of Northwold (Con)]

My Lords, I congratulate my noble friend Lord Evans of Rainow on introducing this important and timely debate.

Successive Governments have had to deal with rising levels of youth unemployment for a range of reasons, including economic shocks, deindustrialisation and changing patterns of demand. I recall from earlier years, as no doubt other noble Lords do, initiatives such as youth training schemes, training and enterprise councils, and new qualifications such as NVQs—not perfect solutions, but constructive and collaborative. They involved close working between government, both national and local, along with employers, further and higher education, and training providers.

Today, we have the aftermath of Covid, the world economic situation, war, the influence of social media and the implications of AI—uncertainty on all fronts. The Government need all possible co-operation from business and employers, but that is not what they have provided, which is higher national insurance costs, increased national minimum wage and business rates, new workers’ rights legislation and more regulation. These are disincentives for business stability and expansion. Employers are reluctant, even unable, to take on more staff to provide those vital first job openings for any staff they may not be able to retain. There is, as has already been pointed out, a chronic shortage of part-time job opportunities for young people, such as paper rounds or part-time work in cafés and shops, making progression to full-time work even harder for the young. These issues are difficult enough, but other government policies are exacerbating the grievous situation, especially for NEETs, as exposed by Alan Milburn’s recently published report.

The complete chaos and uncertainty caused by this Government inflicting an uncertain future on local government has already been mentioned in this debate. Local government is a provider for those with special educational needs, a key further education provider and a partner with the business sector in apprenticeship and training schemes. How can collaborative partnership proceed when there is currently no clear future for the whole sector, as pointed out in the Milburn report? As has already been mentioned by the noble Lord, Lord Cameron, there are particular problems for rural communities, where there is less visible aspiration and transport is expensive and often non-existent. The Government’s apparent hostility to such communities, as shown by them loading them with tax after tax on their livelihoods and their very future, provides a bleak landscape for unemployed young people.

As I have said, rising youth unemployment has been a problem faced by successive Governments, but some of the facts revealed in Alan Milburn’s unflinching report on NEETs are mind blowing. NEETs account for one-quarter of all pupils and half of all those ending up on benefits in their late 20s. In this country, we spend 25 times as much on benefits for NEETs as we do on helping them back into work. That cannot continue. As the noble Lord, Lord Walker, has already pointed out, Alan Milburn has described the situation as “scandalous”. His report has this clear message to the Government: if the Government’s

“priority is to create young people’s jobs, then it’s got to create the right conditions for employers to do so”.

So far, they have not.