Youth Unemployment

Debate between Damian Hinds and Andrew Pakes

Wednesday 28th January 2026 Commons Chamber

[Damian Hinds (East Hampshire) (Con)]

There are many ways that we can express it, but none of them are good: youth unemployment is at 15.9%; it is up 10%; it is up 1.5 percentage points; it is up over 100,000 in the last year; it is at a 10-year high—higher than in the covid era.

Let us be clear: this is not economic inactivity we are talking about; it is unemployment. The definition of unemployment is not about who is claiming benefits; it is about having had no income whatever—not having worked for a paid hour—in the reference week. It is about being available for work and actively looking for work. That is the number that has gone up. The increasing number of people who are both studying and seeking to work—for whom, by the way, zero-hours contracts are especially relevant—is a particular issue, and I will come back to that point.

Unemployment overall has gone up, but it is young people who have borne the brunt; the rate of increase has been almost twice as high for young people as it has overall. To be fair, that is usually the case—when there is rising unemployment, it is always young people who feel it first and hardest. Why? Well, as the shadow Secretary of State, my hon. Friend the Member for Faversham and Mid Kent (Helen Whately), said, the first thing that employers do when things look uncertain or difficult is to stop hiring. A hiring freeze is the quickest way to cut down the payroll.

Secondly, if companies have to let people go, I am afraid that redundancy is cheaper when it comes to younger people, so they sometimes deploy a LIFO rule —last in, first out. There is then the secondary effect that the more experienced workers can fill the vacancies. On top of that, we have the situation at the moment whereby sectors that disproportionately employ young people—in shops, restaurants, hotels and throughout retail, hospitality and leisure—have been particularly hard hit by the national insurance and business rates hikes.

I said that youth unemployment usually tends to rise faster and be higher than overall unemployment. That is true, but historically it is not as true in this country as it is in the rest of Europe. There are exceptions—in Germany and the Netherlands, for example—but it is the case in southern Europe. After the crash under the previous Labour Government in 2007-08, there was talk of a lost generation in southern Europe as youth unemployment rates soared so high.

Why should the situation in those countries be different from the situation in countries like ours? There is a fancy economics term for it: insider-outsider theory. That theory basically says that when there are economic troubles in a system that has very heavily regulated labour markets, very high levels of employment protection and the very heavy involvement of trade unions, all the help tends to go to the people in work, and it is those trying to get into work—the outsiders—who suffer as a result. Historically, our country has had more liberalised—although not totally liberalised—labour markets, which has meant that we have not had those problems with youth unemployment to the same extent as some of our near neighbours in Europe, and we have tended to recover more quickly when they do occur.

Right now, we have the historical rarity—I am not sure it is unique, but it is certainly a rarity—that the ratio of youth unemployment to total unemployment in the UK is higher than it is in the EU. That is before we feel all the effects of the Employment Rights Act 2025; I am sure that some effects were there already, but we have yet to feel the full effect. That Act will discourage taking on new workers, especially new untested workers, and that is of course what youth unemployment is.

Let me talk about one aspect of the 2025 Act: zero-hours contracts. These contracts have a special place in Labour mythology, which comes from the time when the last leader of the party, the right hon. Member for Islington North (Jeremy Corbyn), used to bring them up every week at Prime Minister’s questions, saying that they were an epidemic, ripping apart our country. At the time, the Conservatives researched how big a deal zero-hours contracts were, and it turned out that fewer than 3% of workers had a zero-hours contract for their main job. There were others who had one for a second job, including many working as bank staff in the NHS. There were also lots of students on them. It turned out that the average number of hours on a zero-hours contract was 25, and—here’s the bit that nobody could accept—the average job satisfaction of people on a zero-hours contract was higher than it was for workers overall.

Those on the Government Benches have been grimacing a little, but I do not know how many of them know that the proportion of people on zero-hours contracts has gone up since the general election of 2024. They are just a part of our economy. They are also heavily skewed towards young people, such as students working in sectors like hospitality and other seasonal occupations. About 40% of people with a zero-hours contract job are under 25.

I myself was once a young person with a zero-hours contract—I just did not know it was called that. If colleagues across the House think back to their first job, perhaps washing up in a restaurant or working shifts in a shop, they probably did not know at the start if they would be working exactly the same number of hours every week and so on; it turns out that a lot of us probably had our first opportunity in the world of work through a zero-hours contract. It will be true for people even after the Employment Rights Act—those with such a contract will have some extra guarantees included in nit. However, it will also be a bigger deal, from an employer’s point of view, and it will add some risk to taking on young people. What will be the balance for employers and employees? It is, for Ministers, a leap of faith.

[Andrew Pakes]

I appreciate the right hon. Gentleman’s knowledge and his passion for this subject. I would just suggest that he perhaps underestimates the impact that insecure work can have. In one of my brother’s last jobs, he had to get in the car and start driving to work each morning before he would get a phone call telling him whether or not he had a shift that day. Does the right hon. Gentleman not think it is reasonable that people like my brother should know their shift a day in advance? That is the issue we are really talking about with insecure work. I understand that he is making a political point, but we are talking about real people’s lives.

[Damian Hinds]

I am not making a political point. I think it is right and reasonable to give employees visibility, and all good employers who want to keep their employees will of course do the right thing and try to do so. The Employment Rights Act, however, does an awful lot more than just let people know some time in advance about the hours of their next shift.

The effects we see from the Employment Rights Act, taxation changes and other measures will not be mass lay-offs; it will be people—young people—not being taken on in the first place. Why does that matter? The Minister said it herself: it matters because of the scarring effect of youth unemployment. We know from studies that if someone is out of work in their early 20s, they can still be suffering the effects 20 or 30 years later.

There are things the Government could do to mitigate some of what is happening, including on the regulations coming out of the Employment Rights Act. However, I just wonder why they are doing it overall. I think it is because, in a world where there have been enough U-turns from this Government—actually, I do not think there have been enough yet, but there have been a lot—that legislation is something that Labour MPs can bring home and say, “This is a proper left-wing policy that we have enacted.” But do they really want to bring home higher levels of youth unemployment in their constituencies? That is what will happen.

The Government have introduced a number of schemes to try to mitigate what is going on, some of which are welcome. All Governments introduce somewhat similar schemes. However, the 55,000 people who will be eligible for the jobs guarantee should be seen in the context of the more than 900,000 young people who are not in education, employment or training. The scheme is limited in the areas it covers and, I think, people are eligible only after they have been searching for a job for 18 months or more, which would obviously count out many young people.

I welcome Connect to Work, which was mentioned by the hon. Member for Dartford (Jim Dickson), although I do not think it is meant particularly for young people; it might nevertheless be helpful for people who have been off on long-term sick. I thought the timings sounded ambitious when the Government first announced it, though, so I would welcome the Minister telling us what they expect the numbers to be at the end of this financial year, including in my county of Hampshire.

I know that I have already spoken for 10 minutes, Madam Deputy Speaker, but I just want to set the record straight on apprenticeships, which have come up a number of times. I hope I can help the House with a non-partisan description of what has happened in relation to apprenticeships over the past 20 or more years. The truth is that under the previous Labour Government, and under the first few years of the coalition Government, many tens of thousands of young people were doing an apprenticeship without even knowing they were doing so, so thin and flimsy were those apprenticeships. [Interruption.] The hon. Member for Bermondsey and Old Southwark (Neil Coyle) may screw up his face, but that is true; the research evidence is available.

The previous Government therefore reformed apprenticeships to be a minimum of one year, with a minimum of 20% time off the job, end-point assessments and qualifications designed by employers themselves, overseen by an independent Institute for Apprenticeships. Yes, when we did that, the number of apprenticeships went down, and the numbers that the Minister was quoting were all from after that change. Making the specifications of a qualification considerably more exacting will of course have an effect on the numbers. But guess what the new Government are doing? The minimum length for an apprenticeship will now be eight months. Try telling a German captain of industry that it is possible to do an apprenticeship in eight months. Will the numbers go up? Of course they will!

I recently met hairdressers in my constituency and was reminded of how all this comes together. Hairdressers, like hospitality businesses and others, bring people into our town centres. They are more than just employers, and their businesses cannot just move online. They are now facing seriously higher employment costs, including national insurance contributions and, in many cases, much higher business rates, and that is before we get to the looming impact of the employment regulations. Hairdressers also have a very strong tradition of taking on large numbers of young people and apprenticeships. My worry is that, with the increase in costs, it will be simply unaffordable for them to take on young people in nearly the same numbers. The same is true for pubs and many other employers.

We are seeing the early effects of Government policy in today’s youth unemployment numbers, and I take no pleasure whatsoever in saying this, but I am afraid that they are going to get materially worse. I ask the Government to take that seriously and to act, not by delivering some short-term programmes but by rethinking their approach in order to make it easier and less costly for companies to take on young people so that they can start their careers and build their futures.

Institute for Apprenticeships and Technical Education (Transfer of Functions etc) Bill [Lords]

Debate between Damian Hinds and Andrew Pakes

Report stage
Monday 31st March 2025 Commons Chamber

[Damian Hinds]

Of course we should be listening to colleges such as Bournemouth and Poole college. We heard the Government announce earlier that thousands of people were going to go into construction, but then say that they could not do anything until they created this body and subsumed the functions of IfATE into it. I do not see how all those things fit together. Yes, we want more people going into construction, and a long list of other sectors too, but that does not necessarily mean an apprenticeship in every case. There is a whole suite of existing technical and vocational courses, and T-levels are still ramping up as well.

On breadth versus depth, IfATE has a huge range, with more than 600 occupational standards for apprenticeships, T-levels and higher technical qualifications. Skills England is initially looking at a narrower set of sectors, but has a much broader remit for them, so it does more than IfATE. There are three big things on its list. The first is to identify where skills gaps exist, which is itself a very significant task. It may at first glance sound obvious, but it really is not. First, there is a question of what time horizon we are talking about. Are we talking about today, or planning five, 10 or more years into the future? More significantly, I am sure people would generally say that we could train more people to go into the social care sector. The issue is not so much whether we have the training courses available, but whether people are willing and happy to go into the sector. That is a broader question.

Secondly, Skills England has to work across Government with the Industrial Strategy Advisory Council and the Migration Advisory Committee, as well, of course, as with the Labour Market Advisory Board, under the DWP. The MAC is a well-established body, having been around for a number of years, that has a remit on immigration; it will not necessarily have the same perspective as Skills England. As the hon. Member for St Neots and Mid Cambridgeshire rightly said, the ISAC is going to be given its own statutory footing, which begs the question of where in the hierarchy Skills England will be. We want this to be a body that is able to speak authoritatively right across Government.

Thirdly, Skills England is going to identify the training that should be accessible via the growth and skills levy. That, again, is a huge task. What can be funded from the levy is a huge strategic question. What specific skills should we rightly expect a firm to provide, and what should be generalisable skills for the economy?

Even after all that, there is still the big question about supply and demand at college level—this may come back to the point the hon. Member for Bournemouth East (Tom Hayes) made about listening to colleges, on which he was absolutely right. We do not currently stop people doing courses because there is a surplus of people in such and such a sector and a shortage somewhere else, but some hard questions are going to come up around the funding formulae for these things to ensure that we do have enough people going into construction, social care and so on.

My contention is that each of those functions is enormous. Amendment 6 would, therefore, perform a useful role. It is not about dither and delay, but about allowing Skills England to establish itself and to carry out those key strategic functions that it is there to do, and then to be able to subsume the functions from IfATE.

[Andrew Pakes (Peterborough) (Lab)]

It is a pleasure to follow the contributions of the right hon. Member for East Hampshire (Damian Hinds) and the hon. Member for St Neots and Mid Cambridgeshire (Ian Sollom), who spoke powerfully to their amendments. It may disappoint them to know that I will be speaking against both new clauses, as they risk undermining the speed with which we need to effect change in the sector.

It is a privilege to speak in this debate on a subject about which I am very passionate, and as co-chair of the all-party parliamentary group on apprenticeships. The transfer of functions to the Secretary of State and the creation of Skills England is one of the most critical reforms this Government are due to bring about. It addresses one of the most damaging legacies of the previous Government: the fall in apprenticeships. This matters when we look at the structure of the Bill, which is why I am concerned about new clauses 1 and 4 in particular. It also matters in constituencies like mine in Peterborough, and in neighbouring St Neots and Mid Cambridgeshire, where we have seen falling apprenticeship starts, falling training and rising unemployment. Peterborough is a city with one of the highest levels of young people not in education, employment or training. This is not just the folly of opportunities lost and young people let down, but the story of a failed economy.

I take the opposite view to that expressed by the right hon. Member for East Hampshire, who seemed to elevate the independence of Skills England as a virtue in respect of what it could deliver; I see the independence of IfATE as one of the tools that led to its failure. The fact of its independence removed it from economic need, made it bureaucratic and meant it failed to address the needs of businesses and other providers to get the flexibility and delivery of skills that we need. Independence does not always guarantee success or the things that we need.

[Damian Hinds]

Would the hon. Gentleman extend that principle to the academic route? I have asked the Minister this question a number of times now. I do not think we would stand for anyone saying that the standard and specification for A-levels should be set in Sanctuary Buildings by the Department for Education. If we would not do it for A-levels, why would we think it is right for T-levels? What is the answer to that?

[Andrew Pakes]

I think we need a mixed economy in this area. The principles I elevate in this debate are speed, substance and bringing businesses around the table, alongside providers and colleges—such as my excellent provider in Peterborough, ARU Peterborough, with its new university campus—to deliver the goods and get the job done. My concern with new clauses 1 and 4 and amendment 6 is that they elevate a level of independence that does not address the overall issue.

In fact, many of the issues the right hon. Member for East Hampshire described in his speech were actually around delivery and political choices. Having the Secretary of State and the Department establishing Skills England will make it much more likely, in my view, that we deliver at speed on those challenges. However, I am sure scrutiny will come from all parties of this House if that is not the case.

Our No. 1 mission is economic growth, spread across all parts of the UK and built on a diverse base of industries and services. The Government have already made a powerful start, which could be undermined by these amendments if they cause further delay, with early work on the growth and skills levy to drive up standards and places, the move to functional English and maths, foundation apprenticeships providing flexibility and a route in, and a £600 million investment in construction skills. I particularly welcome the replies from my right hon. Friend the Minister for Skills, who has acknowledged in written answers the need for social mobility to be a factor that Skills England will consider, so that we can actually change people’s life opportunities. This is something I am passionate about, and which the Co-operative Group and other employers I have talked to consider to be very important. This mission will fail without the urgency needed to get the Bill passed and to get Skills England up and running.

Skills England has already been set up in shadow form. Given the urgency of the task, it provides the best of external industry leadership in its Skills England shadow board, which will move to a full board. It provides independence for the voices around the table, and therefore already meets the needs that new clauses 1 and 4 seek to address. It also focuses on delivery and the speed with which we can get going to bring jobs and opportunities to all parts of the country.

The Government had already been clear, before these new clauses and amendments were tabled, that the transfer of the institute’s statutory functions to the Secretary of State will introduce more flexibility to the skills system, which I wholeheartedly endorse. It will allow us to be more responsive to the needs of employers, learners and the economy, which I also endorse. The Secretary of State will delegate these powers to Skills England. I think new clauses 1 and 4 risk delaying and creating confusion, rather than aiding purpose and delivery of what we need. I therefore oppose the moves to create a separate Executive agency or to bind Skills England before it is even created.

We need to get going. This is not just a political slogan or the subject of debates in this House, but the message I hear from businesses, providers and schools in Peterborough. We need a genuine partnership in places such as my community between colleges and employers to ensure that we are providing leadership at all levels; we need practical action and leadership, working together to improve lives and our economy. The independence of IfATE, as I said earlier, elevates it to a level that risks undermining the ability to get going quickly.

Let me provide an example. A few weeks ago, I met MDS, a not-for-profit membership organisation in my constituency that is a pioneer in flexi-job apprenticeships and training in the food supply chain, working with some of the biggest names in the food sector to create a workforce for tomorrow. It is looking to Skills England and this Bill to create the flexibility and opportunities that businesses and learners need. It would be sorry to see any delays or confusion over structure when it knows what needs to be done to get the jobs. It wants this Bill.

Can the Minister say what additional funding and resources are available to help businesses to provide pre-apprenticeship training for individuals who have been unemployed long term? Businesses want the Government and Skills England to do that quickly. They want to understand how, with SMEs and others, the Government are supporting the growth of flexi-job apprenticeships to help industries to attract new talent into the food and fresh produce industry. That is a direct criticism of IfATE and the structures we already have, and there is concern that delay through new clauses 1 and 4 will make it more difficult. As we have heard, Skills England will identify the skills gaps in our economy and work with the Industrial Strategy Advisory Council and the Migration Advisory Committee to plug them. The direct link between the industry, the MAC and the Industrial Strategy Advisory Council will address our industrial need and purpose at the necessary speed.

The new clauses are not necessary. This is a Bill about skills and about addressing our skills shortages, and it needs to get going. I support the Bill and oppose new clauses 1 and 4 and amendment 6.