Welfare Reforms and Youth Unemployment

Lord Elliott of Mickle Fell Excerpts

Thursday 11th June 2026 Lords Chamber

[Lord Elliott of Mickle Fell (Con)]

My Lords, it is a huge pleasure to follow my noble friend Lord Hannan, and I thank my noble friend Lord Evans for securing the debate. This is not the first time I have spoken about the million plus young people who are not in education, employment or training. It is a subject I follow closely as president of the Jobs Foundation, as declared in the register.

In his interim report, Sir Alan Milburn rightly said that:

“We are at risk of a lost generation”


of young people. He rightly stated that:

“If public policy aims to increase youth participation, it has to minimise risks and maximise incentives”.


In this vein, I will reiterate a cost-free idea that I first proposed over a year ago, which has now garnered support from other noble Lords, as well as Back-Benchers in the other place and regional mayors. Noble lords will be aware that there is currently a scheme to incentivise employers to hire veterans, which was first introduced in 2020 and has been extended by the current Government to last until at least 2028. The scheme is very simple: employers who hire veterans do not have to pay the employers’ national insurance for that new employee during their first year of employment. This is facilitated through a zero rate of employers’ NI on salaries below roughly £50,000 a year.

In a similar way, employers hiring those under 21 also do not have to pay employers’ NI, a change first introduced in 2015. My hope is that the Government might be willing to consider extending this scheme to those older than 21 who are moving from welfare into work. They might wish to extend it to anyone moving from welfare into work, or they might wish to restrict it to those aged 24 or under, but it is certainly a proposal that would help maximise incentives for employers, as Sir Alan Milburn put it.

When I first mentioned this proposal last year, when we debated the Universal Credit Bill, it was supported only by the Jobs Foundation and the Good Growth Foundation, whose advisory board boasts the noble Lord, Lord Liddle, who I am pleased is in his place. I endorse his call for a cross-party approach on this issue.

Crucially, the Good Growth Foundation estimates that the policy would save the Exchequer up to £1.1 billion every year were it to be adopted for all employees helped from welfare into work. It would surely also save the Exchequer money were it to be restricted to NEETs.

I am pleased to say that support for this proposal has grown over the past year. In your Lordships’ House, the final report of the Autism Act 2009 Committee, published last November, recommended

“the use of tax incentives and/or national insurance relief”

to help businesses employ more autistic people.

The concept has also received backing from Labour Back-Benchers in the other place. Speaking to the Sunday Times a fortnight ago, Labour Back-Bencher Wes Streeting said:

“I think we should be thinking actively about … targeted reduction in employers’ National Insurance”.


I was also pleased to hear one of our great regional mayors, the Mayor of Greater Manchester, Andy Burnham, telling BBC “Newsnight” that he was “sympathetic” to reversing the recent rise in national insurance for employers.

Given that my modest proposal now has growing support on a cross-party basis, I have two questions for the Minister. First, can she confirm that the Milburn review will be allowed to make policy proposals with budgetary implications, including those involving tax incentives? Secondly, can she clarify whether the Treasury will hold back from finalising the Autumn Budget until it has both seen and considered the final recommendations of the Milburn review?