Welfare Reforms and Youth Unemployment

Lord Jackson of Peterborough Excerpts

Thursday 11th June 2026 Lords Chamber

[Lord Jackson of Peterborough (Con)]

My Lords, it is a pleasure to have the opportunity to take part in this debate, and I congratulate my noble friend Lord Evans of Rainow. I can see that the Government are not responsible for every societal phenomenon, so I accept that artificial intelligence and the overhang of Covid are outwith their competence. Nevertheless, that is about as consensual as I am going to get this afternoon.

I congratulate the noble Lord, Lord Walker of Broxton. I think you could probably call that friendly fire from him. It was an excellent speech. There is a particular consensus around the triple lock, and we have to come back to that debate.

We have a crisis of youth unemployment in this country, and a welfare budget which, as has been said, is out of control. In 2025-26, total UK welfare spending is forecast to be £334 billion, 10.9% of UK GDP. By 2031, it is predicted to have risen to £409 billion. This is completely unsustainable. It is not only an inefficient use of resources but, frankly, a social catastrophe.

I campaigned against the free movement directive from 2005 onwards as a constituency MP, because, as the noble Lord, Lord Austin of Dudley, has said quite rightly, we imported cheap foreign labour and displaced our own indigenous British youth workforce by driving down their wages and conditions. That was under a Labour Government, unfortunately, and was a completely ill-thought-out policy.

Some 13.5% of all 16 to 24 year-olds are NEETs, as we heard earlier. Yet in its 2024 election manifesto, Labour committed to reviewing universal credit and reforming employment support. This Government also committed to “make work pay”. But do businesses and business leaders think the Government have succeeded? The answer is no. The British Chambers of Commerce has predicted that the rate of unemployment among young people in the UK will rise to 17.8% by 2027. It has argued that the Government’s decision to raise national insurance contributions and the minimum wage has helped to lock young people out of opportunities.

We only need to look, for instance, at the experience of Shepherd Neame, Britain’s oldest brewer, and the 15% decline in hiring of their business. The number of applications has risen by 15% and there has been a 41% increase in applications for bar jobs. Young people are attempting to get into employment, but the Government’s economic policies are making it harder for them to get employed. David McDowall, head of Britain’s biggest pub company, said to the Government directly:

“I implore the Chancellor to reverse the increase in NICs to give our sector, and the wider UK high street, the support it needs to reinvigorate youth employment”.


The increase in national insurance costs is making it impossible to hire people in entry-level roles. An increase of £1,200 makes it impossible to effectively run a business. The same message comes from UKHospitality, which is suffering in a similar way.

The Government have a choice. They could follow their own MPs—who were famously quoted recently by the Secretary of State for welfare as saying “Who can we tax in order to pay benefits to others?”—and increase the welfare bill, or commit to welfare reform that both incentivises people into work and cuts the cost to the taxpayer, so that these employment costs can be cut or mitigated. The balance spent on welfare payments versus employment support needs to change. Milburn’s review, as we know, shows that nearly two-thirds of all 16 to 24 year-olds claiming PIP payments do so on the basis of anxiety, depression, autism and ADHD. Eight in 10 GPs admit that they prescribe antidepressants that they do not think are necessary. Rather than diagnose and overtreat, we should recognise that, often, worthwhile employment would have a more transformative effect. We must not tolerate abuse of the benefits system. One of the policy proposals in the Centre for Social Justice’s The Benefits Budget report was that welfare support for those with milder anxiety, depression or ADHD should be reduced or removed.

In conclusion, this Government have to prioritise job creation over benefits if they want Britain to succeed. Labour has done it before and it can do it again. If they do not, the crisis of youth unemployment, which they themselves have recognised, social immobility, societal strife and inequality will only get worse.