The Government’s announced another £1 billion of funding to reduce the number of young people not in education, employment or training (NEET). This comes on top of previous announcements to roll out a Youth Guarantee in England. Will this make a difference and what else might we need to do?
First, why does this matter. There’s almost one million 16-24 year olds who are NEET, up one third since the pandemic. That’s around one in eight young people. Being NEET when young can do long-term damage to your career prospects, so it’s something it’s best to nip in the bud. And our rates, while not at the levels seen in recessions, are substantially worse than best performing countries like the Netherlands where fewer than one in ten young people are NEET.
So this is a problem: it damages young people’s prospects and we’re doing worse than we were and worse than other countries. Our research shows that NEET rates vary across the country, and that one in four are on unemployment-related benefits, one in four are on incapacity-related benefits, one in two are not on benefits.
What’s the plan?
The plan is to have a Youth Guarantee in England (some Government plans are UK wide, in other areas devolved administrations have responsibility) so all young people are offered a job, training place or apprenticeships. That’s something we’ve argued for since 2020 so is good news. It includes a Jobs Guarantee, a paid six month work placement for those who’ve been on benefits and searching for work for 18 months or more, again something we argued for.
But the programmes are focused on 18-21 year olds when 22-24 year olds have higher NEET rates, and mostly on those claiming unemployment-related benefits risking missing the other three in four NEETs. For that latter group, a number of trailblazers led by local government are testing ways to better and engage them and other young people.
What’s new?
The latest announcement is another £1 billion of funding (over a number of years, we don’t know how many). It expands the Jobs Guarantee to 18-24 year olds, in line with our asks, but still limited to those on unemployment-related benefits. We estimate that £4-500m of the new funding could support an additional 40,000 work placements. This is genuinely good news and these schemes are expensive (you have to pay people’s wages for six months). But there are surely young people in the other three quarters of NEETs who could benefit from this too?
The remainder of the funding is likely to largely go to £3,000 subsidies for employers who take on young people who’ve been on benefits and searching for work for 6-18 months and £2,000 to employers who take on 16-24 year old apprentices. The latter is part of the Government’s aim to rebalance the apprenticeship system toward young people (youth apprenticeships are down one third in a decade), and comes alongside plans to remove funding from some higher level apprenticeships. On the latter, this is about priorities in a fixed budget. Af course apprenticeships aren’t the answer to everything and employers can invest in training beyond the levy if it’s of business value.
In total, these measures could cover 180,000 jobs, though of course young people would’ve got some of them anyway. We know hiring subsidies can work so this should make a difference. But, again, what about the three quarters of NEETs who are not on unemployment benefits?
The Cost of Employing an 18-20 year olds has risen from £15.6k in 2024 to £19.7K in 2026
And we shouldn’t forget that rising minimum wage and employers National Insurance rates means the cost of employing an 18-20 year olds has risen from £15.6k in 2024 to £19.7k from April 2026, and for a 21-24 year old from £22.4k to £25.8k. And the economy is pretty tough for lots of employers; their costs are rising and growth is low. It goes without saying that a growing economy is a prerequisite for low NEET rates ultimately. But it’s also easier said than done.
Are we doing enough?
These measures, and the previously announced ones, are welcome, substantive and will make a real difference. The Jobs Guarantee will help those who have the most difficulty finding a job, particularly the more than half of NEETs who our research showed said they’d never had a paid job. The trailblazers will help to join up support to engage those young people not in the system. And the hiring subsidies will make it easier for employers to take on young people.
But we need to do more to systematically engage every young person who is NEET, regardless of benefit status. We need a really high quality employment, training and apprenticeship offer with an open door approach to everyone who could benefit, rather than riddle-me-this eligibility criteria. And we need a growth friendly environment for employers.
And of course we await the Milburn Review which will look at all of this and also the operation of the benefit system. We’ve argued that young people not required to work should be required to meet regularly with a Work Coach or local support provider to talk about their circumstances and hear about the help on offer, but with no requirement to take it up where they are too ill to work. We need to focus on positive engagement.
Plus prevention is better than cure, so we need to look at earlier age groups too. But we have a pressing problem among 16-24 year olds that we can’t ignore.
Lastly, there is much the Government can and should do. But helping young people get a good start in their careers and build the skills they need is the job of us all. That means employers seeing this as an investment and thinking about what more they can do, while recognising it’s tough economically. It means local leaders joining up support and public services thinking about what opportunities they can offer to lead the way.
This is too important not to give it our all. There are one million reasons to act.
This article was originally published on FE News on Tuesday 17 March.
