The government’s new £1bn “life-changing” youth unemployment scheme will help only a small number of the nearly 1 million young people not in employment, education or training (NEETs), a leading think tank has warned.
The Institute for Fiscal Studies said the plans did not even target the more than 300,000 who currently claim universal credit and are not required to look for work, mostly due to health conditions.
The measures were announced with great fanfare on Monday, with work and pensions secretary Pat Mc Fadden saying they would “give life-changing opportunities to young people and significantly reverse the increase we inherited in” NEETs.
But Xiaowei Xu, a senior research economist at the IFS who has written a paper on the plans, said the “policies will benefit only a small share of nearly 1 million” young people.
She added that the number of young people not forced to search for work has “increased substantially in the last few years. Stemming its rise will be important for making progress on youth employment.”
The initiative includes a new Youth Jobs Grant, offering businesses £3,000 for each 18-24 year old hired who has been unemployed for six months or more.
A new apprenticeship incentive will provide small and medium-sized businesses (SMEs) with £2,000 for every new 16-24 year old employee. The existing jobs guarantee, which offers a six-month role to Universal Credit claimants who are unemployed for 18 months, will expand to include those up to 24 years old.
As well as not targeting the 300,000 not required to look for work, the IFS paper also points out there are thought to be around 280,000 young people who are NEET but not on out-of-work benefits, who also would not be helped by many of the measures.
When it comes to wage subsidies the report warns that “the number of placements will be constrained by employer take-up, and – at least in the case of the Jobs Guarantee – by the administrative capacity of the Department for Work and Pensions (DWP) and the local “delivery organisations” tasked with matching jobseekers to employers.”
It adds: “The government expects the Jobs Guarantee to support an average of 30,000 people a year over the next three years, a fraction of the 72,000 UC claimants who are eligible for the policy today. The Youth Jobs Grant is expected to support an average of 20,000 people a year over three years, taking the yearly average number supported by wage subsidies to 50,000.
“For context, even if all 50,000 jobs were ‘additional’ jobs that would not have existed in the absence of these policies (discussed more below), this would take the NEET rate from 12.8 per cent to 12.1 per cent still well above the 11.7 per cent seen three years ago.”
The Department for Work and Pensions has been approached for comment.
