UK government weighs curbs on youth sickness benefits to fund back-to-work schemes
disability benefits to pay for back-to-work programmes aimed at nearly 1 million young people not in work, education or training, a move that is controversial.
Britain had 981,000 people aged 16-24 not in employment, education or training (NEET) in the second quarter of this year, or 13% of the age group. Last year that share was the second-highest in Europe.
Its 15.6% youth unemployment rate is also unusually high compared with the 3.4% rate for older workers. Elsewhere in Europe, the youth jobless rate is typically only just over double that of older age groups.
Former minister Alan Milburn, a party ally of Prime Minister Andy Burnham, warned of a “lost generation” in May in the first part of his report into youth unemployment.
Next week he will propose barring under-25s from ill-health supplements to standard unemployment benefits and moving them to a more restricted version of the main disability benefit. His report is unlikely to rapidly reduce the £8 billion ($11 billion) a year spent on benefits for young people.
Milburn said earlier this year that he wanted to shift the 25-to-1 ratio of spending on benefits versus employment support more towards the latter. He also said he wanted to draw lessons from the Netherlands and elsewhere, where more young people are in work.
Disagreement is likely over how to fund more back-to-work programmes against a backdrop of stretched public finances, an issue he addressed in a newspaper interview on Thursday.
“I’m not saying that any of this will be easy, or that it will be pain-free,” Milburn told the Times. “Candidly, it could mean that some people will get less financial support.”
Cuts are also likely to be unpopular among many Labour lawmakers, who thwarted attempts by previous prime minister Keir Starmer to cut welfare. That has handed ammunition to opposition parties, which accuse the governing party of favouring welfare recipients over workers.
Training schemes and a changing jobs market
The government hopes to replicate on a much bigger scale the experience of Faisa Omar, who applied for more than 500 jobs in the UK and got nowhere, a slog she likened to “shouting into the void”. A 10-week training course tailored to the green energy sector, which she attended in 2023, helped the 27-year-old land a job within a month.
“Before Generation I had the drive but I didn’t have the map. So I didn’t know how to get into sustainability. Climate change was one of my passions, but I didn’t know how to … find an accessible path into the green sector,” Omar said.
Michael Houlihan, UK head of employment charity Generation, said programmes with a proven track record of getting people into jobs should be scaled up. Around 70% of people on Generation’s courses found a job within 12 months, double the average for similar ones, he said. The key was ensuring courses were tailored to the precise needs of employers in sectors with vacancies.
James Tuttiett, an executive at IT consultancy FDM Group, said one part of the problem now is that artificial intelligence has reduced client demand for junior staff. He said FDM now had to train recruits for longer before hiring them out.
“You have this silent hiring freeze where AI can increasingly do a lot of jobs that exist in white-collar work,” he said. He added that a higher minimum wage and increased employer social security payments had also limited hiring.
Less back-to-work support in Britain
NEETs’ reasons for not being in work or training vary, but many lack educational qualifications or report having health conditions that make it harder to get a job.
Nye Cominetti, an economist at the left-leaning Resolution Foundation think tank, said Britain’s welfare benefits were not unusually generous compared with European countries with lower rates of NEETs. However, young people receiving health-related benefits in Britain faced fewer requirements to engage with a process of getting back to work.
Sonja Bekker, a professor of employment law at Utrecht University in the Netherlands, said her city sent people to knock on the doors of young people not in education or work, to offer solutions such as childcare or mental health support.
Vocational schools mean many Dutch pupils are on months-long work placements aged 17, and two-thirds of 16- to 17-year-olds have part-time jobs, compared with less than a fifth in Britain.
Even in the Netherlands, though, the rate of NEETs has begun to rise. As in Britain, AI and taxes are sometimes blamed.
“We don’t know whether it is a long-term trend or whether it is just a bump in the economic cycle,” Bekker said.
