Can the chancellor really abolish long-term youth unemployment?

Rachel Reeves has pledged to “abolish” long-term youth unemployment, targeting those aged 18 to 24 years who’ve been, broadly speaking, out of work, education or training for 18 months, and on universal credit. At that point, if all else has failed, they’ll be offered some sort of paid work experience. The policy went down well at the Labour conference, but some may think they’ve heard this sort of talk before…

“Every young person will be guaranteed either a place in a college, for those who want to continue their studies, or an apprenticeship, to help them learn a trade vital to our plans to rebuild the country, or one-to-one support to find a job,” Reeves said. “But more than that, our guarantee will ensure that any young person out of work for 18 months will be given a paid work placement. Real work, practical experience, and new skills.”

She didn’t labour the point, but if the offer is rejected without reasonable justification (undefined), their benefits may be taken away, meaning potential destitution. The amount of “pay” for the placement is also unspecified, and presumably down to the firms involved.

Not yet. No companies were announced alongside the scheme, though Labour suggests feedback has been encouraging.

Obviously, the “youth guarantee” is a counterpart to the wider, so far stalled, attempts to reduce the social security bill and move people (of all ages) off long-term sickness and disability benefits, and increase the supply of labour. Whether the payments made for the work experience placements would be equivalent to the minimum wage is also unclear.

As with all “work experience” placements, the danger is that the young people are used as very cheap labour and fobbed off with menial, unrewarding work that neither endows them with fresh skills nor fills them with enthusiasm to get a proper job.

There are, of course. no guarantees that a youth guarantee placement will lead to a paid job. The more obvious problem, as with the labour market more generally, is the geographical and skills mismatch between vacancies and people. Thus, an unqualified young person in, say, Barnsley is poorly placed to take up even the most promising and suitable opportunity in the Cambridge Science Park.

But it is at least something, you might argue.

Even with still-widespread skills and labour shortages, widening as restrictions on immigrant work visas tighten, some 948,000 young people are classified as “Neets” – not in education, employment or training – about one in eight of the age group. As Reeves points out, lack of qualifications and a prolonged spell of unemployment early in adulthood can seriously “scar” long-term earnings and quality of life.

The proportion of young people who are Neet and who are affected by long-term or temporary sickness has also risen in recent years, with over one in four citing sickness as a barrier to participation in 2023, compared to one in 10 in 2012. As many as 80 per cent are more likely to have special educational needs and disabilities; it would be harsh to cut their benefits if they couldn’t participate in work experience.

Yes, though like most of these sorts of initiatives, they don’t get much publicity. What Reeves announced amounts to a national extension of the eight regional pilot schemes called “youth guarantee trailblazers”.

For almost half a century, governments of all parties have launched initiatives to deal with this intractable problem, with varying degrees of success. These include: the youth opportunities programme (1976-83); the youth training scheme (1983-89); the training and enterprise council youth training (1990-2001); modern apprenticeships (1994-98); a new deal for young people (1998-2010); traineeships 2013-23): the kickstart scheme (2020-23); the youth guarantee trailblazer 2024-25.

The UK has long had a problem with vocational training and skills, especially by comparison with Germany, where such things carry comparatively higher status and wages than university degrees in Britain. As a de-industrialising power that’s never spent much time or effort on investing in its people, solving “free rider” problems (where good employers fear their trained workers poached by less scrupulous ones) and where consumption has always been favoured over investment, Britain has long been guilty of a kind of economic child abuse.

Recent improvements in school results only partly ameliorate this. Politically, the issue has rarely drawn much political interest – the mass unemployment in the 1980s that eventually led to Gordon Brown’s dramatic new deal programme was the exception to the general air of neglect.