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Dr Neil Lee
Head of the socio-economic centre
T 020 7976 3611
Dr Neil Lee

Work & Pensions Committee report is a welcome challenge to government on youth unemployment

Authors: Dr Neil Lee Neil Lee

19 September 2012

The House of Commons Work and Pensions Committee today released their report into the Youth Contract – the government’s flagship programme to address the problem of youth unemployment. They find that the Youth Contract is a good start – but nowhere near enough to tackle the problem.

We agree. The report highlights a number of problems with the Youth Contract at present. First, the amount of money involved isn’t enough. The Select Committee notes that the wage incentive – a £2,275 subsidy for employers taking on young people out of work for nine months or more – may not be enough, particularly for certain groups or in areas of high unemployment.

Second, the targets are ambitious. They expect to pay 160,000 wage incentives and create 250,000 work experience placements. This exceeds previous schemes and looks optimistic given the weak economy – particularly given the money involved.

Third, the report recognizes that youth unemployment is not just a short-term crisis – it is a long-term problem which has been increasing for some time. The causes, a long-tail of poorly skilled young people and structural change in the economy making it hard to get them into work, are difficult to address.

They cite two long-term policy changes to address this. Reform of vocational education will be important – it has long been the Cinderella sector – important, but overlooked for reform and investment. New skills minister Matthew Hancock will need to work hard to implement the reforms set out in the Wolf Review.

Alongside this, policy has been uncoordinated. They cite our proposal for a designated youth unemployment unit in Whitehall and recommend: “the Government sets out how it plans to deliver a more stream-lined and cost-efficient system for providing youth employment and skills services both in the short and longer-term.” This is an important report on a crucial issue. The challenge now is for the government to respond.