A plan to end NEETs through reform, not cuts

We should shift spending over time from paying benefits to young people because they haven’t got skills and work - and instead investing in them so they do.

IPPR is not proposing to 'scrap benefits for under 25s', as claimed in the headline on the front page of the Daily Telegraph this morning. Our new report out today sets out a plan for radically reducing the number of young people who are NEET (not in education, employment or training). Losing touch from either learning or earning is deeply damaging for young people’s own prospects – and often hugely costly for society. Our ideas draw on lessons from countries like the Netherlands and Denmark, where they have a distinct work, training and benefits track for young people – separate from the adult welfare system – and very low levels of NEETs. The plan is built around three core reforms:

First, replacing existing out-of-work benefits for young people with a youth allowance which provides financial support for those who need it, conditional on participation in further and vocational education or intensive job search. This would overcome the structural flaw in JSA for young people, which is that it prevents them from training and treats them like adult jobseekers even if they haven’t yet completed their initial education. And it would prevent young people drifting away from learning or earning altogether, by closing off access to inactive benefits, except for those with serious disabilities and very young children.

To pay for this extension of eligibility to financial support to the 440,000 young NEETs who currently receive no benefit (or incentive to engage in learning or work) and the 260,000 who are in (non-HE) study but not in work or already claiming a benefit, access to the youth allowance should be means tested on the basis of parental income until young people are over 21, mirroring the rules governing the university maintenance grant. In other words, a redistribution towards young people in low income families to help prepare them for work – drawing on the evidence from the Educational Maintenance Allowance, which boosted educational participation among disadvantaged teenagers.

The second plank of the reform is to establish a youth guarantee that offers young people access to further education or vocational training plus intensive support to find work or an apprenticeship. For those not learning or earning after six months, paid work experience or a paid traineeships should be provided, to place an upper limit on the period young people can be inactive or unemployed. Unlike the current system of benefits and support, a youth guarantee of this kind would be directed towards the two things that really make a difference to young people’s chances of building a career: completing their initial education and gaining practical employment experience.

To pay for this substantial expansion of provision for young people, expenditure on 18–24-year-olds in the Work Programme should be re-directed, along with adult skills and apprenticeship funding for over-24s. When public spending is tight, the priority for the state should be to focus resources on giving young people the best possible chance of improving their skills and getting a job. Consistent with a 'social investment' strategy, the political goal should be to shift spending over time from paying benefits to young people because they haven’t got skills and work – and instead investing in them so they do.

Third, and finally, these structural shifts should be combined with a major act of institutional reform. The government should set national objectives and priorities for the youth guarantee, but local areas should organise and deliver it. Decentralisation should start with London and the eight 'core cities' in England taking on resources and responsibility for their young people. These cities should establish governance arrangements, including a key role for employers, plus plans for commissioning a diverse network of local providers. Finally, to increase opportunity for young people and drive employer engagement in this new system, large firms should be offered the choice of offering youth apprenticeships themselves, or paying a dedicated 'youth levy' to train and prepare the future workforce, with resources controlled by employers via the Local Enterprise Partnerships (LEPs).

Youth unemployment is probably the most visible and damaging consequence of recession – and politicians of all parties will seek to demonstrate they have an answer. Too often in the past, this area has been bedevilled by initiatives that fail to get to the root of the problem. As the next election approaches, we need a plan for substantial reform that would mean all young people are learning or earning.

Unemployed brothers Andrew and Jonathan Courtman in Corby Town Centre on April 24, 2013. Photograph: Getty Images.

Graeme Cooke is Associate Director at IPPR

Photo: Getty
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Who will win in Stoke-on-Trent?

Labour are the favourites, but they could fall victim to a shock in the Midlands constituency.  

The resignation of Tristram Hunt as MP for Stoke-on-Central has triggered a by-election in the safe Labour seat of Stoke on Trent Central. That had Westminster speculating about the possibility of a victory for Ukip, which only intensified once Paul Nuttall, the party’s leader, was installed as the candidate.

If Nuttall’s message that the Labour Party has lost touch with its small-town and post-industrial heartlands is going to pay dividends at the ballot box, there can hardly be a better set of circumstances than this: the sitting MP has quit to take up a well-paid job in London, and although  the overwhelming majority of Labour MPs voted to block Brexit, the well-advertised divisions in that party over the vote should help Ukip.

But Labour started with a solid lead – it is always more useful to talk about percentages, not raw vote totals – of 16 points in 2015, with the two parties of the right effectively tied in second and third place. Just 33 votes separated Ukip in second from the third-placed Conservatives.

There was a possible – but narrow – path to victory for Ukip that involved swallowing up the Conservative vote, while Labour shed votes in three directions: to the Liberal Democrats, to Ukip, and to abstention.

But as I wrote at the start of the contest, Ukip were, in my view, overwritten in their chances of winning the seat. We talk a lot about Labour’s problem appealing to “aspirational” voters in Westminster, but less covered, and equally important, is Ukip’s aspiration problem.

For some people, a vote for Ukip is effectively a declaration that you live in a dump. You can have an interesting debate about whether it was particularly sympathetic of Ken Clarke to brand that party’s voters as “elderly male people who have had disappointing lives”, but that view is not just confined to pro-European Conservatives. A great number of people, in Stoke and elsewhere, who are sympathetic to Ukip’s positions on immigration, international development and the European Union also think that voting Ukip is for losers.

That always made making inroads into the Conservative vote harder than it looks. At the risk of looking very, very foolish in six days time, I found it difficult to imagine why Tory voters in Hanley would take the risk of voting Ukip. As I wrote when Nuttall announced his candidacy, the Conservatives were, in my view, a bigger threat to Labour than Ukip.

Under Theresa May, almost every move the party has made has been designed around making inroads into the Ukip vote and that part of the Labour vote that is sympathetic to Ukip. If the polls are to be believed, she’s succeeding nationally, though even on current polling, the Conservatives wouldn’t have enough to take Stoke on Trent Central.

Now Theresa May has made a visit to the constituency. Well, seeing as the government has a comfortable majority in the House of Commons, it’s not as if the Prime Minister needs to find time to visit the seat, particularly when there is another, easier battle down the road in the shape of the West Midlands mayoral election.

But one thing is certain: the Conservatives wouldn’t be sending May down if they thought that they were going to do worse than they did in 2015.

Parties can be wrong of course. The Conservatives knew that they had found a vulnerable spot in the last election as far as a Labour deal with the SNP was concerned. They thought that vulnerable spot was worth 15 to 20 seats. They gained 27 from the Liberal Democrats and a further eight from Labour.  Labour knew they would underperform public expectations and thought they’d end up with around 260 to 280 seats. They ended up with 232.

Nevertheless, Theresa May wouldn’t be coming down to Stoke if CCHQ thought that four days later, her party was going to finish fourth. And if the Conservatives don’t collapse, anyone betting on Ukip is liable to lose their shirt. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.