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.