Chancellor Rachel Reeves will announce a new guarantee of paid work placements for young people who have been unemployed or out of education for 18 months. Those who refuse the offer without reasonable excuse could lose their benefits.
In a keynote speech to Labour’s annual conference in Liverpool, Reeves will pledge “nothing less than the abolition of long-term youth unemployment”, presenting the scheme as part of a wider vision for a society built on “contribution” and “fair reward”.
A Youth Guarantee Expanded
The scheme builds on the “youth guarantee” launched last year, which promised every 18 to 21-year-old access to training, education, apprenticeships or job support.
Under the new initiative:
- Every young person on Universal Credit for 18 months without “earning or learning” will be offered a paid work placement.
- Placements are intended to build skills and prepare participants for full-time jobs.
- Those who reject the offer risk sanctions, including loss of benefits.
Latest figures show around 948,000 16 to 24-year-olds in the UK are not in employment, education or training (NEET), equivalent to one in eight young people.
Cost and Business Role
The government has not confirmed the cost of the programme, but said it would be funded from existing budgets set out earlier this year. The scheme will be delivered in partnership with private companies, with businesses expected to cover at least part of participants’ wages.
Full financial details will be outlined in Reeves’s November Budget, which economists warn will require either tax rises or spending cuts to meet borrowing rules.
Support and Questions From Business
The Federation of Small Businesses welcomed the initiative as “hugely important”. Policy chair Tina McKenzie said it would “reprioritise spending from employment programmes which aren’t working” and deliver better value for taxpayers.
But she also cautioned that the scheme must ensure support for over-25s, including those with health conditions, and allow small firms to play a central role.
Other employers have raised concerns about capacity, pointing to rising National Insurance Contributions, an increased National Minimum Wage, and falling vacancy numbers, which earlier this year hit their lowest level since the pandemic.
Reeves’s Vision of ‘Contribution’
Reeves will use her speech to frame the initiative within a broader economic philosophy:
“I will never be satisfied while too many people’s potential is wasted, frozen out of employment, education or training. It’s bad for business, bad for taxpayers, bad for our economy, and it scars people’s prospects throughout their lives.”
She is expected to link the scheme to the legacy of Labour’s last time in government, when Gordon Brown’s New Deal for Young People sought to eradicate long-term youth unemployment.
The chancellor will also announce plans to fund a library in every primary school in England, addressing a National Literacy Trust finding that one in seven state primary schools currently lacks one. In disadvantaged areas, that figure rises to one in four.
