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£3 billion government intervention needed to create hundreds of thousands of jobs and support young people, says IPPR

New analysis by the IPPR think tank today reveals the scale of the job crisis facing a whole generation of young people. IPPR estimates that an extra 620,000 young people (18-24) will be unemployed by the end of the year. This is on top of the 410,000 young people already unemployed, bringing the total to over a million. IPPR says that this will be the highest number of young people unemployed on record, surpassing the levels seen in the 2008/9 and 1990s recessions.

The think tank warns that this level of youth unemployment should be a major cause for concern. Unemployment at an early age can cause serious 'scarring effects' on people’s life chances including lower wages, increased risk of further unemployment and worse health into later life. These risks would be most severe for the young people who claim benefits lasting for six months or more; IPPR estimates that 380,000 young people will do so in the last three quarters of the year.

To prevent such a dramatic rise in youth unemployment, IPPR argues a £3 billion government intervention is needed to ensure everyone under the age of 25 is in education, training, apprenticeship or a job. A similar ambition was declared by the Prime Minister in his speech in the West Midlands earlier this week. He promised an “opportunity guarantee” that will give “every young person the chance of an apprenticeship or an in-work placement”.

IPPR argues that to meet this pledge, a more active approach from government is needed, including subsidising the wages for some young people. In a new report released today, the progressive think tank calls on the government to take action on four fronts:

Apprenticeships - Establish a £1.5 billion fund to part subsidise the wages of young apprentices in England. This could support the creation of up to 200,000 new apprenticeships for young people. Provide an additional £400 million to the apprenticeship levy budget to fully fund the training component of apprenticeships for small businesses (SMEs).
Welfare Reforms - Universal Credit should be reformed to offer greater one-to-one advisory support for young people to move into education or training where moving into work is not possible or desirable. To allow for this, conditionality and sanctions should be reduced for those seeking to return to education.
Education – Encourage more young people to remain in education by extending maintenance loans to under-24s in further education on the same terms as those offered to higher education students.
Right Start Fund – Create at least 140,000 new jobs for young people who are still claiming benefits after six months. These jobs would last for six months, be fully funded by the state and focused on green jobs such as in construction retrofitting homes and heating systems, or in the care sector. IPPR estimates the cost of the Right Start Fund would be at least £1.1 billion but could be scaled up over time. Based on the success of similar schemes previously, the researchers find that this could lower the government’s welfare bill and lead to additional tax revenue as a result of moving more people into work.

Harry Quilter-Pinner, IPPR Senior Research Fellow and lead report author, said:

“We face an unemployment crisis in the UK. Our analysis suggests youth unemployment could more than double by the end of the year. This would be a huge waste of talent and potential. It doesn’t have to be like this.

“That’s why we are calling on the government to step in to guarantee all young people either a funded place in education, an apprenticeship or a job. This will require the state to support businesses to take on young people, just as it has supported them to retain adults through the furlough scheme.

“This is the right thing to do for not just for young people but also in order to drive economic recovery.”

Frances O’Grady, TUC General Secretary, said:

“Without urgent action, the UK may be on the brink of a youth unemployment crisis.

“Research from the TUC has shown workers that young workers face the highest risk of unemployment during the coronavirus crisis. Those aged 25 and under are three times more likely to work in sectors where jobs are most at risk.

“We need a job guarantee scheme, to stop those without work becoming long-term unemployed — and this scheme must prioritise young workers.

“Not only will this prevent young people from being left to face the misery of long-term unemployment, but by ensuring young workers have decent jobs, the government can help the economy to build back faster and stronger.”

Robert Halfon MP, Chair of the Education Select Committee, said:

"As Guaranteeing the Right Start highlights, now is the time to rocket-boost apprenticeships for young people, giving them the opportunity to climb the ladder of opportunity and, at the same time, meeting the skills needs of our nation.

“With unstinting determination and policy, we can recast our skills priorities to place apprenticeships front and centre - to create a new apprenticeship culture as the lifeblood of training and employment."

Sam Windett, Director of Policy at Impetus and Chair of the not-for-profit Youth Employment Group, which works to help young people access jobs, said:

“Now is the time for bold policies to tackle and prevent further youth unemployment. There is a broad agreement behind this call for an ‘opportunity guarantee’ to ensure all young people have the offer of an education, training or employment place. We will work with IPPR, the government and others to ensure the details to come match the ambition set out in the Prime Minister’s speech.”

ENDS

CONTACT

David Wastell, Head of News and Communications: 07921 403651 d.wastell@ippr.org

Robin Harvey, Digital and Media Officer: 07779 204798 r.harvey@ippr.org

Harry Quilter-Pinner is available for interview

NOTES TO EDITORS

The IPPR paper, Guaranteeing the Right Start: Preventing Youth Unemployment after Covid-19 by Harry Quilter-Pinner, Sarah Webster and Henry Parkes will be published at 0001 on Friday 3 July. It will be available for download at: http://www.ippr.org/research/publications/guaranteeing-the-right-start
Advance copies of the report are available under embargo on request
IPPR estimate that youth unemployment (18-24) will increase by 620,000 by the end of the year, assuming projected proportional increases in unemployment by the Bank of England are mirrored in the youth population. This is in addition to the 410,000 already unemployed, taking the total to in excess of 1 million. This would be the highest number on record in the time series (based on ONS data) surpassing previous peaks in 1993 and 2011. It is possible that youth unemployment was higher in the 1980s but quarterly LFS statistics have only been published as a consistent and continuous series since 1992 (with no comparable data for the previous period). IPPR estimate the number of new claims since the crisis which could last 6 months or more based on the historic relationship between caseload and new claims to benefit, and assuming 28 per cent remain on benefit for 6 months+ based on analysis of data from previous recessions. Estimates are subject to uncertainty. For full details, see annex of the report.
This is the first in a series of papers produce by the IPPR Future Welfare State programme which will be examining pathways for reform and 'future proof' our welfare state for the decades ahead. Find out more about the programme here: https://www.ippr.org/future-welfare-state/
IPPR is the UK’s pre-eminent progressive think tank. With more than 40 staff in offices in London, Manchester, Newcastle and Edinburgh, IPPR is the UK’s only national think tank with a truly national presence. www.ippr.org