Labour’s Plan to Tackle Youth Unemployment Sparks Controversy
The UK government has launched a new initiative aimed at addressing the growing issue of youth unemployment. The plan involves using pubs and bars as part of a broader strategy to help young people on benefits find work. However, this approach has drawn criticism, especially as many hospitality businesses are struggling due to recent tax increases.
The government has announced an £820 million package designed to assist nearly one million individuals into employment. This includes job opportunities in various sectors such as bars, restaurants, construction sites, and care homes. The funding also covers training and work experience programs for 350,000 young people receiving universal credit. Additionally, some individuals will be offered ‘intensive support’ to help them secure jobs, while guaranteed government-backed positions will be available for up to 55,000 young people starting from spring 2026.
Work and Pensions Secretary Pat McFadden emphasized that refusing to engage with the available support without a valid reason could result in the loss of some benefits. He stated that “sitting at home doing nothing is not an option.” Despite these measures, concerns have been raised about the effectiveness of the plan, particularly regarding the hospitality sector.
Crisis in the Hospitality Sector
The hospitality industry is facing significant challenges, with many businesses on the brink of collapse. The sector has been hit hard by Labour’s national insurance contributions (NICS) raid in the 2024 Budget and recent increases in the National Minimum Wage. These factors have led to rising operational costs and increased regulatory burdens.
The British Beer and Pub Association (BBPA) warned that pubs could close at a rate of more than one per day in 2025. The industry body estimates that 378 pubs may close, resulting in the loss of 5,600 jobs. Michael Kill, CEO of the Night Time Industries Association, criticized the government’s announcement, stating that it risks missing the point entirely if the businesses creating jobs are being priced out of existence.
He added, “You cannot subsidise people into jobs that no longer exist.” While the association supports efforts to get young people into work, it feels that the government is giving with one hand and taking away with the other. The hospitality, nightlife, and visitor economy sectors are under immense pressure due to rising wage costs, higher taxes, and increasing operational expenses.
Rise in Neets and Concerns Over Funding
The extra funding comes amid a rise in ‘Neets,’ which refers to 16-24-year-olds not in employment, education, or training. Currently, 940,000 young people are considered Neet, with a 195,000 increase over the last two years. This rise is mainly attributed to higher rates of sickness and disability.
The Resolution Foundation warns that the number of Neets could reach one million for the first time since the aftermath of the financial crisis, when it peaked at 1.2 million in 2012. Work and Pensions Secretary Pat McFadden described the new funding as “a down-payment on young people’s futures and the future of the country,” emphasizing the creation of real pathways into good jobs and providing work experience, skills training, and guaranteed employment.
However, he rejected claims that the NICS raid and other changes, such as an increase in the national minimum wage, are making it harder for firms to hire young people. McFadden argued that this is an “international problem, partly impacted by technology, partly impacted by post-Covid factors.”
Criticism and Calls for Accountability
Conservative shadow work and pensions secretary Helen Whately criticized the government’s approach, stating that the Chancellor’s tax hikes are driving up youth unemployment and snatching a career from a generation of young people. She described the scheme as “taking with one hand to give with the other.”
Whately added that ministers cannot provide details on the roles, employers, or the number of positions that will still exist once the funding ends. She questioned the government’s ability to measure the success of the initiative, highlighting the lack of clarity and accountability.
The debate surrounding Labour’s plans continues, with critics arguing that the focus on pubs and bars may not address the root causes of youth unemployment. As the situation evolves, the effectiveness of these initiatives will be closely monitored.