Lord Altrincham
To ask His Majesty’s Government what steps they are taking to reduce the youth unemployment rate.
The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, too many young people are at risk of being left behind, without the right skills, opportunities and support to get started in work. This Government are determined to change that. We are developing a new youth guarantee with the ambition to give all young people access to high quality learning and earning opportunities. As a first step, eight mayoral strategic authorities began mobilising trailblazers to inform the future design of the youth guarantee. With adult skills moving into DWP, we are excited about the opportunities that we now have to bring together skills and employment to drive growth and opportunity in the labour market.
Lord Altrincham (Con)
I thank the Minister for her Answer and for her work and her commitment to young people. Unemployment for those under 30 is rising steadily. HMRC data every month this year has shown falls in payrolled employment of young people, offset by a small rise in employment for those over 65. Given welfare expansion, the enormous step up in personal independent payment expectations and the fiscal tightening on employers, where do the Government think that unemployment for young people under 30 will be in exactly one year’s time?
Baroness Sherlock (Lab)
My Lords, the noble Lord is right to flag that youth unemployment has been rising over the last three years. It is probably worth noting that there is always a higher rate of unemployment for young people than for older age groups; they tend to have higher rates of unemployment mainly because they are more likely to cycle in and out of the labour market around the age that they start into work. However, the trend is one that we need to watch, and he is right to raise it.
The noble Lord is also right to raise the fiscal context, but the real reason that I want to do something about this is not just for my colleague, the Chancellor of the Exchequer—keen though she would be—but because we do not want any young person to leave school and not have the opportunity to learn more or to work. We have tried various things in different Governments, and we have now decided not to leave anyone behind. We are developing a new youth guarantee with a clear commitment that every young person should be earning or learning. We have people in different parts of the country trying to work out what works in their locality, for their young people and their employers. We are transforming apprenticeships, investing in greater support for young people and making sure we identify those young people who are at risk. Frankly, if they are not in education, employment or training at 18 or 19, that is a real risk for the future. We need to find them and support them.
Lord Blunkett (Lab)
My Lords, I pay tribute to my noble friend’s energy, commitment and drive on this issue. Would she talk to her new Secretary of State, whose team might then talk to the Chancellor, about examining how we might learn from the New Deal for Young People, which was introduced in 1998? The number of young people aged 16 to 24 who are out of everything is not just a personal and moral challenge but a societal and economic disaster. We absolutely need to make this one of the main pillars of this Government’s policy in the next three years.
Baroness Sherlock (Lab)
I thank my noble friend and pay tribute to him. He was a reforming Minister in the last Labour Government and did lots of work in this area. I am conscious that I learned a lot from him in those days. He is absolutely right that this is both a scandal and a challenge for the economy.
One of the difficulties we have nowadays is trying to work out how we reach young people if they are not engaged in society. I was talking to an experienced youth worker recently, who said that she is worried about the range of young people who are simply off-grid. It is not just that we are not aware of them: they are not on benefits or claiming anything; they are simply disappearing. Part of our job is to go out there and find out where they are. For example, trailblazers in different parts of the country are looking at how you track down young people who are not on our radar and then support them, draw them in and engage them in their spaces.
We are trying to find more creative ways to do this. I have talked to young people for whom school just did not work—they failed or were failed by school. But it is possible that they will engage in different kinds of apprenticeships or skills-based training, and that work experience might draw them back in. Our job is to find these young people, work out what will make the difference for them individually and give it to them.
The Lord Bishop of Oxford
My Lords, I too welcome and commend the Minister’s passion and commitment. I recently met around 100 young people, as part of the work our diocese is doing, and their number one concern is the impact of technology and AI on their future jobs. There is now robust research in the United States on the likely impact of AI on entry-level jobs. Are the Government aware of that research and do they intend to commission research on the likely impact on the UK of artificial intelligence and strategies that might emerge?
Baroness Sherlock (Lab)
The right reverend Prelate raises a really interesting point, and I am very glad to hear that he is talking to young people individually. I would always be interested to hear more about what they say to him, because I find that I learn a lot more from what young people say than from what anybody else says.
He raised a really important point about AI, which I know is an area in which he does a lot of work. We are starting to witness the impact of AI in the labour market, but there is uncertainty over the scale of that impact, especially over the next four years. The Government are planning against a range of plausible future outcomes. A lot of work is going into this in government. Most forecasters project that, in the end, AI will lead to a net increase in employment but with varying impacts across different sectors and for different people. When you get this kind of change and churn in the labour market, the people who lose out most are those at the margins. Our job is to try to make sure that we give those who would otherwise not succeed the skills to do so. For example, the Government are investing to transform apprenticeships and looking at more shorter courses and ways to give young people a chance to gain skills in new areas, such as digital and AI. We are conscious of it and are very much working on it.
Lord Palmer of Childs Hill (LD)
My Lords, building on an earlier question and the Minister’s reply, she will be aware that, as well as young people claiming unemployment benefits, large numbers of them are not in education, employment or training. Given the lasting damage that long periods out of the labour market can have, especially at the start of a young person’s working life, what urgent steps—I stress the word “urgent”—is the Minister taking to meet the particular needs of this group? She has explained what we are doing long term, and I am grateful for that, but this is an urgent matter and so I would like to know what we are doing urgently.
Baroness Sherlock (Lab)
I have just talked about what happens with young people who are hidden NEETs, as he describes. Let me turn to those who are NEET who we do know about—for example, those on sickness or disability benefits. The Government are determined to transform that. The noble Lord will have seen our Pathways to Work Green Paper, in which we describe wanting to create a new transition phase for young people from 18 to 21, such that, if they are looking to go on to sickness or disability benefits, we will treat them in a special way. We will support them from the beginning and give them the kind of help that they need. A lot of help is already out there; there is help for people with mental health and physical health issues. The bottom line is that almost everybody should be able to get a job. A small minority will not, but most will. Our job is to help them.
Baroness Stedman-Scott (Con)
My Lords, KPMG and the Recruitment and Employment Confederation have launched their August 2025 jobs report. Permanent placements fell for the 17th consecutive month. The number of candidates looking for work has increased, fuelled by redundancies, fewer job openings and economic business threats. Merck has pulled the plug on a £1 billion research site, and the prospect of the Employment Rights Bill and its impact is sending economic shivers down the spines of business. At the end of the list, as the Minister has said, are young people who are struggling to enter the labour market for the first time. I am grateful for the explanation about the programmes that the Government are undertaking, but can the Minister tell us what work they are doing with employers—the only ones that can create jobs—to incentivise them to help young people and integrate them into their workforce?
Baroness Sherlock (Lab)
My Lords, the noble Baroness commented on vacancies. She is very aware, as I am, of the facts of the economy and will know that vacancies have been declining steadily since spring 2022, when they reached a historic high. The decline in vacancies is a continuation of longer-term trends, but the noble Baroness is absolutely right: our job is to make sure that we give young people the chance to do this. She will know, for example, that employers who take on a young person under 21 or an apprentice under 25 are given complete relief on basic national insurance class 1 contributions until they hit £50,000. That makes a real difference. Above all, what will make a difference, if we want employers to take on young people, is to make them worth having. We have to skill them up, and give them the confidence to get out there and the ability to work in the workplace. That is what we are investing in now.