Welfare Reforms and Youth Unemployment

Thursday 11th June 2026 Lords Chamber

Motion to Take Note

11:52

Moved by

[Lord Evans of Rainow]

That this House takes note of the economic implications of the Government’s approach to welfare reforms and the current levels of youth unemployment.

[Lord Evans of Rainow (Con)]

My Lords, I pay tribute to my noble friend Lord Younger on his 15 years’ service on the Front Bench. He was an outstanding public servant and is very much missed in your Lordships’ House.

All of us can remember our first job and the moment we got our first pay cheque—or, depending on how old you are, pay packet: cash paid in a little brown envelope with holes in it. My father was a wages clerk, and he always told me to open it instantly and count how much was in it. My first pay packet was £10 and I bought myself sweets, clothes and Airfix models. Then I moved on to working in my local pub, the Farmers Arms in Poynton, as a glass collector and bottle washer—hospitality and retail.

High streets and the NEET issue are inseparable. Hospitality and retail provide jobs in every high street in the UK. Hospitality and retail jobs are part of the answer to youth unemployment. Your first job is your first step. With businesses struggling with increased costs and additional taxes, they have been forced to cancel recruitment plans, cut staff hours and, in the worst cases, close. This has acutely affected part-time, entry-level and first jobs, feeding directly into today’s NEET crisis.

Let us look at some economic data and facts. Nearly 1 million young people between the age of 16 and 24 in the UK, one in eight, are NEET—not in education, employment or training. At the end of 2025, that figure was registered as 957,000 young people. If they formed a city, it would be the third largest in the UK, larger than cities such as Leeds, Glasgow and Cardiff.

This is a long-term issue, as over the last 25 years the NEET rate has fallen below 10% only during the Covid-19 pandemic, while at the end of 2024 it reached the highest level in a decade, 13.2%. The UK has a higher-than-average rate of young adults who are NEET compared to similar countries in the EU and the OECD. The EU average for 15 to 24 year-olds was 9% NEET. The UK used to be around the EU average, but now only Romania has a higher NEET rate. France had a similar NEET rate when it entered the Covid pandemic in 2020, but it is now lower. Denmark’s NEET rate for 15 to 24 year-olds was 8.4%. The Netherlands is currently around 4.1%. The UK has gone from being average to being an outlier.

In the early 2010s, most NEET young people were unemployed, seeking employment and ready to start. Now only 43% are. The other 57% are economically inactive. This is driven most by an increase in inactivity among men since the Covid pandemic. Six in 10 NEET young people today have never had a job, going up from four in 10 in 2005.

The duration that a young person is NEET makes a big difference on returning to employment. Some 65% of those who are NEET for less than a year return to employment the following year, but only 25% of those who are NEET for more than a year do so. While there are 7 million more jobs in the UK than in 2000, the number of workers who are under 25 has fallen. Young people have gone from making up one in seven workers to one in nine. At the turn of the millennium, 63% of young people were in work, but now it is barely 50%. In contrast, the employment rate for 25 to 64 year-olds rose from 74% to 80% over the same period. Unemployment among young people was 9% in 2022. It is now 16%. More than 250,000 young people have been unemployed for over six months, the highest number since 2015.

The Young People and Work interim report, the Milburn review, estimated that the NEET rate could increase to over 16%, or more than 1.25 million young people, within five years. Over the last decade, the proportion of those who say they are NEET due to a work-limiting health condition has gone up by 70%. The proportion of NEET young adults who are inactive due to sickness or disability has gone up from 11% in 2005 to 28%. The proportion of disabled NEET young adults who cite mental health as their main health problem has risen from 24% in 2011 to 42% in 2025. All those who fell into ill health-related economic inactivity between 2017 and 2019, almost eight in 10, were still NEET more than two years later.

A young person who first claimed health and disability benefits in 2019 is one-third more likely to be NEET five years later than someone who first claimed in 2010. Between 2010 and 2020, the proportion of young people leaving disability benefits within five years dropped by 40%. Today, around seven in 10 young people claiming a health and disability benefit are still claiming a decade later.

The Milburn review found that only one in five NEET young people in England are getting meaningful employment support from the welfare system. Around half the young people in the UK do not claim benefits and so are hidden from the system. Of those who claim benefits, only one-third get meaningful support in finding employment, and these are often those who face the least barriers to work. Almost half of those who first claimed a health and disability benefit aged 16 to 24 are not in work or education 15 years later.

A young person who first claimed health and disability benefits in 2019 is 34% more likely to be NEET after five years than someone who first claimed in 2010, but this is different from what those surveyed for the Milburn review claimed they wanted. In a survey carried out for that review, 64% of NEET young people said they wanted to find a job or an apprenticeship, and 19% wanted to enter education or training. Of the young people who are claiming disability or health benefits and were surveyed by the Milburn review, 90% are working and 49% believe that they could work, either now if the right support was available or in the future if their health improved. Only 32% feel that they will not be able to work again.

This is not what the system supports. Less than half of the total £8 billion currently spent on key benefits for young people aged 16 to 24 has any participation support or requirement attached to it. It is an issue that affects the whole system. More than 4 million people claim universal credit, with no requirement to look for work. In 2024-25, DWP spent less than £0.2 billion on funding employment support programmes for young people, plus a share of the £1.4 billion spent on jobcentres, which support all ages.

The Milburn review estimated that, in 2024-25, £25 was spent on benefits for young people for every £1 on employment support for them. The amount of money spent on PIP for young people alone is expected to rise from £3.2 billion to £6.5 billion by 2031-32. The Milburn review estimated that, if the spend on DWP employment support stays at the levels currently funded through the youth guarantee, by 2030-31, for every £1 spent on employment support for young people, around £10 will be spent on welfare support for them.

The Milburn review estimates that the cost to the 45% of today’s NEET 24 year-olds who have never had a job will be almost £300,000 in earnings over the course of their lifetime. Their cost to the state could be up to £240,000. The estimated direct total potential output lost due to NEET 18 to 24 year-olds is £38 billion, and the estimated scarring impact on output is £63 billion. The estimated forgone tax revenue for 18 to 24 year-olds who are NEET is £3.2 billion and the estimated scarring forgone revenue is £10.8 billion. The cumulative annual cost to the UK of almost a million NEET young people is £125 billion. The UK’s welfare expenditure is set to rise by £18 billion this year, up to around £333 billion. That is an eye-watering figure, given that we need to spend more on defence and elsewhere.

When I was a Member of Parliament in the other place during the coalition Government, the Conservatives’ approach, working together with the Liberal Democrats, achieved some significant thresholds. Workless households fell to a record low; there were over half a million fewer children growing up in workless homes; youth unemployment was cut in half; and £20 billion was saved from the annual welfare bill. OBR analysis concluded that UK government policy reduced social security spending by £19.6 billion in 2015-16 alone, relative to the 2010-11 baseline. That shows how, by working together cross-party, savings can be made that are fair to the recipients of welfare but also fair to those taxpayers who have to pay for it.

What about the employers who will employ young people? Make UK, the manufacturers’ representative association, has set out a range of challenges, from an employer perspective, that are making it more difficult to recruit, train and retain young workers. It cites overall employment costs as the most significant concern for manufacturers in 2026, as overall hiring appears to be slowing as a result of higher costs. There are constraints on apprenticeships, with a lack of the right local provision, while increasing training and employment costs are limiting employers’ capacity to offer apprenticeship opportunities. On wider skills and technical education, there is insufficient exposure to vocational and technical routes, while lack of employer engagement from schools is limiting awareness and understanding of skilled employment opportunities for young people in sectors such as manufacturing. Consistently high increases in both the national living wage and national minimum wage and their age-based rates, plus the proposed reduction in the national living wage age threshold to 18, mean restricting opportunities for young people. On labour market regulation and the Employment Rights Act 2025, measures such as the right to guaranteed hours may limit opportunities for young people to be employed flexibly.

At the beginning of my speech, I mentioned hospitality and retail, which cite the tax burden that recently fell upon the sector. Since the 2024 Budget, the hospitality sector has been battling an increase of £3.4 billion in annual costs and, more recently, an existential crisis in business rates. Hospitality has been disproportionately and repeatedly hit with taxes by successive Budgets. The sector has accounted for nearly half of all job losses in the UK since the Budget, confirming that it is the hardest hit by tax increases. Hospitality is the biggest employer of young people, with 39% of its workforce being 16 to 24 years old, by far the highest of any sector. Young people have typically been able to rely on a job in their local high street as their first job, and job losses in the hospitality sector affect them most acutely.

The changes to employer national insurance contributions brought in at the 2024 Budget are costing the hospitality sector £1 billion annually. Employment costs hit every part of the workforce, but particularly young people. A student working 14 hours at the weekend would mean £1,140 more in employment costs. Last year saw a 25% year-on-year drop in summer jobs, evidencing the loss of job opportunities for young people. High employment costs have had a knock-on effect in limiting job opportunities for young people and reduced footfall in the high streets. High-cost employment is high-risk employment; hospitality offers many people their first job and is a vital first step on the career ladder for many young people. The Government must de-risk businesses employing the least trained and least experienced in the economy, by reducing employment costs and ensuring that part-time and temporary work is affordable for businesses to offer.

Job losses in the hospitality and tourism sector are collateral damage to the Government’s NEET mission. The industry is leading the way, providing 25% of all entry-level jobs. Will the Government rethink any fiscal measures that threaten further job losses in hospitality and elsewhere to provide accessible jobs for everyone, everywhere? Why was hospitality not included in the Government’s industrial strategy? Again, that would have helped young people gain good-quality apprenticeships.

Finally, we are still awaiting the Government’s response to the 2025 Lords report on social mobility, which was completed in December last year. The Government should have reported back by February this year. With exceptional delays, if a response is likely to take longer than two months, the responsible government department must write to the specific committee, explaining the delay and providing a revised timetable. With this in mind, can the Minister take this opportunity to ask her departmental officials to update your Lordships’ House on the Government’s response to this important Lords report on social mobility, which is highly relevant to all those NEETs who are no longer or have not started in the workplace? I beg to move.

12:07

[Lord Walker of Broxton (Lab)]

My Lords, it is a pleasure to follow the noble Lord, Lord Evans, and I congratulate him on securing this debate. I must declare an interest as the executive chairman of Iceland Foods.

Hanging on the wall in our boardroom is a framed version of the company’s guiding values. It proclaims just four things: Simplification, Focus, Urgency and Accept Reality. There is also a framed picture of a cartoon, in which half a dozen people are sitting round a board table and the chairman is saying:

“Instead of risking anything new, let’s continue our slow decline into obsolescence”.


Business success is not about being ruthless; we are always in the Sunday Times list of best companies to work for. It is about being a business that can thrive, grow, adapt, change to circumstances and move quickly to outfox the competition. In doing so, wealth and jobs are created, taxes are paid and society benefits.

As I said in my maiden speech, I support the Labour Party, not the “Benefits Party”: a party that promised to be pro-growth, pro-business and on the side of the builders, not the blockers. Yet hard truths must be spoken, because we cannot keep kicking the can down the road.

We must urgently reform the welfare system so that the safety net catches those who truly need it, not those who choose it as a lifestyle. But let us jettison the worn-out stereotype of who constitutes the biggest drain on our benefits system. We should have the courage to challenge the pensions triple lock. It is mathematically unsustainable, politically untouchable and profoundly unfair: we all know it. As for the epidemic of youth unemployment, it is a tragedy that will be made worse by the challenges of AI but also because the reality is that incentives to work are diminishing.

The bottom line is this: we will cure the problem only by growing the economy. It really is that simple. I was happy to support Labour in 2024 precisely because it promised a growth-first mission. Yet I have to confess that progress has been slower than I imagined, and in my short time working within No. 10 as the cost of living champion, I have been disappointed to find out how hard it actually is to get stuff done, a frustration that I know the Prime Minister shares. I recently presented a comprehensive report to No. 10, setting out practical steps that could be taken immediately to ease the pressures facing many households, including young people. The report focuses on energy debt relief, winter energy affordability, faster support payments, action on consumer rip-offs and reform of punitive debt collection. These recommendations need to be translated into urgent action; let us see what No. 10 does with it.

On the broader stage of the national economy, we need to break out of the endless cycle of consultations and procrastination and actually get stuff done. To grow the economy, the Government need to be more business friendly. It is only business that creates wealth and jobs and pays tax. I repeat: it is only business that can grow the economy. If time permitted, I could list 100 things the Government could do today to help businesses prosper, thereby driving down youth unemployment and reducing the need for welfare. But in brief, my recommendation is: put those two framed pictures we have at Iceland’s HQ in every single office within government. Simplicity, focus, urgency and accepting reality are the proven keys to success, and that really would be trying something new. The hour is late, the stakes are high and it is time to choose. Adapt and thrive, or drift and die.

12:12

[Lord Shipley (LD)]

My Lords, it is a pleasure to follow the noble Lord, Lord Walker of Broxton. He has a huge amount of practical advice but, as he said, we cannot keep kicking the can down the road. Youth unemployment, he said, was a tragedy, and I agree with him. We have seen it rise in recent times. I thank the noble Lord, Lord Evans of Rainow, for enabling us to hold this debate, which is timely in the context of the Milburn review.

First, welfare support should not be removed from young people if there is no work for them to do. Young people do want to work; they do not prefer to live on benefits. I have been a member of two Select Committees reporting in recent years on youth unemployment. I chaired the Youth Unemployment Committee that reported Skills for Every Young Person in November 2021. It had been the proposal of the noble Lord, Lord Baker, from whom we shall hear shortly; I look forward to that. We identified a huge skills mismatch between the needs of employers and the qualifications of young people leaving school. We identified deficiencies in the digital skills of young people. We were concerned by the narrowness of the national curriculum. We saw the need for more technical and vocational education and more apprenticeships for school leavers. We understood the importance of work experience and the capacity of employers to meet demand.

I was then a member of the committee chaired by the noble Baroness, Lady Morris of Yardley, which late in 2024 produced a report, Think Work First, on the transition from education to work for young disabled people. We know from Mencap that 86% of young people with a learning disability want a job. The noble Baroness, Lady Morris of Yardley, said that the report provided a blueprint for the new Government to implement their manifesto commitment to getting more young disabled people into work, and to bridge the gap between education and work for them. Two key proposals were supported internships and better career support in schools, to which I think we should add more face-to-face assessments for those being interviewed for personal independence payments and the decisions around that.

What has happened? We heard from the noble Lord, Lord Evans, that more than 1 million are not in education, employment and training and the number is growing. Youth unemployment today stands at 16.2%. The long-term impact of Covid, the rise of AI and the lack of entry-level jobs all add together to make the picture worryingly bleak. Crucially, half of those not in education, employment and training have never worked. Yet the cost of youth unemployment is £125 billion in benefit payments and lost tax revenues taken together. DWP statistics show that for every £25 spent on benefits, only £1 is spent on helping young people into work; I find those to be astonishing figures. I have concluded that the DWP is too centralised: we need to devolve now to combined authorities and mayors and to give them a clear responsibility to deliver a reduction in NEETs and a real increase in youth employment in their areas.

We can compare ourselves with the Netherlands, where there is stronger vocational education and better, more targeted financial support for business. There is a work experience system and a welfare system that promotes engagement by young people. Municipal authorities, not central government, run welfare programmes.

The noble Lord, Lord Walker of Broxton, was very helpful about the need to support employers. The Government’s youth guarantee is good but it needs to be part of a package of tax incentives, and the truth is that the national insurance rise has been a significant disincentive. To conclude, too many young people are leaving school without the skills that they need to succeed or that employers need. Support through coaching is insufficient. I remember our taking evidence from young people who said that the jobcentre saw them as statistics. The jobcentre’s objective was to get the young person into a job, whether or not that job was suitable for them or might lead them to a career. We have to get coaching of individual young people so much better.

12:17

[Lord Cameron of Dillington (CB)]

My Lords, it is a pleasure to follow the noble Lord, Lord Shipley, and a particular pleasure to hear the speech of the noble Lord, Lord Walker. I could not agree more with almost everything he said. I declare my interest as a retired member of a farming family in Somerset, and I will talk about rural youth unemployment.

Our rural youth has special problems, mostly to do with transport and the distances involved. The great question for the rural young is: how do I get to a job without a set of wheels? There is no other way to get to a job at 7.30 am in a place that is 10 miles away without your own set of wheels. But how do I get a set of wheels without the money from my first job? It is a Catch-22. The simple answer is that you lend the youngster a moped. There used to be hundreds of these Wheels to Work schemes around England doing just that. After a short training session, the youngster was lent a moped free of charge; after six months in work, they had to give it back and get their own set of wheels. The scheme was funded by local authorities and the DWP, but then local authorities ran out of money, as we all know, and the urban-based DWP simply did not get it. It did not get the fact that these schemes cost less per head than the social security benefits otherwise payable to these youngsters, who if they had been helped into work would probably never trouble the welfare state again for the rest of their lives. Sadly, nearly all these Wheels to Work schemes have died.

These schemes help youngsters get to training courses, and that is a problem in itself. Technical colleges can be 15 to 20 miles away, so now most aspiring youngsters have to cadge beds from their fellow pupils living in the town, sofa-hopping until their welcome runs out. Sometimes, it is easier just to launch yourself into some sort of self-employment. Rural England has twice as many self-employed people as a percentage than urban England, and some counties—my own county of Cornwall, for instance—have five or six times as many. We are an enterprising crowd, but we could really benefit from help, training and advice.

I came across a scheme at Loch Lomond, which I think should be replicated all around the country. Youngsters applied to the national park authority, which organised tuition classes, paid for by the youngsters themselves. It was simple stuff, such as budgets, cash flows and marketing, but important if you want to earn your own money by mending bikes or computers, fitting IT routers or cleaning windows. Helping a percentage of the rural workforce to earn their own money rather than draw the dole must make a difference, both to them and to the Treasury.

Small rural family businesses have always tried hard to give local youngsters a start in life. These businesses have always been and felt part of their community, so it is ingrained in their ethos. But whereas in 2020 employing a 21 year-old cost £17,000 per annum, now, in 2026, it costs £29,600, and no small business can afford to employ an untrained 21 year-old at that price. Who loses? The 21 year-olds, of course. Just when they are on the springboard of a working life, it collapses beneath them. The other loser is the Treasury, because it has to pay benefits to these now unemployed 21 year-olds, as opposed to receiving probably their lifelong payments of tax.

I will stop there. We are an enterprising lot in rural Britain. We have many more businesses per head than the towns. Our youngsters would love to join this world of work, but they need that extra help to enable them to do so.

12:22

[The Lord Bishop of Leicester]

My Lords, I am grateful to the noble Lord, Lord Evans of Rainow, for securing this debate and to all taking part. Noble Lords may differ on the diagnosis but I think the whole House shares the same concern for the young people behind these figures.

I begin by noting that none of us likes to be labelled, and the use of acronyms to refer to people is even more disconcerting. Each young person is unique and precious, whatever their circumstances, and their dignity must be at the heart of our concerns. I also want to push back on the narrative which we often see in the media—that the rise in young people who are not in education, employment or training reflects a generation that has no appetite for work. The evidence simply does not bear that out.

Research by the Learning and Work Institute shows that the vast majority of young people who are not in education or training—84%—had clear career or educational aspirations. Only 6% said they did not want to find work. Nor is it a case of unrealistic aspirations. Only 4% said they were waiting for an opportunity in a specific sector, whereas 17% said they planned to find any job they could. Similarly, research by the King’s Trust showed that one in five young people who are not in education, employment or training are applying for jobs every single day. Almost one-third have applied for jobs they did not even want, out of sheer desperation to get a foothold on the labour market. One in six had been rejected from more than 50 positions, and more than half said they feel embarrassed about not having a job. That is not a picture of idleness. It speaks of a generation knocking on doors that are just not opening for them, because more than half of so-called entry-level vacancies now demand prior experience—on average, nearly three years of it.

We should be especially wary of stigmatising young people and suggesting they have a poor work ethic or a lack of realistic ambition, because the more that narrative takes hold, the more reluctant employers will be to take a chance on them. We will, in other words, perpetuate the problem which we want to solve.

If the problem is not a lack of work ethic then the solution is not necessarily tough love. It is, at least in part, confidence, coaching and a community that believes in them. I want to recommend a model that does precisely this: the Spear programme, run by the charity Resurgo and delivered through local churches. Spear began in 2003, at St Paul’s Church in Hammersmith, as a response to the unemployed young people on its own doorstep. It has since grown to some 18 centres across the country and works with over 1,000 young people each year, all of whom face multiple significant barriers to work—from mental health issues to criminal history and adverse childhood trauma. The programme involves six weeks of group work and one-to-one coaching that tackles the psychological barriers as much as the practical ones—confidence, mindset and resilience—alongside CV writing, interview practice and job search skills. It is followed by up to a year of ongoing support, as each young person moves into work or education and, crucially, stays there. Around three-quarters of those who complete the programme are in work or training a year later—a figure I am sure noble Lords will agree is remarkable.

What I want to draw out for the House from this model is the importance of a supportive community in helping marginalised young people into work and the importance of a trusted adult to journey with each young person. As Ministers build out the youth guarantee, I urge them to recognise that the availability of placements on its own is not enough for young people who face multiple barriers to work. Many young people need the intensive personalised confidence-building support of organisations such as Spear to provide for and help them as they seek to find placements. The positive ripple effects of these will be generational, passed down to their children, as well as being important for wider society as a whole.

12:27

[Baroness Shephard of Northwold (Con)]

My Lords, I congratulate my noble friend Lord Evans of Rainow on introducing this important and timely debate.

Successive Governments have had to deal with rising levels of youth unemployment for a range of reasons, including economic shocks, deindustrialisation and changing patterns of demand. I recall from earlier years, as no doubt other noble Lords do, initiatives such as youth training schemes, training and enterprise councils, and new qualifications such as NVQs—not perfect solutions, but constructive and collaborative. They involved close working between government, both national and local, along with employers, further and higher education, and training providers.

Today, we have the aftermath of Covid, the world economic situation, war, the influence of social media and the implications of AI—uncertainty on all fronts. The Government need all possible co-operation from business and employers, but that is not what they have provided, which is higher national insurance costs, increased national minimum wage and business rates, new workers’ rights legislation and more regulation. These are disincentives for business stability and expansion. Employers are reluctant, even unable, to take on more staff to provide those vital first job openings for any staff they may not be able to retain. There is, as has already been pointed out, a chronic shortage of part-time job opportunities for young people, such as paper rounds or part-time work in cafés and shops, making progression to full-time work even harder for the young. These issues are difficult enough, but other government policies are exacerbating the grievous situation, especially for NEETs, as exposed by Alan Milburn’s recently published report.

The complete chaos and uncertainty caused by this Government inflicting an uncertain future on local government has already been mentioned in this debate. Local government is a provider for those with special educational needs, a key further education provider and a partner with the business sector in apprenticeship and training schemes. How can collaborative partnership proceed when there is currently no clear future for the whole sector, as pointed out in the Milburn report? As has already been mentioned by the noble Lord, Lord Cameron, there are particular problems for rural communities, where there is less visible aspiration and transport is expensive and often non-existent. The Government’s apparent hostility to such communities, as shown by them loading them with tax after tax on their livelihoods and their very future, provides a bleak landscape for unemployed young people.

As I have said, rising youth unemployment has been a problem faced by successive Governments, but some of the facts revealed in Alan Milburn’s unflinching report on NEETs are mind blowing. NEETs account for one-quarter of all pupils and half of all those ending up on benefits in their late 20s. In this country, we spend 25 times as much on benefits for NEETs as we do on helping them back into work. That cannot continue. As the noble Lord, Lord Walker, has already pointed out, Alan Milburn has described the situation as “scandalous”. His report has this clear message to the Government: if the Government’s

“priority is to create young people’s jobs, then it’s got to create the right conditions for employers to do so”.

So far, they have not.

12:31

[Lord Baker of Dorking (Con)]

My Lords, I very much welcome the opportunity in this debate to explore why youth unemployment is so high in our education system. It is deplorable that we have 1 million young people aged 16 to 24 who have never had work and who, as the right reverend Prelate the Bishop of Leicester said, want to work. The education system has failed. This debate gives us a chance to examine what is wrong with our education system and secondary schools.

The problem with our secondary schools, and the reason why unemployment is so much lower in Europe, is due to the fact that, in Europe, all the countries that my noble friend Lord Evans mentioned teach technical and vocational education to students aged under 16. Our bog-standard comprehensives do not teach students at all, and they leave school with no employability skills. It is not their fault.

When you want to know what employability skills are, you should look at the information that the Nuffield Foundation has sent to all Peers for this debate because it lists employability skills. The first is collaboration; students at school should have experience of working in teams. The second is communication, so that students can persuade their future employer of what they have learned and how it has inspired them. The third is creative thinking: organising, planning, prioritising, problem-solving and decision-making. These are not taught in our secondary schools today. It is an indictment of Conservative Governments and Labour Governments that, since the turn of the century, they have not made any significant change in this, whereas in Europe there is lots of technical education for those aged under 16. That is why, 15 years ago, Lord Dearing and I created a new type of school, a university technical college, for 14 to 18 year-old children. Children who attend those schools leave with employability skills. That is what this country needs in a much greater area, and it is very disappointing that it is not developing at all quickly.

Just before the Government came into power, the unemployment rate in Britain was about 13%. Two and a half years later, it has gone up to 16%, and Alan Milburn thinks that it could well be much higher than that by the time of the next election. It therefore makes sense to consider what changes must be made to our education system.

Some 15 years ago, I developed with Lord Dearing a new type of school called a “university technical college” for 14 to 18 year-old students. We have 21,000 students. Last September, we had to turn 6,000 away because so many of our colleges are oversubscribed. Our unemployment rate is not 15.8%; it less than 4%. That is because 20% of our students become apprentices, whereas that figure is only 3% in an ordinary school. You must realise that heads of schools do not want to encourage apprenticeships because every person they lose to an apprenticeship costs them £6,000 in funding, so they do not promote apprenticeships. Some 50% of our students go to university to study STEM subjects or the humanities. The rest get local jobs because they have worked with the companies that support them.

I believe that we should have many more of these technical schools. We had 300 technical schools in 1945, which were, in fact, abolished by snobbery. The technical schools that we have now are the best we have ever had, and I would like to see expansion. I would like 300 of them, but I am not going to have them, because no schools will be built in this country for about five or 10 years. We have therefore got to change the existing bog-standard comprehensives to include practical technical education. We have devised a scheme whereby we can insert a sleeve of technical education for 14 to 18 year-olds into every comprehensive. We would give advice and explain what equipment they need, the subjects they need to study, et cetera.

We have umpteen schools that now want a sleeve, where students choose whether they follow the technical route or the academic route. I am glad to say that the first of these sleeves will commence in Barrow-in-Furness this September. Currently, BAE Systems cannot recruit from Cumbria any students of the quality that it wants, but soon it will be able to. It costs £2.5 million to provide a sleeve, whereas building a new college would cost £25 million, so it is the cheapest and easiest way of improving technical education in our schools.

The Minister replying this afternoon likes UTCs—she has listed three of them—and the Secretary of State likes them too. Will they please therefore support the idea of the UTC sleeve for bog-standard comprehensives? That is the biggest and cheapest way that we can reduce unemployment.

12:38

[Baroness Fox of Buckley (Non-Afl)]

I thank the noble Lord, Lord Evans of Rainow, for this debate. Its urgency is exemplified by Alan Milburn’s important review of young people and work, which, as people have said, is brimming with shocking and scandalous revelations. Not only are 1 million young people aged 16 to 24 not in work or education, but 61% of NEETs are not even looking for a job, and Britain spends more on health and disability benefits for that age group than it does on apprenticeships.

Of course, there are lots of factors stacked up against the young, some of which we in Parliament are responsible for, including the counterproductive jobs tax that we have heard about and the consequences of uncontrolled mass migration distorting the labour market. However, we should be wary of suggesting that these are insurmountable external problems because that could fuel an exaggerated sense of grievance or fatalism among the young and a sense that there is nothing they can do to get a job and it is not their fault.

I agree with Alan Milburn that what is at stake is,

“more than an economic crisis, it is a moral one”.

However, I am a bit disappointed that the review does not dig deeper into reasons and solutions for why so many young people are detached from the world of work. I agree with the review’s argument for a participation-first welfare system, but the barriers to participation are not always external.

The moral question is why so many young people are alienated from participating per se, and why there is a seeming rejection of the work ethic. On this, I am definitely at odds with the right reverend prelate the Bishop of Leicester—it is not the first time I have been at odds with the Church, but there we go. In another recent report, Inside the Mind of a Young NEET, the authors note that

“Many young people told us they wanted to work but felt they could not immediately cope with 35 or 40 hours a week”—


cue a slew of proposals to offer part-time supported work opportunities, trial shifts and so on to help build confidence. But is that not pandering to low expectations and creating new dependencies? Do we not need to interrogate why past generations of young people grasped full-time work as an opportunity, a rite of passage to adulthood? Today, so many, too many, feel themselves unable to cope.

Similarly, employers report that it is younger employees who are most keen to work from home. They cite everything from travelling to and from work being too stressful, to anxiety arising from being forced to spend so many hours with strangers they have nothing in common with—otherwise known as fellow workers. Then there is the boss and work discipline; strict time-keeping and the expectation of productive outcomes are characterised as oppressive or even bullying. Rather than challenge such low levels of resilience, HR departments and policy experts attempt to reshape workplaces to accommodate demands.

Of course, I am generalising and caricaturing, a bit at least, and no doubt Alan Milburn would scold me, because he worries that it is too easy to tell the NEET story as being about a generation that is less resilient and more snowflakey. Perhaps I am victim-blaming, but I work with young people at the Academy of Ideas who I think are fantastic, and they and I share some worries about their generation. I fear that we, the grown-ups, are facilitating the internalisation of a victim narrative in the young, infantilising them and institutionalising a self-justification for non-participation—that they are too fragile to cope with the rigours of working, just too vulnerable to take responsibility for transcending challenges.

In this climate, it is unsurprising that one growing, normalised explanation for NEETdom is psychological illness. There is a well-documented huge surge of allegedly debilitating mental health conditions such as depression and neurodivergence. We accept these accounts of distress uncritically, and even without medical diagnosis. When we heard last year that 63,000 students went straight from university on to long-term sickness benefits, we might note that recently, Oxford University agreed to give 25% more exam time to students who said that they had ADHD, without any formal diagnosis. The university explained that seeking diagnostic documentation is an onerous administrative burden and a barrier to inclusion of disabled students.

I used to work in mental health, and back then we worried about the stigma of disability labels. Now, in an era of identity politics embraced by many politicians, identity labels afford privileges and entitlements, so the young are desperate to acquire medical labels and we reward them. Policymakers have also encouraged pathologising the ups and downs of everyday life. We have medicalised social media use as addictive, and academics issue trigger warnings on classic texts to prevent students suffering post-traumatic stress disorder from exposure to difficult or offensive content.

In fact, many of the worst habits exhibited by the young in relation to work can be traced back to us. Let us not forget, in lockdown we taught the young that health trumps everything—work, school and the economy. For me, welfare dependency is the tip of the iceberg. I am glad that we are examining the tip, but we have a lot further to go.

[Baroness in Waiting/Government Whip (Baroness Blake of Leeds) (Lab)]

I remind the House that this is a time-limited debate. Any extra time Members take will be taken off the Front-Bench response.

12:43

[Lord Liddle (Lab)]

My Lords, I congratulate the noble Lord, Lord Evans of Rainow, on securing this debate and on the largely non-partisan way in which he explained the problem.

I would love to see cross-party consensus on welfare reform, but if we are to get that, I totally agree with my noble friend Lord Walker that it has to examine the challenge of the ageing society and whether we can continue to support the pension triple lock and all the costs of NHS and social care, which, if we are not careful, produce great generational inequality in Britain. Something has to be done to address that.

On the Milburn report, first, I would like to say that it is brilliant. The way in which Alan Milburn and Pat McFadden are going about trying to get positive change in this policy area is an example that the rest of our Government here should follow. They are making a really powerful argument for change with compelling clarity, and we want more of this from our Government. They also make it clear that there are no simplistic solutions to this problem. I agree with Tony Blair that the Government made a mistake in putting up national insurance as a way of raising taxes—we should have done something else—particularly in lowering the threshold at which national insurance is paid, which hit low-paid starter jobs particularly hard. However, changing that is not going to change what is a very complex problem, as the Milburn report has outlined.

Part of this is a classic story of social exclusion, and the Government are doing a lot through Early Years to try to get more children school ready by five. The report demonstrates that it is children who are not school ready at five who are much more likely to be jobless at 18. We are doing good work there. There is also a problem of poor school attendance among the less able children. This is a question of education reform, as the noble Lord, Lord Baker, explained to us; we have to be better not just at training kids to pass exams but at giving them skills. The system is not well organised for that. However, it is a much bigger problem than social exclusion. After all, 30% of NEETs have good GCSEs, 20.1% have level 3 qualifications, and 15% have a degree, so it is not just a problem of social exclusion.

The most interesting part of the report, which was new to me, was the changing nature of the labour market and how the supply of entry jobs has gone down. This has not happened under the Labour Government in the last two years; it is much more of a long-term trend. We remember Norman Tebbit saying that you had to get on your bike to find a job. Nowadays, Milburn tells the rather pitiful story of young people who make hundreds of applications by email and typically do not even get an acknowledgement. So that is an issue.

We have to have more incentives for employers to provide apprenticeships, which have fallen by 35% since 2019. What the Government are doing there is right. We have to have an extended job guarantee, as we had in the early 1980s through the Manpower Services Commission. There are lots of ideas that need to be explored. This is one of the great social challenges of our time, and we must address it.

12:49

[Lord Willetts (Con)]

My Lords, I congratulate my noble friend Lord Evans on his excellent introduction to this debate, full of relevant facts and analysis. Indeed, we at the Resolution Foundation—I declare an interest as its president—have tried to contribute to such an analysis. It is absolutely clear that this is a British problem. The NEETs rate in the Netherlands is 5%; in Britain it is 15%. This is not some pervasive problem of young people affected by social media. Other countries do better, and we should be able to raise our game. Part of the problem is simply the cost of employing young people. We have had some examples of those costs already, but it is worth recording that the minimum wage for young people this year is going up by 8.5%, compared with 4.1% generally. Does the Minister accept that the time has come to halt or pause the process of aligning young persons’ minimum wage rates with the wider adult population’s, because it is one of the factors driving the increase in unemployment?

There is more that we can do to lower the cost of employing people. Although there have been many references already to the Milburn review—an excellent document, brilliantly presented—I draw the attention of the House and the Minister to another report that has not had quite so much attention. It is the 27th occasional paper from the Social Security Advisory Committee, which came out in March, entitled The Influence of the Social Security System on Educational and Vocational Decision-making at Age 16. It is another very useful contribution to the debate and shows how, for households, the cost in benefits foregone of a 16 or 17 year-old going into an apprenticeship is really very considerable. I hope the Minister will look at that report alongside Alan Milburn’s.

There is already one very useful initiative, the youth guarantee, which guarantees a work placement or an apprenticeship for young people who are on benefits. It does appear to be effective. However, there are currently only 43,000 young people on it. It should be extended to young people who are not on benefits—we should remember that half of NEETs are not on any benefits—and to 22 to 24 year-olds. But this would cost money, and we absolutely cannot afford further increases in the total budget. I have been inspired by the interventions from the noble Lords, Lord Walker and Lord Liddle, because there is one obvious way of funding it: by getting rid of the pensions triple lock and linking pension payments to earnings. This would not be the tough regime we had under Margaret Thatcher, who I used to advise, when it was linked simply to prices, but we estimate that if we just said that pensions will rise with earnings, by the end of this Parliament that would save £650 million a year. What better use of that saving than instead shifting it towards young people who could gain from the guarantee?

When we look at how Britain compares so poorly with continental countries, the main gap, however, is not in employment but in people who are not participating in education and training. There is clearly a lot more we can do there. The apprenticeship levy has been captured by older workers and absolutely should be redirected to prioritise young people. Higher education can also make a contribution. It offers a large amount of vocational and technical education. It is very hard to measure this, but almost 80% of graduates in work say that they are directly using what they learned in higher education for their work, and graduate employment rates, at 88%, are significantly higher than employment rates among non-graduates, at 68%. Although there are, as we have heard, graduates who are NEET, they are far less likely to be NEET, so I ask the Minister, with her wide range of responsibilities, to recognise that higher education can be part of the answer, not part of the problem.

12:54

[Lord Young of Cookham (Con)]

It is a pleasure to follow in the wake of my noble friend Lord Willetts and to join others in commending my noble friend Lord Evans on choosing this highly topical subject for today’s debate. He and I both sat on the Social Mobility Policy Committee, which focused directly on NEETs and youth unemployment. Only the House of Lords would put three old Etonians on a social mobility committee, but I challenge anyone reading Hansard to identify who they were. Our work has been complemented, as others have said, by the Milburn interim review. I read all 217 pages over the Whitsun Recess. It is one of the finest reports I have ever read—evidence-based, balanced, clearly written, without any jargon, and with the author’s commitment to social justice shining through. The difficulty is that he has raised enormously high expectations for his final report, due in the autumn.

I will just contrast for a moment the Government’s approach to youth unemployment with that of social care. The Milburn review was announced in November last year, with a final report in early autumn—less than a year. The Casey review into social care was announced in January 2025, with a report expected in 2028. Adult social care has been kicked into touch.

I will pick up two points from the review, one mentioned by my noble friend Lord Willetts. The Milburn review said that the apprenticeship levy

“has been captured by employers upskilling existing workers rather than bringing in new ones”.

It makes the point that only 2% of apprenticeships actually go to NEETs. That is a distorted priority that the Government should urgently correct. The second point is one paragraph of Milburn that I thought encapsulated the whole problem:

“Less than half of the total £8.1 billion currently spent on key benefits for young people aged 16 to 24 years old has any participation support or requirements attached to it”.


It is the polar opposite of what a participation-first welfare system should be providing and means that more and more people are being trapped on benefits. He concludes:

“This is a catastrophic failure”.


The Milburn review and our Social Mobility Policy Committee report both point in the same direction: tackle youth employment locally. Milburn said:

“There is a strong case for local leadership to address the NEET crisis. Labour markets are local. Transport is local. Employer relationships are local … Strategic authorities are bodies that have huge potential to enact change”.


That reflects the recommendation of the Select Committee:

“We recommend that the Government takes note of the successful local partnerships working with those who are NEET … They should support local and combined authorities in endeavours to develop the leadership of such local initiatives”.


We concluded:

“The current local government restructure and the creation of mayoral combined authorities is an opportunity for Government to devolve the power and resources needed for those authorities to lead work, through local partnerships with schools, colleges, universities and employers and Skills England, to promote social mobility and address the acute NEET problem”.


We saw that working in practice when we visited Liverpool.

I end with a radical suggestion that takes those recommendations to a logical conclusion and builds on the point that the noble Lord, Lord Shipley, made earlier. Pick as a pilot a mayoral authority such as Bristol and work out what the DWP would spend over the next 12 months on benefits for those aged 16 to 24. Give that sum—it is probably billions—as a lump sum to the mayor to work with the universities, the technical colleges and local employers, and challenge them to invest that money in new apprenticeships, work experience, training and voluntary work. Every claimant would of course keep the benefit to which they are entitled, but I believe that unlocking that budget in that way would have a major impact, by the end of the year, on the solution we all want—namely, more jobs for young people. Do the Government have the nerve to do this?

12:59

[Lord Storey (LD)]

My Lords, I declare an interest as the patron of Career Connect. I thank the noble Lord, Lord Evans, for initiating this debate and welcome the opportunity to contribute on welfare reform and youth unemployment. Recent analysis from the Health Foundation highlights a significant change in the profile of young people who are not in employment, education or training. A decade ago, around a quarter of these young people reported a work-limiting health condition. Today, that figure is almost a half. Perhaps most strikingly, mental health and neurodevelopmental conditions are now among the principal barriers preventing many young people participating in education and employment.

These findings tell us something important about the challenge we face. Too often, debates about welfare and unemployment focus solely on economic incentives or labour market conditions. Important though these issues are, they tell only part of the story. For a growing number of young people, the challenge is not a lack of aspiration but a struggle with their health and well-being. As someone who spent many years working in schools, I know that these difficulties rarely emerge overnight. The young person who eventually leaves education without qualifications, confidence or a clear pathway into work often showed signs much earlier. The question for policymakers is whether we recognise those signs and provide support before any disadvantage becomes entrenched.

The evidence suggests that employment policy, health policy and welfare policy can no longer be treated as separate conversations. A young person experiencing poor mental health does not encounter these challenges in neat departmental categories. They experience them as barriers to learning, to work and to participation in society. That is why early intervention matters so greatly. Effective mental health support, strong pastoral care in schools and colleges, access to mentoring, high-quality careers advice, and opportunities for training and employment can make the difference for a young person between becoming disconnected from society and fulfilling their potential.

As we have heard from my noble friend Lord Shipley and others, perhaps we could learn lessons from elsewhere. Young people in the Netherlands report anxiety at much the same levels, yet the Dutch NEET rate is less than a third of ours. There, vocational education is prized, not patronised. The Dutch call it the foundation of their economy. Employers are involved from the classroom onwards and, by 19, more than half of Dutch young people have workplace experience. Here it is fewer than one in five. The Resolution Foundation estimates that matching the Dutch rate would mean 600,000 more of our young people earning and learning.

I welcome the youth guarantee, but it is built around claimants. Can the Minister tell us how it will reach the far larger group who are economically inactive and the 314,000 young people who claim nothing and are known to no service at all? Will it be sustained, or will it be another new initiative funded and then quietly wound down? Will the Government give every young person a statutory entitlement to meaningful work experience and face-to-face careers guidance, starting early and reaching those who need it most? Will they go further in rebalancing the apprenticeship levy towards young people entering work, while easing national insurance and business rate burdens on hospitality and high street employers who give so many of them their first job?

We should judge our success not merely by the number of people moved through a system but by the number of young lives put on a path to opportunity. Welfare reform must be about more than managing need; it must be about creating the conditions in which people can thrive. If we can help young people overcome the barriers that prevent them participating fully in education and employment, we will not only improve individual lives but strengthen our communities, reduce inequality and support economic growth. That is an objective which I hope can command support across this House.

13:03

[Lord Grayling (Con)]

My Lords, I congratulate my noble friend on today’s timely and important debate. I was Employment Minister back in 2010. We inherited a country in which unemployment was heading to 3 million, youth unemployment was close to 1 million and the system had deep flaws. We also inherited some good things, which have been lost over the years. I will set out some of the things that worked.

My noble friend rightly made the point that, over the decade that followed, we saw some significant improvements in relation to the number of children growing up in workless households and the level of youth unemployment. We achieved the lowest unemployment levels since the 1970s. Part of that was down to getting the economy right. The noble Lord, Lord Walker, is absolutely right about the need for growth; I hope he will use his position on those Benches to put pressure on the Government, with whom he clearly does not entirely agree, to change some of the things they are doing.

Three key elements are needed to get to grips with the issues in the welfare system. Clearly, there are big issues around education, as we have heard, and we have an Education Minister responding today, but I will focus on issues within welfare. First, there has to be a central element in the system that is face to face. In 2010, we inherited in the disability living allowance a system where people had largely self-referred. That cannot be right. We changed it, but I freely admit that under the last Government that was significantly lost during the pandemic. That needs to change—we need to get back to a situation where people cannot self-refer to benefits but are subject to challenge, question and assistance. They should not be able simply to enter the system and stay there.

The second thing that needs to happen is around activity. I very much welcome the youth guarantee, but the work programme we put in place after 2010 made a genuine difference. If Ministers look back at the official findings of the 2016 report that assessed its effectiveness, they will find that it was cost effective for taxpayers and highly effective for claimants. It required those who were stranded on benefits to get involved in significant programmes to do things and be subject to constant challenge. We need to make sure that that is a central part, so that no one is sitting at home doing nothing but they are getting out and doing things. The youth guarantee is positive, but it needs to be spread so that no one is left at home doing nothing.

How do you pay for that? The Minister needs to have a conversation with the Treasury about the DEL/AME switch. The way that worked was very simple: the money saved by getting people off benefits was used to pay for the programmes that helped them get there. If you keep somebody in work for a couple of years, they are almost certain to stay there. At that point, the Treasury generates a genuine saving, it becomes extremely high value for money for the taxpayer, and it deals with a long-term social issue. So I encourage Ministers to go back and look at the work programme, the DEL/AME switch and the innovative things that providers did. These private sector, yes, but also voluntary sector providers were brought into the network and the system by the previous Labour Government, and I commend them for that. There were some first-rate organisations and charities, some of which were quite close to people sitting on my Front Bench, and they did a first-rate job.

Thirdly, there have to be consequences and sanctions for those who will not participate. It is simply not good enough. I have sat in meetings, assessments and all kinds of processes where people were subject to help, challenge and assessment. I have seen at first hand how different people respond, including people with mental health challenges. It can be done, it can make a difference, and we can turn those lives around. However, if people will not engage, there must be consequences. They cannot expect simply to carry on drawing benefits while refusing to engage with the system. Again, part of that was lost during the pandemic. I say to Ministers that it is now time to put some of the sticks back in place alongside the carrots. The bloc of people who will not engage, but would benefit from doing so, must be brought into the system.

Ultimately, the welfare state should be a ladder up which people climb, not a place in which they live. All the evidence shows that, if people are on benefits long term, they are less healthy, die younger and are less happy. That cannot be good for any of us.

13:08

[Lord Austin of Dudley (Non-Afl)]

My Lords, I too congratulate the noble Lord, Lord Evans, on securing this important debate. I agree with the noble Lord, Lord Shipley, and the right reverend Prelate the Bishop of Leicester that young people want to work but, as we have seen from Alan Milburn’s report, they are being badly let down. Of course, if young people refuse to engage in work there should be sanctions, but that is very much the minority. There are 1 million young people out of work because they have no opportunities. You have to deal with that first and that should be the top priority. One in six is now unemployed—1 million. That is the highest rate in Europe apart from Romania’s. It is not because they are sitting at home refusing to engage. The rate is four times higher than in the Netherlands and twice as high as in Ireland. As Alan Milburn says, without urgent action it will soon be 1.25 million.

More than half of these young people have not had the opportunity to work at all. The number of entry-level jobs in shops, restaurants and pubs has halved in four years, not just over the last two years of this Government. Apprenticeships have collapsed in the last decade. A lot of the problem starts at school in that children who often miss school are four times more likely to end up out of work. A generation of young people have been let down at school and college, and now, when they cannot get an apprenticeship or a job.

When people say that young people are unemployed because of mental health problems, I think they have got it the wrong way round. It is no wonder they have mental health problems when they are left sitting at home on their phones all day, bored and with nothing to do. It is shocking that for every £1 helping a young person into work, £25 is spent on benefits. Why are we still bringing in so many plumbers, electricians, building workers and labourers from abroad when we could be training British young people to do these jobs? Why do we limit the number of nurse training places and import nurses from abroad when there are plenty of young women in places such as Dudley who would love to train to become nurses?

The whole country should be furious about youth unemployment, not just because young people’s lives are being ruined but because it is costing us all a fortune, and it will cost much more in the future. What is the Government’s political problem? In essence, it is that no one really knows what their objective is. What are they for? What is their driving mission and sense of purpose? They are not able to set out this narrative. Nobody really knows whose side the Government are on. Ministers, starting with the Prime Minister, should talk about this issue every single day. What, after all, is the point of a Labour Government if they are not tackling youth unemployment and making this the central issue?

This sounds trivial, but if I was the Prime Minister, I would put one of those massive electronic counters up in Downing Street showing the number of young unemployed people or the number of apprenticeships, and if it is not moving in the right direction, I would want to know why. That would focus the whole of the Government’s attention on this issue. How many apprentices are now working in the Civil Service? Every Cabinet Minister should double the number of young trainees in their department straightaway. Every quango, government agency and local authority should do that too, as should every local authority. The number of apprenticeships in local authorities has collapsed, but they could be taking on young people in building trades, parks, leisure centres, finance and admin. The NHS could be doing the same. I asked West Midlands Police why it did not have apprentices helping to look after the fleet of police cars. It said, “Oh, we couldn’t possibly do that”. I explained to them, “Well, if you’re not helping young people now, you’ll be arresting them in a few years’ time”. Companies and charities that get government contracts should be required to take on apprentices and trainees as part of the procurement process. Obviously, the Government should cut red tape and employment costs that prevent businesses taking on young people.

The noble Lord, Lord Baker, is right—and I have agreed with him for years on this—that we have to reform technical education so that young people specialise more at 14 and can learn practical skills for careers in construction, engineering and other industries. We should improve vocational courses in colleges so that students study full-time, like their counterparts doing A-levels, instead of just half the week, so that they would be ready for work or an apprenticeship when they leave.

In conclusion, obviously, all this would cost money, but it would cost a lot less than we are spending on the benefits system. When we are spending more on benefits than on education or defence, and when we have a generation of young people whose lives are being ruined, my view is not that we cannot afford to do this, it is that we cannot afford not to.

13:13

[Baroness Neville-Rolfe (Con)]

My Lords, I congratulate my noble friend Lord Evans of Rainow on securing this vital and timely, and very interesting, debate. Welfare is out of control and risks bankrupting the country unless serious action is taken soon. Let us consider the following figures from the Taxpayers’ Alliance to add to those cited by my noble friend and in the excellent Library Note. Between 2019 and 2025 in England, there was a 106 % increase in people claiming PIP—that was up to 3.5 million. Over the same period, there was a 139% increase in claims for the enhanced element of PIP, taking that to 1.75 million—by the way, they are all entitled to claim Motability cars.

That is unsustainable. I had to say that, although my purpose in speaking is to give a perspective from my time at Tesco. Retailers are amazing providers of first-time jobs, as we have seen recently from the new Marks & Spencer scheme. I also commend the ambition to increase the number of apprenticeships. I welcome the Government’s decision to reinstate the low-level foundation apprenticeships. These were abandoned some years ago, with a devastating impact on apprenticeship numbers.

However, my main concern is with the job guarantee, for which the Secretary of State this week announced bids for multiyear grants to delivery organisations. In my experience, taking youngsters into retail businesses, whether for job experience, internships or special schemes, is difficult. To be successful, it requires exceptional and experienced staff willing to mentor them, and corporate commitment to accept the hanging around and distraction of permanent staff—one sometimes gets the comment, “Never again”. The truth is that, for success, the scheme needs to reflect the reality of retail life. The youngsters need to turn up on time, pass their health and safety test, and be able do a full day’s work, which is appreciably more than the 25 hours a week reimbursable under the new scheme. It needs to be possible to terminate or suspend failing participants. The job guarantee criteria are for youths of 18 to 24 who have been on UC for six months and out of work for 18 months. This is not an easy cohort to deal with.

We are also talking about substantial government investment. How many job guarantee placements do the Government expect to find over the next three years, and how does that compare to their target of getting 90,000 into paid permanent employment? Bear in mind, as we have heard, the high cost of the minimum wage, NICs and the demands of the Employment Rights Act thereafter. More specifically, what does the Minister expect to be the cost per participant, and can that be value for money? Or will the beneficiaries, as so often with government schemes, be the consultants who are bidding for the work?

I fear we have both a supply-side problem, which I have described, and a demand-side problem, since, once they have been on benefits for 18 months, youngsters find it difficult to knuckle down to the kind of jobs that will be made available. My noble friend Lord Baker is right that schools are part of the problem. I agree we need a technical stream in comprehensives, and to learn from his brilliant experience with city technical colleges.

Having said that, in my time at Tesco, we pioneered a not dissimilar scheme for our regeneration stores, in tough places like Seacroft in Leeds and Beckton, near Newham. We took a group of long-term unemployed and got them into the new store teams ahead of opening. The DWP helped with the funding and many—crucially, not all—settled into fruitful careers in the business. The local MP, now Sir Stephen Timms and a DWP Minister, will remember the scheme and it may have some lessons for the new guarantee.

Helen Dickinson of the British Retail Consortium and an impressive roll of retail leaders yesterday called for a government and retail taskforce to help the Government build credible arrangements for getting young people back into work. This seems to me a good idea. Does the Minister agree?

13:18

[Baroness Nargund (Lab)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Neville-Rolfe. I thank the noble Lord, Lord Evans, for securing this very important debate. I also thank our Government for commissioning the Milburn report. I declare my interest as a former trustee and vice-chair of the British Red Cross.

We face a profound challenge. NEET is not simply a jobs crisis; it is in fact a health crisis with a job problem. Some 44 % of NEET young people report a work-limiting health condition, 24% cite depression and anxiety, and 70% report loneliness.

The review shows these problems often begin long before young people become NEET. Reduced socialisation, weaker support networks and the pandemic have left many young people less confident, less connected and more isolated. We have not got a jobs gap: in my view, we have a jobs readiness gap. Over half of 18 to 24 year-olds say they do not feel prepared when leaving education, despite 84% of NEET young people saying they want a job, education or training.

We need to bridge the gap between education and employment. That is why volunteering matters. Throughout my years in the voluntary sector, which has been decades, including at the British Red Cross, I have seen first-hand how volunteering transforms lives. I know it from my own personal experience: I have been a volunteer and I have spoken to thousands of volunteers across our country. The evidence is compelling. Research shows that one-third of volunteers aged 16 to 19 said volunteering helped them secure their first job. Some 84% of young volunteers report gaining skills and confidence, while 77% say it reduces their feelings of isolation and loneliness.

This matters because poor mental health and unemployment reinforce one another. Volunteering tackles both. It helps young people develop the skills and qualities employers value: reliability, responsibility, communication, resilience and problem-solving. It also provides structure, experience and purpose. Yet, too few young people volunteer. Schools and universities should work with the local voluntary sector so that volunteering becomes part of their education. Jobcentres should actively promote volunteering pathways, backed by the Government’s right to try guarantee, so participation does not risk benefit reassessment.

Without these actions, one in six young people could be NEET by 2030. That is something we cannot afford, economically or socially. As such, I welcome our Government’s youth jobs grant and other initiatives when it comes to hiring apprentices, several of which the DWP has come up with. In fact, it proactively came up with these policies before the Milburn report was published, in order to support NEET young people. If we are serious about tackling youth economic inactivity in our country and getting young people back into work, we must stop seeing volunteering as an optional extra but as a practical, proven tool for tackling youth inactivity, and start recognising it as a vital pathway into work.

For many young people, volunteering is not simply something good to do; it is the bridge to a better future. I ask my noble friend the Minister whether volunteering could be placed at the heart of the strategy for supporting young people into employment and opportunities. I look forward to the Minister’s reply.

13:23

[Lord Jackson of Peterborough (Con)]

My Lords, it is a pleasure to have the opportunity to take part in this debate, and I congratulate my noble friend Lord Evans of Rainow. I can see that the Government are not responsible for every societal phenomenon, so I accept that artificial intelligence and the overhang of Covid are outwith their competence. Nevertheless, that is about as consensual as I am going to get this afternoon.

I congratulate the noble Lord, Lord Walker of Broxton. I think you could probably call that friendly fire from him. It was an excellent speech. There is a particular consensus around the triple lock, and we have to come back to that debate.

We have a crisis of youth unemployment in this country, and a welfare budget which, as has been said, is out of control. In 2025-26, total UK welfare spending is forecast to be £334 billion, 10.9% of UK GDP. By 2031, it is predicted to have risen to £409 billion. This is completely unsustainable. It is not only an inefficient use of resources but, frankly, a social catastrophe.

I campaigned against the free movement directive from 2005 onwards as a constituency MP, because, as the noble Lord, Lord Austin of Dudley, has said quite rightly, we imported cheap foreign labour and displaced our own indigenous British youth workforce by driving down their wages and conditions. That was under a Labour Government, unfortunately, and was a completely ill-thought-out policy.

Some 13.5% of all 16 to 24 year-olds are NEETs, as we heard earlier. Yet in its 2024 election manifesto, Labour committed to reviewing universal credit and reforming employment support. This Government also committed to “make work pay”. But do businesses and business leaders think the Government have succeeded? The answer is no. The British Chambers of Commerce has predicted that the rate of unemployment among young people in the UK will rise to 17.8% by 2027. It has argued that the Government’s decision to raise national insurance contributions and the minimum wage has helped to lock young people out of opportunities.

We only need to look, for instance, at the experience of Shepherd Neame, Britain’s oldest brewer, and the 15% decline in hiring of their business. The number of applications has risen by 15% and there has been a 41% increase in applications for bar jobs. Young people are attempting to get into employment, but the Government’s economic policies are making it harder for them to get employed. David McDowall, head of Britain’s biggest pub company, said to the Government directly:

“I implore the Chancellor to reverse the increase in NICs to give our sector, and the wider UK high street, the support it needs to reinvigorate youth employment”.


The increase in national insurance costs is making it impossible to hire people in entry-level roles. An increase of £1,200 makes it impossible to effectively run a business. The same message comes from UKHospitality, which is suffering in a similar way.

The Government have a choice. They could follow their own MPs—who were famously quoted recently by the Secretary of State for welfare as saying “Who can we tax in order to pay benefits to others?”—and increase the welfare bill, or commit to welfare reform that both incentivises people into work and cuts the cost to the taxpayer, so that these employment costs can be cut or mitigated. The balance spent on welfare payments versus employment support needs to change. Milburn’s review, as we know, shows that nearly two-thirds of all 16 to 24 year-olds claiming PIP payments do so on the basis of anxiety, depression, autism and ADHD. Eight in 10 GPs admit that they prescribe antidepressants that they do not think are necessary. Rather than diagnose and overtreat, we should recognise that, often, worthwhile employment would have a more transformative effect. We must not tolerate abuse of the benefits system. One of the policy proposals in the Centre for Social Justice’s The Benefits Budget report was that welfare support for those with milder anxiety, depression or ADHD should be reduced or removed.

In conclusion, this Government have to prioritise job creation over benefits if they want Britain to succeed. Labour has done it before and it can do it again. If they do not, the crisis of youth unemployment, which they themselves have recognised, social immobility, societal strife and inequality will only get worse.

13:28

[Baroness Meyer (Con)]

My Lords, it is an honour to follow my noble friend’s excellent speech. As many pointed out, the Alan Milburn review was a wake-up call. I am not going to go through all the facts and figures again, because they were so clearly presented by the noble Lord, Lord Evans, in his opening speech, and followed up on by many others who spoke before me. But the reality is, as Alan Milburn warned, we risk creating a lost generation trapped in economic inactivity and long-term dependency, and that should concern us all. Work is about far more than earning a living; it provides purpose, dignity, self-respect and independence. A society that leaves a growing number of young people without work is failing them.

I therefore welcome the Government’s recognition that the current welfare system is unsustainable and that economic inactivity must be reduced. But recognising a problem and solving it are two different things. The welfare bill is projected to exceed £400 billion a year. Our national debt is approaching £3 trillion, while debt interest payments alone now exceed £100 billion a year. I imagine that the Minister will remind us that Britain’s borrowing remains below the average of the G7 economies, but is that a fair or comforting comparison? It is a bit like claiming that freedom of speech in the United Kingdom is excellent because it is better than in Russia or China.

The reality is that a country cannot indefinitely spend more money than it creates, yet I fear that the Government are not confronting these challenges with pragmatism. The Chancellor’s doctrine of securonomics rests on an assumption that the Government can play a central role in directing growth and wealth, but history suggests otherwise. Governments can create the conditions for growth but they do not create wealth itself. Wealth is created by businesses, entrepreneurs, innovators, investors and workers. The role of the state is to enable growth, not to substitute itself for growth.

This matters because it exposes a fundamental contradiction at the heart of the Government’s welfare reforms. Ministers say they want more people in work, yet they continue to increase the cost of employing them. They say they want to reduce welfare dependency, yet they burden the very businesses that create jobs and provide entry-level opportunities. They say they want growth, yet they pursue policies that discourage investment, enterprise and wealth creation. As has been pointed out many times before, the sectors that traditionally provide young people with their jobs—hospitality, retail and small businesses—are already under immense pressure. Young people are being locked out of the labour market before they have even reached the first rung of the ladder. This is not a coherent economic strategy.

The current incapacity benefit system illustrates the problem perfectly. Too much of the debate focuses on what people cannot do, rather than on what they can do. The system asks people why they cannot work; a better system would ask them what support they need in order to work. That is a fundamentally different philosophy. Of course we must support those who genuinely cannot work, but the challenge is not simply to reduce welfare spending but to increase employment. A welfare system should provide a safety net, not become a destination. The Government cannot claim to be tackling worklessness while simultaneously making work more expensive, more regulated and harder to find. That is not pragmatism; it is ideology.

Does the Minister agree that Labour’s economic policies are undermining its own welfare system? Even Sir Tony Blair has warned that the Government lack a credible plan for growth and has questioned whether their current approach is sustainable. If the Government accept that work is the best route out of dependency, can the Minister explain why they believe that increasing the cost of employing people will help achieve their objective?

13:34

[Lord Sentamu (CB)]

My Lords, the interim independent review by Alan Milburn into young people and work, and young people not in education, employment or training, is absolutely shocking. On the acronym, I would say that I am guilty as charged, but is the acronym appropriate? I am not a lover of acronyms. Given the many accents of our union, “NEET” could easily be pronounced in a way that may mean something that is not intended—I could try that out, but time does not allow me. It is not an inviting acronym for the young people of the United Kingdom who are not in work or employment.

Reading Alan Milburn’s interim report reminded me of the question Queen Elizabeth famously asked economists at the London School of Economics. After receiving a briefing on the unprecedented magnitude of the financial crisis and the resultant global credit crunch, she asked, “Why did nobody see the awful financial crash coming if it was that big?” A group of leading economists sent her a three-page letter explaining that the crisis was caused by a failure of the collective imagination of many bright people. For young people who are not in education, employment or training and who are claiming health and disability benefits, the crisis we face now has been caused by a similar failure of the collective imagination of many bright people.

What can we do? How do we lift our young people out of this deep quagmire they find themselves in? The interim report is a wake-up call for us all. Let me take us all, in hearts and minds, to the northern province of York, to hear what we have tried to do to change young people so that they can develop wonderful habits of the heart through commands given in our schools and colleges, so that they do not end up among the 1 million young people not in education, employment or training. For most of us, we learned the habits we now practise from how we lived, not from somebody telling us about them across a long distance. Archbishop Desmond Tutu helped officially inaugurate the Archbishop of York Youth Trust in 2009, which has gone on to help a lot of young people. It trains them to be leaders, empowering them from year 6 to post-16, so they can be real leaders in their communities.

I strongly believe that young people are not our leaders of tomorrow but our leaders of today. Young people and children can make a positive and transformative difference to their local communities. For example, a group of 50 young people living in a very deprived area asked 500 homes with older people, “What do you want to get at Christmas to keep you warm?” The answer was very simple: woollen jumpers and fleeces. The young people contacted the businesses in their community, which supplied all the goods they needed. Then they went to those homes and gave the older people jumpers and fleeces. In an area that was so troubled by truanting and bad behaviour, suddenly these older people saw the young people as friends and no longer as a menace. I could give endless examples, but time does not allow me.

When Alan Milburn’s final review is published, it will be crucial to see young people as key players in becoming the change they want to see, turning their eyes to the horizon of hope. May all our work with children and young people be similar to that of Isaac Newton, who saw ground-breaking discoveries in physics and mathematics and built on the earlier work of his predecessors, writing:

“If I have seen further it is by standing on the shoulders of Giants”.


May we become those giants, so that young people can stand on our shoulders and then learn to be leaders and help other young people.

13:39

[Lord Hannan of Kingsclere (Non-Afl)]

My Lords, I declare my interest as the director of the Institute of Economic Affairs, the longest established free market think tank in the country. I recently came across something called Munchausen syndrome by proxy. The medical or legal name for it is FDIA—factitious disorder imposed on another. It means giving people poison in the guise of medicine. Sometimes, it is a mental health condition, and occasionally, it is a crime. I do not know if any of your Lordships happened to catch the dramatisation “The Serpent”, which told the story of Charles Sobhraj, who would poison backpackers in Asia and, under the guise of making them better, would give them more and more of the poison, until he was able to murder and rob them.

I will talk a little bit about the theme of giving the patient more of the medicine that sickened him in the first place. The illness here is actually very easy to identify—we have heard it from all sides: there is a rise in unemployment and, particularly, a rise in youth unemployment. Between 2021 and the present, the number of 16 to 24 year-olds out of work rose from 9.7% to 12.8%. This is since the pandemic, when we should have been in an upswing.

Some 957,000 young people, according to the latest figures, are not in education, employment or training. Why is that? It is quite obvious, if you look at cause and effect, what has caused these things. The national insurance rise has deterred firms from taking people on, through the imposition of some £25 billion on the private sector. On the Employment Rights Act, it is always an unpopular thing to say, but if we want to make it easier to hire people, we need to make it easier to fire people. The thing that will encourage employers to take people on is the knowledge that if something goes wrong, they will not be lumbered with an open-ended commitment. Therefore, all these rights are a way of building up the number of unemployed people. One thing that people do not like to talk about is the extraordinary rise in the minimum wage. The cost of employing someone has gone up by over £4,000 since the beginning of the pandemic—up 26% in three years. All these things are happening in an economy that, more widely, is failing to grow because of excessive taxation, regulation and debt.

The things that we individually complain of, such as price rises, tax rises, debt levels, worklessness and dependency on welfare, are all the symptoms of the underlying disease: excessive government—that is, Governments intruding in fields where they have no proper business and making things worse, which is what I mean by more of the medicine that sickened the patient. What are the Government’s solutions to youth unemployment? They are not to remove the things that are causing it in the first place, but to have even more expensive and intrusive measures to deal with the problems of their own creation. I am reminded of the aphorism popularised by the great African-American economist Walter Williams, who said that almost all our problems are caused by politicians trying to solve problems that they themselves created. What cures are being offered for the disease of big government? They are all more government: the jobs guarantee, the youth jobs grant, the new apprenticeship initiative, some 80 youth hubs and the Fair Work Agency, which is currently in Tashkent. Its members are off on a jolly in Uzbekistan, looking at the impact of migration. All these things are adding yet more intrusion and money, which are what caused the problem in the first place.

I finish with a heartfelt plea to all Front Benches, because some of these problems predate the current Government. Will they please spare us their however well-intentioned interventions? Will they please just leave us alone? We do not want the grants or the guarantees or the initiatives or the agencies or any of the regulation. All we ask is to be allowed to get on with our jobs.

13:44

[Lord Elliott of Mickle Fell (Con)]

My Lords, it is a huge pleasure to follow my noble friend Lord Hannan, and I thank my noble friend Lord Evans for securing the debate. This is not the first time I have spoken about the million plus young people who are not in education, employment or training. It is a subject I follow closely as president of the Jobs Foundation, as declared in the register.

In his interim report, Sir Alan Milburn rightly said that:

“We are at risk of a lost generation”


of young people. He rightly stated that:

“If public policy aims to increase youth participation, it has to minimise risks and maximise incentives”.


In this vein, I will reiterate a cost-free idea that I first proposed over a year ago, which has now garnered support from other noble Lords, as well as Back-Benchers in the other place and regional mayors. Noble lords will be aware that there is currently a scheme to incentivise employers to hire veterans, which was first introduced in 2020 and has been extended by the current Government to last until at least 2028. The scheme is very simple: employers who hire veterans do not have to pay the employers’ national insurance for that new employee during their first year of employment. This is facilitated through a zero rate of employers’ NI on salaries below roughly £50,000 a year.

In a similar way, employers hiring those under 21 also do not have to pay employers’ NI, a change first introduced in 2015. My hope is that the Government might be willing to consider extending this scheme to those older than 21 who are moving from welfare into work. They might wish to extend it to anyone moving from welfare into work, or they might wish to restrict it to those aged 24 or under, but it is certainly a proposal that would help maximise incentives for employers, as Sir Alan Milburn put it.

When I first mentioned this proposal last year, when we debated the Universal Credit Bill, it was supported only by the Jobs Foundation and the Good Growth Foundation, whose advisory board boasts the noble Lord, Lord Liddle, who I am pleased is in his place. I endorse his call for a cross-party approach on this issue.

Crucially, the Good Growth Foundation estimates that the policy would save the Exchequer up to £1.1 billion every year were it to be adopted for all employees helped from welfare into work. It would surely also save the Exchequer money were it to be restricted to NEETs.

I am pleased to say that support for this proposal has grown over the past year. In your Lordships’ House, the final report of the Autism Act 2009 Committee, published last November, recommended

“the use of tax incentives and/or national insurance relief”

to help businesses employ more autistic people.

The concept has also received backing from Labour Back-Benchers in the other place. Speaking to the Sunday Times a fortnight ago, Labour Back-Bencher Wes Streeting said:

“I think we should be thinking actively about … targeted reduction in employers’ National Insurance”.


I was also pleased to hear one of our great regional mayors, the Mayor of Greater Manchester, Andy Burnham, telling BBC “Newsnight” that he was “sympathetic” to reversing the recent rise in national insurance for employers.

Given that my modest proposal now has growing support on a cross-party basis, I have two questions for the Minister. First, can she confirm that the Milburn review will be allowed to make policy proposals with budgetary implications, including those involving tax incentives? Secondly, can she clarify whether the Treasury will hold back from finalising the Autumn Budget until it has both seen and considered the final recommendations of the Milburn review?

13:48

[Lord Blackwater (Con)]

My Lords, it is a great privilege to follow my noble friend Lord Elliott, and I congratulate my noble friend Lord Evans on the excellent way he presented this debate and the figures he set out. He touched a real nerve with me because, like him, my first job was working in a pub, and I feel that I probably learned much more there than I did at the university I went to afterwards.

I want to agree with the present Prime Minister, who spoke a year ago of a “moral imperative” to fix the welfare state—ironically, hours after being forced to U-turn on benefit reforms. He promised that there would be reforms but, he said, in a “Labour way”. A year later, we still are waiting keenly to see what that way is.

As my noble friend Lord Hannan said, we must treat causes and not symptoms. Nothing will help young people find work and contribute to society—as, according to the Milburn report, 84% of them long to do, as the right reverend Prelate said—better than a taxation and regulatory system allowing businesses to create such jobs. Currently, young people are priced out of work, particularly, as we have heard, in the hospitality and retail sectors.

Worse, as the noble Lord, Lord Austin, said, some develop psychological frailties because they cannot work. The moral imperative must be to help them by finding them jobs. Among the barrage of statistics, one is deeply alarming: the proportion of those not in employment, education or training and diagnosed with a work-limiting health condition has risen from 26% to 44% since 2015. Psychological conditions account for much of that rise.

However, there is a fundamental economic problem. Only this week Tom Kerridge, the restaurateur, said of his sector:

“Younger people, part-time staff, they just don’t exist very much in the businesses any more … those businesses cannot afford it”.


He cited national insurance contributions for those over 21 and the steep rise in the minimum wage for those aged 18 to 20, and pleaded for a VAT cut for the hospitality industry. Last Monday, the owner of a car repair business quoted in the Times said:

“Minimum wage for an apprentice now is ridiculous. It steers you away from wanting to have young people in your company”.


We must have some, doubtless uncomfortable, philosophical discussions about the minimum wage and about other employment rights, and about the health assessment process for benefit claimants, most of whom, as noble Lords heard on Monday, never have face-to-face consultations. We should discuss how to make as many “work-limiting” health conditions as possible unlimiting. I realise that this may require a review of GPs’ working practices, and I entirely agree with the noble Baroness, Lady Fox, that we should perhaps be less uncritical about some of these diagnoses.

It is unfashionable to cite the Victorian distinction between the deserving and the undeserving poor, but that too merits discussion. However Dickensian that distinction might sound—although Dickens himself, as close students of him will know, was not so opposed to it as many think—it ensured that scarce resources were channelled towards those in the most need and not used to encourage a life of unnecessary dependency.

It is 84 years since the Beveridge report, but since politicians of all colours like to cite it as the foundation stone of welfarism, we might note some of Beveridge’s doctrines. He said that

“getting work or getting well may involve a change of habits, doing something that is unfamiliar or leaving one’s friends or making a painful effort of some other kind. The danger of providing benefits, which are both adequate in amount and indefinite in duration, is that men, as creatures who adapt themselves to circumstances, may settle down to them”.

As relevant to this debate, he also said that

“six months for adults would perhaps be a reasonable average period of benefit without conditions. But for young persons who have not yet the habit of continuous work the period should be shorter; for boys and girls there should ideally be no unconditional benefit at all; their enforced abstention from work should be made an occasion of further training”.

He stressed that welfare

“should not stifle incentive, opportunity, responsibility”

and emphasised that

“benefit in return for contributions, rather than free allowances from the State, is what the people of Britain desire”.

I suspect that our people desire that still, and would endorse another of Beveridge’s fundamentals, that

“the Idleness which destroys wealth and corrupts men, whether they are well fed or not”

is bad

“when they are idle”.

This reminds us that the Prime Minister’s moral question remains shamefully unanswered.

13:53

[Baroness Stowell of Beeston (Con)]

My Lords, with the leave of the House, I will speak briefly in the gap. I have been here from the beginning of this debate because I am a social mobility commissioner, so this topic is very close to both my heart and my responsibilities in that role. As it happens, our annual symposium in a fortnight will be very much devoted to the topic of NEETs.

I did sign up to speak in this debate, but when I saw the august array of speakers I was not sure that there would be anything I could add to what I expected to be said. I have very much enjoyed the contributions from all noble Lords. But there is one thing I have not heard mentioned that I feel is important, so I want to add it before we get to the winders. It is the importance of the family to anybody’s progress and the importance of a stable and secure home to a child’s development. Much has been said in this debate about employability skills or soft skills. I tend to call them the credentials of character—things such as punctuality and reliability, the shared common standards that we expect of one another when we start work or are in work and faced with people of lots of different backgrounds, levels of educational attainment or abilities.

These shared standards are very much what we learn at home and in the family. They form part of what we learn at school, but they are critical to anybody’s progress. According to a Children’s Commissioner report in 2022, which is not that long ago, 44% of those born in this country at the start of this century did not live with both biological parents for their whole childhood. That is up from 21% for children born in 1970. We have to include the family and home when we are looking at this topic. What are the Government doing to support families, both generally speaking and in the context of how they are considering responding to the challenges highlighted in the Milburn report?

13:56

[Lord Mohammed of Tinsley (LD)]

My Lords, I too thank the noble Lord, Lord Evans, for securing this important debate and all noble Lords for their thoughtful contributions.

As I have listened, I have been struck by how this debate is not merely about stats, forecasts and the Government’s programme. It is about people, particularly young people, and the opportunities that can shape the course of their lives. I know this from experience. In the late 1980s, I was fortunate enough to gain a place on a youth training scheme, a YTS. We all know what they were—£27.50 for 40 hours. Mine was at the Sheffield Co-op at Hillsborough. Like many young people growing up at the time, I entered that labour market during a period of economic uncertainty and high unemployment similar to what young people face today. The opportunity that I received through that programme was not simply about a wage. It gave me confidence, experience, skills and, perhaps most importantly, a sense of purpose and possibility. I often reflect on how different my life might have been had that opportunity not existed for me. The experience has stayed with me throughout my career.

Before I entered your Lordships’ House, I spent many years working with young people in Sheffield who have often been referred to during this debate as NEETs. I often want to change it, get rid of the “N” and replace it with an “L” to say “looking” for employment, looking for training et cetera. When you speak to young people you often hear that they do not like being called a NEET. I met those young people and saw in them a talent that was obvious to everyone except them and the system that was there to support them. I met young people who were struggling with poor mental health, unstable homes, family difficulties or a lack of confidence. I learned that very few young people lack ambition. What many lack is the opportunity, the support and sometimes someone to believe in them.

This is why the figures from the House of Lords Library should concern us all. Almost 1 million young people are, in my view, looking for employment, education or training, while welfare spending continues to rise significantly. We heard from a number of noble Lords, including the noble Lords, Lord Shipley and Lord Austin, about this 25:1 ratio. We are spending 25 times more on welfare than on helping and supporting these young people who are looking for opportunities. It reminds me of my time in local government. We had a term, “invest to save”—invest in now and make savings. I hope that when the Minister responds we look seriously at how we can invest now to save in future. How can we invest in young people’s future now?

For us, the test of welfare reform is not how we can move people off the benefit roll; it is how many people we can help into fulfilling, sustainable employment and support to live independent lives. The most successful welfare systems are not those that simply reduce expenditure but those that invest in people. We have heard from many noble Lords about the example of the Dutch model, which invests a lot more in training in early years in secondary schools. That their NEETs level is less than half of ours means that we should take the opportunity that has been afforded to us by the Milburn review. He has diagnosed the problem; the challenge of the next six months is to see what the possible solutions are.

I hope that we can use energy and expertise from across your Lordships’ House to come together to shape the recommendations of the Milburn review. Rather than waiting for Alan Milburn to come back to both Houses with his recommendations, we should use that time, possibly with a cross-party working group—however you term it, I hope the Minister looks at it favourably—to use our experiences to say what should be in Milburn. We all want to see fewer young people on welfare and more support for them to fulfil their lives because that would be good for society.

The Government are right to recognise that economic inactivity has become a significant challenge to growth. We on these Benches welcome efforts to improve access to employment, training and apprenticeships, as my noble friend Lord Shipley said earlier. However, we remain concerned that some aspects of the welfare reforms focus too heavily on short-term savings while failing to address the underlying causes of inactivity.

As I said, my experience in Sheffield has taught me that many young people who are disconnected from work are facing multiple barriers simultaneously. A young person experiencing anxiety, depression or poor physical health cannot simply be instructed into employment. A young person without qualifications, work experience or a stable support network requires investment and guidance. If we ignore these realities, we risk treating the symptoms, as we heard earlier, while leaving the cause untouched. Milburn warns of a “lost generation”, and it is a warning to us all. Those words should resonate in your Lordships’ House.

When a young person spends years disconnected from education and employment, the consequences, as Milburn said, are often lifelong. Lower earnings, poor health outcomes and reduced economic participation all follow. The costs are personal, social and economic, but I remain optimistic because I have seen what works. I have seen young people flourish when given access to mentoring, skills training and meaningful work experience. I just flag to your Lordships that as university and sixth-form terms come to an end, many young people are seeking opportunities for work experience. I will be taking a number of young people on in July, and I hope that many other Members of your Lordships’ House take the opportunity to give that experience.

I always say to young people, “You’re all going to get GCSEs. Some of you will get A-levels and some of you will get degrees. What else can you get? That is the difference that an employer seeks”. If we in your Lordships’ House can play a very small part in doing that, I urge noble Lords to take up those opportunities that young people welcome. I have badgered my Liberal Democrat colleagues to take on four young people who have approached us.

On that greater investment in young people, I make a plea to the Minister that investment in youth services and community organisations is important because they often engage with young people before the statutory sector gets involved. We need skills and apprenticeship systems that work for every young person, not just those who follow the traditional academic route. We also need employment support that is personalised and supportive. Many disabled young people and those with long-term health conditions want to work, but need flexibility and understanding. The principle behind the Government’s “right to try” approach—that people should test their ability to work without fear of losing support—is sensible, and I welcome it. I hope they can strengthen it further.

The economic argument, as we have heard today from many noble Lords, is compelling. Britain cannot afford to leave the talent of over 1 million young people untapped. At a time when growth remains weak and productivity challenges persist, helping young people into education, training and employment is not simply a social policy but an economic policy, yet beyond the economics lies something even more important. Every young person deserves a chance such as that which I was fortunate to receive, as I said earlier, as a young YTS trainee all those years ago.

Here is one thing that I hope we can build on. I know the Government have tried to reset their relationship with the European Union around Erasmus. When I was in the European Parliament with the noble Lord, Lord Hannan, I was on that committee, and we were looking at expanding Erasmus to include more young people on apprenticeships, not just the academic route. At the time, I argued that if the sons and daughters of hospital cleaners and car mechanics from Hull and elsewhere were working at Siemens, they should also have the opportunity to go abroad, and I really hope that that opportunity continues. Young people deserve that opportunity to discover their talents, contribute to their communities and build a better future for themselves. If we are serious about welfare reforms, we must be equally serious about creating opportunities, as I said earlier. If we are serious about economic growth, we must invest in potential for our young people. If we are serious about building a fairer society, we must also ensure that no young person is written off because they happened to start life on the wrong side of the opportunity.

This is a challenge for us all, and it is one that I hope the Government will continue to address with ambition, compassion and determination.

14:06

[Baroness Stedman-Scott (Con)]

My Lords, I, too, pay tribute to Lord Younger, our colleague on these Benches who has left the House, not of his own volition. He is a great loss to the House, as are all the hereditary Peers who have left us. I also thank my noble friend Lord Evans very much for making this debate happen. Look at what he has done: we have had a fantastic array of speeches and knowledge. He is now our DWP Whip. I also welcome my noble friend Lady Spielman to our Front Bench; she will be a great asset to our team.

I hope the Minister and everybody in the House have enjoyed the masterclass they have had today on welfare reform and opportunities to help young people into the labour market. I know we have had lots of debates, questions and conversations about the NEET problem. Many judgments have been passed across the House about who has caused it. I hope that we have got past that today and have been able to speak honestly about some of the things that we believe might help the situation.

I am not going to repeat all the statistics in my speech—I have rubbed them out, because they have been put very powerfully—but I will start by talking about the concern that 61% of young people are reported as NEET, which is a record, where economically inactive means that they are not working and are not looking for work and, in many cases, are not required to look for work. My noble friend Lord Young made that point. Can the Minister tell us what proportion of those who are economically inactive are so because they are not required to look for work? I am sure she will have noted Alan Milburn’s warning that the welfare state is “exacerbating inactivity”, which is a point that has been made right through this debate. His argument is that the Government’s new work programmes alone, welcome though they are, will not be enough to address problems that are far deeper-rooted.

So I ask everyone to be brave, think the impossible and take seriously some of the recommendations that have been made today—even by an Etonian, my noble friend Lord Younger, about changing the way in which Jobcentre Plus money and activity are used. I spent 32 years trying to help people to get and keep a job; that is why I got up in the morning, and to some degree it is why I get up now.

I want to tell noble Lords about a meeting I had with a doctor at a conference. He said to me, “Debbie, I’ve got heart-sink patients”. I said, “What’s wrong with them?”, and he said, “My heart sinks every time they walk into the surgery, because I’ve got nothing for them. Can you put your people into my surgery and see what you can do for them?” To cut a long story short, we had 200 people on our books, and we had a consulting room in the surgery, and I am pleased to say that we reduced the antidepressant prescription by over 34% and reduced referrals to counsellors by 86%. Of those whom we got into work, which was around 56% in a year, 76% were still in work a year later. That is the kind of magic, and the kind of energy, that we need to inject into our thinking and our challenges.

The challenge before us all is profound. Now is the moment for us all to work together, as has been said by many people, to improve the lives of the people whom we exist to serve.

I have to congratulate the noble Lord, Lord Walker, on his outstanding contribution. It cannot have been easy to make it, but I say to him: “Well done for your bravery, sir”. I wish we all had it by the bucketload. If the noble Lord wants another job, then that as a speechwriter beckons; I am sure he will be very welcome.

I recognise that the issue of the economy is, at least in part, on the Government’s radar. Policies such as the youth guarantee scheme, while we may have disagreements over them, represent the beginning of a response, but the scale of the challenge demands something far more serious, coherent and ambitious. I thank my noble friend Lord Elliot for his idea, which seems to have caught everyone’s imagination; it is one that we should embrace.

The labour market has changed fundamentally over the past 20 years; the noble Lord, Lord Liddle, said that, as did my noble friend Lady Shephard of Northwold. Our economy now has around 1.6 million fewer lower-skilled and medium-skilled jobs than it once did. Entry-level work is harder to find, if not impossible. Competition for those jobs is more intense and the pathways into stable employment are far less straightforward than they were for previous generations. Technology has changed, and absolute support on an individual basis is really important.

From an employer perspective, the British Retail Consortium has talked about the impact of the Government’s changes on the cost of hiring people. It says—it is not me saying this—that taking on young people is more expensive and complicated, and schemes are not working. We should be brave enough to go back to the drawing board and work out what might work, and I am sure that today’s debate has helped us come up with even more ideas about what is possible. The Government cannot do this job alone; it is incumbent on all of us to work together to do it.

I spent a whole couple of days in Suffolk recently talking to businesses and colleges and to Jobcentre Plus. They were very excited about the prospect of jobcentres merging with the careers service. This has not been mentioned today, but I wonder whether, either in the Minister’s response or in writing, we can be told how long the merger will take, how long it will take for it to become fully operational and what outcomes we are expecting from it.

I want to talk about regional disparities. I agree with everyone who said that national programmes have been good in the past, but they are not right for now. We have to allow local people and local organisations to come up with interventions that work for them. We do not need a national programme, because no national programme can sort it out, but whatever happens must be known nationally and delivered locally, and the impact must be known and felt personally.

Finally, I want to talk about early intervention. We have a NEET problem but, for me, if we want to prevent NEETs in future, we have to start earlier and make sure that no young person leaves education, in whatever form, as a NEET. Another thing that I was involved in was ThinkForward, where we put our advisers into schools to work with young people about whom, at the age of 14, everybody said, “They’re going to end up in trouble; they’re going to end up NEET; they’re not going to get anywhere”. When we worked with them, I think it was the most wonderful thing I was ever involved in.

Eighty-five per cent of those 14 to 16 year-olds showed statistically significant improvements in their attendance, because when they did not turn up for school, we went round their house and got them. Sixty per cent of our school leavers achieved at least five GCSEs grades A to C, and 96% of our 17 to 18 year-olds were, when I left, in further education, employment and training. That NEET problem had been all but eradicated. This is the kind of thinking we need today. Can the Minister set out what the Government are doing on early intervention and how DWP is working with the Department for Education to make sure that happens?

Mental health has been mentioned. I know that young people are suffering anxiety. For those of us who see it with people in our families, it is real and we have to help them.

The other thing I want to finish on, if noble Lords will allow me, is that we need a strong economy. Others more eloquent than me have articulated how that should work and what needs to happen. It is obvious that only employers create jobs. Again, I plead with the Minister: please will she and her Government rethink the additional costs that they have added to business? I am telling your Lordships that if we did something about that now, this problem would start to go away. We need earlier intervention and a vibrant economy, and we need people to think what they dare not think and implement it.

I thank noble Lords for their honest contributions. I hope all contributions have been taken by the Government in the right spirit and that this propels us into action to do the right thing.

14:17

[The Minister of State, Department for Education and Department for Work and Pensions (Baroness Smith of Malvern) (Lab)]

My Lords, I too thank the noble Lord, Lord Evans, for bringing forward this debate, which has been very constructive and wide-ranging. There was a clear consensus in it that far too many young people in this country are leaving education and not getting the chance to work. We must be clear about the scale and implications of this challenge that we face. It is, of course, not a problem that arrived in the last year, or in fact in the last two years; it is deep rooted and long term.

The number of young people not in education, employment or training has been rising for years, increasing by a quarter of a million in the three years leading up to the election. As many others have said, it is now close to a million, which is far too high. But it is not inevitable; it is a crisis of opportunity and one that we should not accept.

I agree with those who said that what it is not is a failure of ambition among young people. There are many young people keen to learn and work who are not provided with that opportunity. It is too often a failure of the system to provide the opportunity and support that they need. As others have said, it is not only a social challenge; it is an economic one as well, and one that needs early intervention and work across the whole of government. That is why I am so pleased that I sit now in two departments: the Department for Work and Pensions and the Department for Education. One of my bosses, the Secretary of State for Work and Pensions, commissioned Alan Milburn to examine the underlying drivers of rising youth inactivity, because we were clear that this is not a single issue with a single cause. Also, as the right reverend Prelate the Bishop of Leicester identified, this is a series of individuals, quite often with differing needs and reasons why they are not working, learning or earning. In many cases, they very much want to work.

Another area of consensus in the debate, I think we all agree, is that Alan Milburn’s report provides a very important, serious assessment of the challenge. Having read quite a lot of Government-produced or prompted reports in my time, I agree with the noble Lord, Lord Young, that it is very much better than a lot of them and certainly well worth a read.

On the point made by several noble Lords about the position of the economy and costs in the labour market, I am sure noble Lords will recognise, as I pointed out to the House the other day, that Alan Milburn makes it clear in paragraphs 264 and 266 that it is not actually about the national insurance contribution increases or the national minimum wage. If we look at the way in which both of those impact on the labour market, but also the reliefs that are available to employers, particularly with respect to national insurance contributions when they take on young people, we see that this is not at the heart of the cause of youth unemployment. We have the fastest-growing economy among G7 countries. We have 416,000 more people in work in this country now than a year ago. Our unemployment is lower than in most OECD countries and the EU average. There are specific issues that young people face in being able to access the labour market; we need to respond not only to the economic conditions but to all the other issues too.

The other important thing about the Milburn report is that it brings into sharper focus the nature of what we face, not just its scale but its persistence: what has been described as “stickiness”. Too often, once a young person falls out of work or education, they can become stuck outside the system and, the longer that continues, the harder it becomes to return, with lasting consequences for their prospects, their health and their earnings. The report highlights the growing number of young people who are not only out of work but who are assessed as having health-related barriers to work. That underlines that this is not simply a labour market issue but one that cuts across employment, health, education and welfare. That is why it cannot be a challenge for one department alone. There must be a whole-of-government effort and, as the noble Baroness, Lady Stedman-Scott, mentioned, a broader campaign across the country to tackle it.

As the Chamber has also recognised today, when so many young people are outside work or education, we constrain labour supply, limit productivity and store up long-term costs for individuals, for the Exchequer and for the economy. That is why this Government have acted and are investing. In response to the noble Lord, Lord Mohammed of Tinsley, this Government are investing now to save for the future. There is an additional £2.5 billion in the youth guarantee and the growth and skills levy, in support of young people and employers over the next few years, including a £3,000 youth jobs grant for employers hiring a young person who has been out of work for six months. There is also a £2,000 incentive for small and medium-sized businesses taking on young apprentices.

We are turning the focus of apprenticeships back to young people, including the full funding of training costs for SMEs employing apprentices under 25. I strongly agree with my noble friend Lord Austin and the noble Lord, Lord Willetts, about the need to achieve this pivot of the apprenticeship system back to young people, and to reverse the sharp decline in apprenticeship starts among young people, which have fallen by 40% over the last decade. That is why we are expanding opportunities for young people through new foundation apprenticeships. It is why we have introduced a £2,000 hiring payment for non-levy-paying employers. We are removing the requirement for small businesses to fund any element of training, and there will be additional investment for taking on apprentices if they are out of work.

This is backed by an additional £1 billion investment and will support 50,000 more young people into apprenticeships over the next three years, providing a clear route into skilled work and helping businesses grow with the talent that they need. My noble friend Lord Austin is right to emphasise the role of government here. I am proud that our estates strategy at the Department for Education, as we repair and rebuild schools, will provide places for 13,000 more apprentices and T-level placements.

I say to the noble Lord, Lord Willets, that we are considering the report of the Social Security Advisory Committee on the impact of apprenticeships on benefits, and we will have more to say about that.

Another element of the youth guarantee is the expansion of youth hubs across the country, bringing together employment skills and the sort of wider support that the right reverend Prelate the Bishop of Leicester rightly identified in local communities.

The noble Baroness, Lady Shephard, and the noble Lord, Lord Cameron, in particular raised the issue of rural unemployment. We recognise that transport can be a barrier for young people in rural areas. That is why we design youth hubs to be flexible, to work with local partners and to tailor delivery to what works best in each area, including flexible opening hours or choosing locations that can align with local transport patterns. Youth hubs bring together employability support from jobcentre work coaches with mental health, housing, essential skills and employer engagement support in community settings, so that young people have access to local opportunities and support tailored to community needs.

We are also, in doing that—I think the noble Lord, Lord Young, is right about the need for more place-based funding and the ability to address this problem—actively testing and evaluating place-based delivery models. This includes how we reach a diverse customer base, including those with specific needs and in hard to reach areas, such as through jobcentre vans: mobile units are being tested in nine areas including Bolton, the highlands of Scotland and north Wales. In particular, the youth guarantee trailblazers, where we are working with mayoral strategic authorities in eight areas, are testing the ability of those strategic authorities with government investment to test innovative approaches to identify and deliver support to young people who are NEET or at risk of becoming NEET. I am sure the noble Lord, Lord Cameron, will be pleased to hear that in the west of England one of the ideas in rural north-east Somerset is to facilitate e-bike loans for young jobseekers to be able to travel.

On another element of the youth guarantee, young people on universal credit looking for work will get support through the youth guarantee, with a dedicated gateway meeting and intensive support if they are still not earning or learning after 13 weeks. Nearly 900,000 16 to 24 year-olds will be able to benefit from that dedicated session and four weeks of additional intensive work coach support, including work experience and the ability to enter into and benefit from sector work-based academies as well.

Finally in the youth guarantee there is a jobs guarantee, providing six months of paid government-subsidised work for young people who remain unemployed in the long term after all of that other support. I welcome the comments of the noble Baroness, Lady Neville-Rolfe, about her experience at Tesco. She is absolutely right that these are not easy cohorts of young people by definition if they have been out of work for 18 months. The delivery partners we are working with are not consultants. They are organisations with exactly the experience of getting young people to work and getting them there on time. I agree with the noble Baroness about all those requirements; perhaps we should send the noble Baroness, Lady Stedman-Scott, round to get them up in the morning. It is the Government’s intention—we have expanded the investment in this—to enable this job guarantee to provide the six months of paid work to 90,000 young people by virtue of our investment.

I will just touch on retail and hospitality—which was raised by several noble Lords—not least because, as we know, retail and hospitality have traditionally provided those first experiences in work for young people. We know that employers want to play their part in supporting young people. For instance, I welcome the announcement just this week from Marks & Spencer that it is launching a training programme for 1,000 young people.

I had a very good visit to B&M, where, in a meeting facilitated by the BRC, I met other retail employers; and I was able to join the BRC HR leaders’ webinar just the other day. Of course, while there are concerns about the costs and risks of employing young people, I found there was also a lot of enthusiasm from retailers to be involved with, and be a part of, the Government’s youth guarantee, and to play their role in it. In exchange, we want to support and work with employers to develop opportunities for young people. In the DWP, we continue to expand our current network to more employers in key sectors, such as retail and hospitality, where there is a critical demand for workers. We have expanded opportunities through new foundation apprenticeships in hospitality and retail, in addition to our new V-level in marketing and retail, which we aim to introduce in 2028.

Noble Lords also raised an important theme about how we prioritise prevention: how we make it easier to identify young people who are at risk of becoming NEET, and how we stop that from happening. As the noble Lord, Lord Storey, identified, we know that these barriers emerge early in life. As a Government, we are focused on ensuring that young people get the best start in life, which many are not currently getting. That is why we are bolstering our prevention measures. Through our child poverty strategy, we are taking steps to lift 550,000 children out of poverty. We have committed to ensuring that 75% of children reach a good level of development by the end of reception, so that they can engage in learning. We know that persistent absence from school is not just a short-term problem but closely linked to young people becoming NEET later on. That is why we welcome the action that has led to the fastest improvement in attendance in a decade.

We know that the transitions between school, further education and employment are too often simply not strong enough to keep young people engaged and moving forward, and we know that the curriculum needs change. That is why we set up the Curriculum and Assessment Review, which will enable young people to have more of those skills that are necessary to operate in the modern job market. It is why we are reforming post-16 qualifications to increase the number of young people who can do T-levels, and it is why, as I said, we are introducing the new V-level qualification, which will be closely linked to occupational standards and involve working with employers, providing a high-quality vocational route for young people.

I welcome the further push from the noble Lord, Lord Baker, on the UTC Sleeve, and I will come back to him on that.

I also hear what noble Lords are saying about work experience. One of the things that Alan Milburn identified is the way in which it is much harder now for young people to get work experience, which is why, through our youth guarantee, we will find 300,000 placements for work experience and sector-based work academy programmes, backed by major employers such as Manchester Airports Group, JD Sports and Gatwick Airport. We are strengthening work experience in schools, with a guarantee of two weeks’ high-quality work experience for every young person. As my noble friend Lady Nargund said, volunteering also plays a very important role in this.

There are other deeper challenges at play as well. More than one in six young people who are not earning or learning had a mental health condition as their primary condition in 2024, more than double the rate in 2012. That is why it is so important that this week we were able to show how the expansion of mental health support teams in schools is progressing. Six million children now have access to mental health support in their schools. We know that young people with SEND and those who struggle to achieve at school face a significantly higher risk of becoming a NEET. The noble Lord, Lord Shipley, is right. There are supported internships, which I was fortunate enough to see in practice at Whipps Cross Hospital last week through Project SEARCH, which I note is also now working with Amazon on a very big expansion. Supported internships are important for those with education, health and care plans—but the Government are also investing in research as to how we can develop them for those who do not have EHCPs.

This is about much more than education or employment alone: it is about early support and well-being, and ensuring that our systems work together around the young person. It is about more responsibility on schools to identify early who will become a NEET, with the improved risk of NEET indicator tools that we are developing. It is about ensuring, as we are doing, that we build on the existing guarantee of a place in education or training for every 16 and 17 year-old. Much of this, particularly the youth guarantee, is welfare reform, but we are reforming the welfare system more widely as well to ensure that it supports people to engage with work wherever possible. That includes legislating for a right to try, so that disabled people can take steps into work without fear of automatic reassessment. It means changes to universal credit to reduce disincentives to work and investment in personalised employment support, including for people with health conditions.

These reforms reflect a broader shift under this Government, from a system which can too often write people off to one that acts as a platform for opportunity, now also essential to ensuring the long-term sustainability of the system, supporting those who need it while enabling more people to move into and progress in work. We are clear, however, despite this significant progress, that more must be done, because for many young people, the barriers to work do not begin at 16. As I have said, they often have their roots in poorer health, disadvantage and unequal access to opportunity. As our population ages and migration falls, we will depend more than ever on the talent and potential of our young people. We cannot afford economically or socially to leave so many outside work and education. We will take determined action; we will learn from others, which is why my right honourable friend the Secretary of State at the DWP is visiting the Netherlands, possibly even at this very moment, to learn from it.

We look ahead to Alan Milburn’s full recommendations in the autumn, but our objective is clear: to build a system that places opportunity and work at its heart—

[Lord Young of Cookham (Con)]

My noble friend Lord Evans asked at the beginning of the debate when the Government would respond to the Select Committee report on social mobility. The report was published in November; the government convention is to reply within eight weeks, and it is now almost six months. When will we get a reply?

[Baroness Smith of Malvern (Lab)]

I am sorry that there has not been a reply yet. I think there should have been, and I have already made that point to both the DfE and the DWP. I will undertake to ensure that we get that back as quickly as possible.

Just to reiterate, our objective is clear: we need to build a system that places opportunity and work at its heart, one that is not concerned only with what people receive but asks a broader question of how we help people to change their lives. That is the challenge before us, and it is one that this Government are determined to meet.

14:39

[Lord Evans of Rainow (Con)]

My Lords, I am truly grateful to everyone who contributed with excellent speeches to this debate today. As the noble Lord, Lord Liddle, said, it has been a non-partisan debate, which means that I look forward to debating again when we get the Milburn report, as the Minister says, in the autumn, because it is so important. I referred to the coalition Government and the progress made there 15 years ago. Your Lordships’ House has an important role in helping with this NEET issue. The noble Lord, Lord Walker, made the point in his excellent contribution that his is the Labour Party, not the benefits party, and that private sector businesses—indeed, private sector family businesses—create the jobs, create the wealth, to move the nation forward.

I am also grateful to the Minister for her responses. I am biased when it comes to the report of the Lords Social Mobility Committee, because I sat on that committee, but it is an excellent report and is complementary to the Milburn report, as my noble friend Lord Young said. The key recommendation is to run a pilot scheme and look at a combined authority, such as that of Andy Burnham in Greater Manchester, or indeed Bristol or elsewhere, to give them the money and see if we can learn from a focused and concentrated effort to reduce NEETs in those communities. As we say in the report, there needs to be a welfare system reset to reflect local areas and local labour markets, because those mayors know best about the specific needs. One hat does not fit all, and it should not even be on a regional basis but on a town-by-town, city-by-city basis.

We cannot carry on spending more on disability and incapacity benefits than we do on defence. At the beginning of my speech, I referred to the predicted growth in welfare spending of £333 billion by 2030. During this debate, I was very sorry to learn that the Defence Secretary, John Healey, has resigned, specifically because of the lack of money being provided for our defence at this time. I pay tribute to John Healey, who was an outstanding Defence Secretary and, indeed, public servant.

Finally, my noble friend Lord Young light-heartedly pointed out that of the five Conservatives on the Select Committee, three were old Etonians, but there was also one NEET. I was the NEET on that committee, and when I left school at 16 with no qualifications, I was lucky enough, as I indicated in my opening remarks, to have had a Saturday job in a shop. I also worked in my local pub, which gave me the work ethic that enabled me to get into a business career in manufacturing, in the local aviation sector near where I lived, which set me up for life. The challenge is to get young people into those early start-up jobs. Saturday jobs are a rare thing these days, as has been ably pointed out. Your Lordships’ House is in a position to help NEETs. I beg to move.

Motion agreed.