Youth Unemployment

Damian Hinds Excerpts

Wednesday 28th January 2026 Commons Chamber

[Dame Diana Johnson]

My hon. Friend has made his case very well. He referred to the £725 million for the growth and skills levy, which is part of the more than £1.5 billion that has been made available for employment and skills support in the Budget. That is very much needed after the dramatic decline in the number of young people starting apprenticeships under the last Government, which we will reverse. At the same time, we are strengthening our world-leading universities.

[Damian Hinds (East Hampshire) (Con)]

Will the Minister give way?

[Dame Diana Johnson]

I will make some progress, because many Back Benchers want to speak.

The skills White Paper sets out our plan to build a more specialised and more efficient higher education sector that will better meet the needs of the economy. The graduate economic inactivity rate is now at its lowest on record, and we want to build on that. We recognise the need for modern technical skills, and not just the old academic subjects. I saw that for myself at the Ron Dearing university technical college in Hull only last week—young people honing their skills and getting a brilliant education.

No matter what path young people choose, we want them to have the skills to succeed. Skills are vital in the world of work today, but more than a quarter of all vacancies are skills shortage vacancies. That is why, last year, the Prime Minister set out our bold ambition for two thirds of young people to enter higher-level education or training. We have added adult skills to the Department for Work and Pension’s brief, to help us join up employment support and skills more closely, so that young people have genuine pathways into good jobs. We are significantly expanding sector-based work academy programmes—SWAPs—in England and Scotland; there will be more than 145,000 additional places over the next three years. Just today, our colleagues at the Department for Science, Innovation and Technology announced a new package to give people the skills that will enable them to seize the opportunities that artificial intelligence will bring. That includes an expansion of free AI foundation training for all workers, to upskill 10 million people by 2030. All this is about opening up opportunities for young people.

However, we want to make sure that no stone is left unturned. Last month, the Government unveiled our national youth strategy, which is backed by £500 million. It will rebuild the youth services that the Conservative party decimated, and help more young people transition into adulthood. The Secretary of State has commissioned Alan Milburn to complete a wide-ranging investigation into the causes of youth inactivity, and to come up with policy solutions across the piece. As a former Health Secretary, he is well placed to give particular focus to the role of health in all this. That is needed, because over a quarter of young people not in employment, education or training now cite long-term sickness or disability as a barrier—more than double the figure in 2013-14.

Too many people are shut out of the labour market by disability or ill health. This has worsened, especially since covid, so we are rolling out a £1 billion Pathways to Work offer, which brings together programmes such as Connect to Work, which my hon. Friend the Member for Dartford (Jim Dickson) referred to and which I have seen in action in Lewisham, where I met a neurodiverse young man who told me that the personalised support that he was receiving from the team was helping him to stay in work; and WorkWell, which is providing really impressive integrated work and health support that I recently had a chance to see in Cambridge. Pathways to Work will ultimately guarantee access to work, health and skills support for disabled people and those with long-term health conditions who are claiming out-of-work benefits. We already have 1,000 Pathways to Work advisers on hand to provide better one-to-one support. We know that prevention is better than cure, so we want to avoid people falling out of work due to ill health wherever possible, and employers have a unique role to play.

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[Damian Hinds (East Hampshire) (Con)]

There are many ways that we can express it, but none of them are good: youth unemployment is at 15.9%; it is up 10%; it is up 1.5 percentage points; it is up over 100,000 in the last year; it is at a 10-year high—higher than in the covid era.

Let us be clear: this is not economic inactivity we are talking about; it is unemployment. The definition of unemployment is not about who is claiming benefits; it is about having had no income whatever—not having worked for a paid hour—in the reference week. It is about being available for work and actively looking for work. That is the number that has gone up. The increasing number of people who are both studying and seeking to work—for whom, by the way, zero-hours contracts are especially relevant—is a particular issue, and I will come back to that point.

Unemployment overall has gone up, but it is young people who have borne the brunt; the rate of increase has been almost twice as high for young people as it has overall. To be fair, that is usually the case—when there is rising unemployment, it is always young people who feel it first and hardest. Why? Well, as the shadow Secretary of State, my hon. Friend the Member for Faversham and Mid Kent (Helen Whately), said, the first thing that employers do when things look uncertain or difficult is to stop hiring. A hiring freeze is the quickest way to cut down the payroll.

Secondly, if companies have to let people go, I am afraid that redundancy is cheaper when it comes to younger people, so they sometimes deploy a LIFO rule —last in, first out. There is then the secondary effect that the more experienced workers can fill the vacancies. On top of that, we have the situation at the moment whereby sectors that disproportionately employ young people—in shops, restaurants, hotels and throughout retail, hospitality and leisure—have been particularly hard hit by the national insurance and business rates hikes.

I said that youth unemployment usually tends to rise faster and be higher than overall unemployment. That is true, but historically it is not as true in this country as it is in the rest of Europe. There are exceptions—in Germany and the Netherlands, for example—but it is the case in southern Europe. After the crash under the previous Labour Government in 2007-08, there was talk of a lost generation in southern Europe as youth unemployment rates soared so high.

Why should the situation in those countries be different from the situation in countries like ours? There is a fancy economics term for it: insider-outsider theory. That theory basically says that when there are economic troubles in a system that has very heavily regulated labour markets, very high levels of employment protection and the very heavy involvement of trade unions, all the help tends to go to the people in work, and it is those trying to get into work—the outsiders—who suffer as a result. Historically, our country has had more liberalised—although not totally liberalised—labour markets, which has meant that we have not had those problems with youth unemployment to the same extent as some of our near neighbours in Europe, and we have tended to recover more quickly when they do occur.

Right now, we have the historical rarity—I am not sure it is unique, but it is certainly a rarity—that the ratio of youth unemployment to total unemployment in the UK is higher than it is in the EU. That is before we feel all the effects of the Employment Rights Act 2025; I am sure that some effects were there already, but we have yet to feel the full effect. That Act will discourage taking on new workers, especially new untested workers, and that is of course what youth unemployment is.

Let me talk about one aspect of the 2025 Act: zero-hours contracts. These contracts have a special place in Labour mythology, which comes from the time when the last leader of the party, the right hon. Member for Islington North (Jeremy Corbyn), used to bring them up every week at Prime Minister’s questions, saying that they were an epidemic, ripping apart our country. At the time, the Conservatives researched how big a deal zero-hours contracts were, and it turned out that fewer than 3% of workers had a zero-hours contract for their main job. There were others who had one for a second job, including many working as bank staff in the NHS. There were also lots of students on them. It turned out that the average number of hours on a zero-hours contract was 25, and—here’s the bit that nobody could accept—the average job satisfaction of people on a zero-hours contract was higher than it was for workers overall.

Those on the Government Benches have been grimacing a little, but I do not know how many of them know that the proportion of people on zero-hours contracts has gone up since the general election of 2024. They are just a part of our economy. They are also heavily skewed towards young people, such as students working in sectors like hospitality and other seasonal occupations. About 40% of people with a zero-hours contract job are under 25.

I myself was once a young person with a zero-hours contract—I just did not know it was called that. If colleagues across the House think back to their first job, perhaps washing up in a restaurant or working shifts in a shop, they probably did not know at the start if they would be working exactly the same number of hours every week and so on; it turns out that a lot of us probably had our first opportunity in the world of work through a zero-hours contract. It will be true for people even after the Employment Rights Act—those with such a contract will have some extra guarantees included in nit. However, it will also be a bigger deal, from an employer’s point of view, and it will add some risk to taking on young people. What will be the balance for employers and employees? It is, for Ministers, a leap of faith.

[Andrew Pakes]

I appreciate the right hon. Gentleman’s knowledge and his passion for this subject. I would just suggest that he perhaps underestimates the impact that insecure work can have. In one of my brother’s last jobs, he had to get in the car and start driving to work each morning before he would get a phone call telling him whether or not he had a shift that day. Does the right hon. Gentleman not think it is reasonable that people like my brother should know their shift a day in advance? That is the issue we are really talking about with insecure work. I understand that he is making a political point, but we are talking about real people’s lives.

[Damian Hinds]

I am not making a political point. I think it is right and reasonable to give employees visibility, and all good employers who want to keep their employees will of course do the right thing and try to do so. The Employment Rights Act, however, does an awful lot more than just let people know some time in advance about the hours of their next shift.

The effects we see from the Employment Rights Act, taxation changes and other measures will not be mass lay-offs; it will be people—young people—not being taken on in the first place. Why does that matter? The Minister said it herself: it matters because of the scarring effect of youth unemployment. We know from studies that if someone is out of work in their early 20s, they can still be suffering the effects 20 or 30 years later.

There are things the Government could do to mitigate some of what is happening, including on the regulations coming out of the Employment Rights Act. However, I just wonder why they are doing it overall. I think it is because, in a world where there have been enough U-turns from this Government—actually, I do not think there have been enough yet, but there have been a lot—that legislation is something that Labour MPs can bring home and say, “This is a proper left-wing policy that we have enacted.” But do they really want to bring home higher levels of youth unemployment in their constituencies? That is what will happen.

The Government have introduced a number of schemes to try to mitigate what is going on, some of which are welcome. All Governments introduce somewhat similar schemes. However, the 55,000 people who will be eligible for the jobs guarantee should be seen in the context of the more than 900,000 young people who are not in education, employment or training. The scheme is limited in the areas it covers and, I think, people are eligible only after they have been searching for a job for 18 months or more, which would obviously count out many young people.

I welcome Connect to Work, which was mentioned by the hon. Member for Dartford (Jim Dickson), although I do not think it is meant particularly for young people; it might nevertheless be helpful for people who have been off on long-term sick. I thought the timings sounded ambitious when the Government first announced it, though, so I would welcome the Minister telling us what they expect the numbers to be at the end of this financial year, including in my county of Hampshire.

I know that I have already spoken for 10 minutes, Madam Deputy Speaker, but I just want to set the record straight on apprenticeships, which have come up a number of times. I hope I can help the House with a non-partisan description of what has happened in relation to apprenticeships over the past 20 or more years. The truth is that under the previous Labour Government, and under the first few years of the coalition Government, many tens of thousands of young people were doing an apprenticeship without even knowing they were doing so, so thin and flimsy were those apprenticeships. [Interruption.] The hon. Member for Bermondsey and Old Southwark (Neil Coyle) may screw up his face, but that is true; the research evidence is available.

The previous Government therefore reformed apprenticeships to be a minimum of one year, with a minimum of 20% time off the job, end-point assessments and qualifications designed by employers themselves, overseen by an independent Institute for Apprenticeships. Yes, when we did that, the number of apprenticeships went down, and the numbers that the Minister was quoting were all from after that change. Making the specifications of a qualification considerably more exacting will of course have an effect on the numbers. But guess what the new Government are doing? The minimum length for an apprenticeship will now be eight months. Try telling a German captain of industry that it is possible to do an apprenticeship in eight months. Will the numbers go up? Of course they will!

I recently met hairdressers in my constituency and was reminded of how all this comes together. Hairdressers, like hospitality businesses and others, bring people into our town centres. They are more than just employers, and their businesses cannot just move online. They are now facing seriously higher employment costs, including national insurance contributions and, in many cases, much higher business rates, and that is before we get to the looming impact of the employment regulations. Hairdressers also have a very strong tradition of taking on large numbers of young people and apprenticeships. My worry is that, with the increase in costs, it will be simply unaffordable for them to take on young people in nearly the same numbers. The same is true for pubs and many other employers.

We are seeing the early effects of Government policy in today’s youth unemployment numbers, and I take no pleasure whatsoever in saying this, but I am afraid that they are going to get materially worse. I ask the Government to take that seriously and to act, not by delivering some short-term programmes but by rethinking their approach in order to make it easier and less costly for companies to take on young people so that they can start their careers and build their futures.

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[Andrew Western]

That is why we are making interventions in the form of the youth guarantee and increased investment in the growth and skills levy. I gently point out that, as the right hon. Member will be aware, the rate of youth unemployment rose by 4% in the Conservatives’ last two years in office. Today we have heard attack after attack, and excuse after excuse for youth unemployment rising, but it was rising when they left office. This is not a new problem. It is a significant challenge that we are serious about addressing, but if the Conservatives wish to continue with their policy of collective amnesia about the mess that they left behind, they will never have anything to offer young people.

I turn to Opposition Members’ contributions, beginning with that of the shadow Secretary of State, the hon. Member for Faversham and Mid Kent (Helen Whately), who showed that the Conservatives have suddenly developed empathy for young people after leaving us with a NEET number of almost 1 million. We heard Tory Members compare the youth unemployment rate with those of other G7 countries, but we have the second-highest youth employment rate in the G7. We are not complacent, and we know that there is work to do. [Interruption.] I am aware that it is a different figure, but it is relevant when looking at the overall picture.

Several Members, but first among them was the shadow Secretary of State, said that nobody on the Government Front Bench had ever worked in a business. I suggest that she checks the record. Certainly, both the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Kingston upon Hull North and Cottingham (Dame Diana Johnson), who opened the debate, and I worked for many years in the private sector. I managed a small business; I worked in a global business; and I did several other jobs in the private sector in between.

Conservative Members suggested that they cut the welfare bill and halved unemployment, using a pick ‘n’ mix of flattering figures from various moments of their time in office. However, we, like people up and down this country, will judge them on their legacy when they left office. They left a spiralling welfare bill that disincentivised people from looking for work, and they left us the only G7 country with a lower employment rate than before the pandemic. They are not prepared to face up to the mess that they left our country in, and they do that time and again. I admire their chutzpah for continuing to table Opposition day debates on subjects on which their record is absolutely appalling and by a considerable margin the most significant factor in what we face today, but that does not mean that the public will forgive or forget what they left behind.

The Liberal Democrat spokesperson, the hon. Member for Richmond Park (Sarah Olney), asked about the impact of artificial intelligence on the workforce. I assure her that the Government are cognisant and mindful of the need to keep a close eye on it. We have recently set up a new cross-Government unit that will look at AI’s impact on the labour market, and will offer free AI foundations training for all workers. She raised concerns about the defunding of level 7 apprenticeships. I will not pretend that the Government’s decision is not difficult. We have chosen to target the apprenticeship funding that this Government have to spend on young people. That is because they are less likely to have a relationship with an employer who might be able to fund their training, and less likely to be able to access some of the other opportunities that people who access higher-level apprenticeships might have, and because there are other routes, including a more traditional higher-education route, for people to access instead of a level 7 apprenticeship.

The hon. Lady asked about the timing of the roll-out of the youth guarantee. The first tranche—the first 55,000 opportunities—will be in place from April, and by September we will see the roll-out of the full 300,000. She went on to criticise the national insurance increase in the Budget and its impact, but then set out that the Liberal Democrats would cut business rates and VAT and scrap that national insurance contribution increase. I say to her gently that that is the problem with the Liberal Democrat position; they never say how they would pay for it, or what they would do. She lambasts the decisions taken in the first Labour Budget. Would the Liberal Democrats choose to withdraw the additional money that has gone into the NHS? It is not credible to set out only what they are against.

We heard a number of excellent contributions from my hon. Friends the Members for Norwich North (Alice Macdonald), for Welwyn Hatfield (Andrew Lewin), for Gillingham and Rainham (Naushabah Khan), for Harlow (Chris Vince) and for Banbury (Sean Woodcock). Those excellent contributions not only highlighted the toxic legacy of the Conservative party, but set out the range of key interventions that this Government are making, which include, but are not limited to, the youth guarantee.

I think the right hon. Member for East Hampshire (Damian Hinds) asked a question about the timing of Connect to Work, but I may have lost track.

[Damian Hinds]

It was about the Minister’s projection for the Connect to Work numbers by the end of this financial year, its first year in operation.

[Andrew Western]

I thank the right hon. Gentleman for that clarity. He will be aware that Connect to Work is already live in two thirds of delivery areas. By April, that will be all areas. In his area of East Hampshire, it is already live, and we expect that it will support up to 4,800 people.

[Damian Hinds]

Is that for this financial year?

[Andrew Western]

I will confirm for him separately the figure for this financial year. That figure is the aspiration in the round, using the £18.7 million funding that has been made available.

The right hon. Gentleman then launched a staunch defence of zero-hours contracts. He will know that we have a fundamentally different view of that. It is my view that insecure work is a blight. It is hugely problematic for those on challenging budgets not knowing what hours they have to work each week. This is the fundamentally different perspective that we have on this side of the House.

[Damian Hinds]

Would the Minister apply that principle to bank staff working in the national health service who have what is in fact a zero-hours contract—a bank staff contract—to top up in other roles in the NHS when that support is needed?