When Rachel Reeves speaks at Labour party conference today, she has a tough message to deliver. The Chancellor will announce her plans to ‘abolish youth unemployment’ by forcing Britain’s jobless youth into work.
There’s a moral case to be made for welfare reform and the Chancellor must make it today
The ‘youth guarantee’ scheme will offer the carrot of a guaranteed work placement once unemployed 18 to 21-year-olds have spent 18 months out of the workforce. Those who turn down job offers or training places, however, will face the stick via sanctions such as having their benefits docked.
With nearly one million 16 to 24-year-olds classified as not in education, employment or training – so called ‘Neets’ – this is a problem that is costing our economy billions. Tackling youth unemployment not only makes economic sense but feeds into one of the key themes that Labour want to get out of this conference: the idea that ‘Britain is founded on contribution’.
Economists, though, will be watching for any clues on what Reeves is planning for employment taxes in the upcoming Budget. Whilst many have blamed the graduate jobs slump on AI, the reality is that the £25 billion raid on employers’ national insurance at last year’s Budget has caused hiring managers to shut up shop. If the Chancellor is serious about stopping a new workless generation, she must tackle the tax environment she herself created for employers last year.
But to look at our welfare problems and rising youth unemployment through a solely fiscal lens misses another key point: this is a human tragedy, too. Thousands of young people go straight from school, college or university on to long-term sickness benefits and many of them never come off of them. That is a moral outrage that must be tackled.
Society doesn’t work if its people don’t. Joblessness breeds depression and anxiety, which makes the idea of getting back to work too difficult for many to comprehend. But, for too long, we have seen that as acceptable and, in turn, the problem has exploded. Allowing thousands of young people to enter lives of dependency and despair in the name of mental health is not compassionate at all.
Politically, an argument like that above is much more convincing than a purely economic one. When Liz Kendall tried to cut £5 billion off a soon-to-be £100 billion-a-year sickness benefits bill, Labour MPs would not accept it. They will not wear benefit sanctions on the young if it is made in purely economic or fiscal terms, either. There’s a moral case to be made for welfare reform. If she is to stand any hope of getting her plan through the party, Reeves must make it today.
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