The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)

My Lords, I am grateful for the questions from both noble Lords. I will come to them in a moment, but I think it is worth reiterating why we are expanding our support for young people now. While the UK’s overall employment levels are historically high, it has been a tough picture for young people in the labour market for some years. I am sure the noble Baroness, Lady Stedman-Scott, remembers that, in the three years running up to the election, the number of young people not in education, employment or training rose by 250,000, up to almost 1 million. This has not been helped by the 40% decline in youth apprenticeship starts in the space of a decade. The trends we have seen with young people in the labour market are long-term, deep-rooted and worrying. They did not start on 4 July 2024 and they are not confined to the UK, but we all have to address them. As the noble Baroness said, and knows very well from her experience, if young people start their adult lives on the wrong foot, it has consequences for decades to come, both for them and for our country as a whole. Sir Charlie Mayfield highlighted in Keep Britain Working that, if a young person goes on to benefits in their 20s, they could lose out on £1 million of lifetime earnings and it could cost the state £1 million to support them. Tackling these trends is in all our interests and there should be good cross-party support for this, especially at the moment. At a time of rapid technological change, young people need our support. We have already set out our reforms to refocus the apprenticeship system back on young people. I say to the noble Lord, Lord Palmer, that we have made some difficult decisions to focus apprenticeships on the young people who need this start early in their life, so we have focused our priority in that space. We had already announced a youth guarantee to help the young unemployed, including 300,000 work experience and training places and a jobs guarantee of subsidised work for 18 to 21 year-olds who have been long-term unemployed. Last week, my honourable friend the Secretary of State set out how we will go even further. The noble Lord, Lord Palmer, asked about the timing. From this summer, we will introduce hiring bonuses of £3,000 if a business hires a young person who has been on universal credit for six months and there will be bonuses of £2,000 for small and medium-sized businesses hiring young apprentices. These bonuses can be combined if the young person hired has been out of work for six months. On top of that, we are introducing new foundation apprenticeships in retail and hospitality, as well as new short courses in AI, electrical vehicle charging point installation, electrical fitting and assembly, mechanical fitting and assembly and solar PV installation welding. We are also extending the jobs guarantee to those aged 22 to 24. Altogether, this will create 200,000 job and apprenticeship opportunities over the next three years. This represents £1 billion of new investment on top of the funding announced at the Budget, so our package of support for young people now comes to around £2.5 billion. I am proud of the efforts we are making to ensure that young people can flourish. The noble Baroness must have got mixed up between this policy and something else, because there is no compulsion here. We are not making employers take on young people, but offering incentives for them to do so. We are offering subsidies for jobs. We are doing all the things to help make sure that the young people who are struggling most have a chance to get those jobs out there. That is not compulsion or controlling outcomes: it is giving young people opportunity, and I am proud that we are doing it. The noble Baroness, Lady Stedman-Scott, pointed to some of the policy choices this Government have made. As I pointed out, youth unemployment has been rising since 2022 and the OBR predicts that overall unemployment will peak this year and fall in every year of the forecast. She mentioned tax rises, I am guessing in reference to national insurance contributions. She will remember that employers are exempt from paying employers’ national insurance contributions for workers under 21 and apprentices under 25, unless they are earning over £50,000 a year. She mentioned the Employment Rights Act and the reaction of employers. The problems young people are facing in the labour market go back rather further than that. They are not new. What is new is this package of support, which has been welcomed by large businesses such as Amazon, PwC and the Kier Group, and the Federation of Small Businesses, which called it a game-changer. In terms of hospitality, the chef and businessperson Tom Kerridge said that “these incentives will give our industry a great boost”. The noble Lord, Lord Palmer, made the important point that there are vacancies in the economy. There are 700,000, including 50,000 in manufacturing. There are jobs out there. Our job is to help young people get the support, skills, training and experience to get them and—I completely agree with him—we need to match the young people with them. He made a really important point. That is why we are setting out this package today and why it matters so much. We have already started to reform the system, but we have to do all the things that will make the difference to help them get those jobs. The noble Lord asked about timing. The £2,000 apprenticeship incentive for small and medium-sized enterprises will take effect for those starting apprenticeships from 1 October, as long as they have joined their employer within the last three months. The £3,000 hiring incentive, the youth jobs grant, will be delivered from June this year. The expansion of the jobs guarantee to include 22 to 24 year-olds will be from this autumn, and the first set of new short apprenticeship units is launching from next month. We are not hanging around; we are getting out there to do the work. I was really grateful to the noble Lord for acknowledging what jobcentres can do in supporting young people. We all know there are young people out there who want these jobs, but they often need the help. They may not have the skills or the work experience. In response to the noble Baroness, Lady Stedman-Scott, different things are obviously open to different people. What I think she was asking was what would happen after somebody was put specifically into a guaranteed job. If they have been out there looking for work for 18 months and they have not got a job, we will guarantee them six months of a job. We would hope that, by the end of that, the employer would see their potential, with all the support they had getting up to that point, and would want to keep them on. If for any reason they did not keep them on, such as if it is not a good fit, or if they did not feel they had the right skills, then all the support will be there from jobcentres and the range of our youth offer, to make sure that, with their new work experience, we can get them out there and get them a new job. Or maybe they would want an apprenticeship to acquire more skills so they can build a career.