No more NEETs

The IPPR has published a paper that sets out a strategy for radically increasing the proportion of young people who are learning or earning, by establishing a distinct work, training and benefits track for those aged 18–24. This approach is underpinned by two new initiatives: a youth allowance, to keep young people out of the adult welfare system, and a youth guarantee, to ensure they stay in touch with the labour market.

There are over a million young people who are not in education, employment or training (NEET) in the UK, equivalent to almost a fifth of all 18–24-year-olds. Just 4% of 15–24-year-olds in the Netherlands and 7% in Denmark are NEET, compared to 14% in the UK. This is a huge waste of individual potential and imposes large, long-term costs on society.

There are three key planks to the plan:

1. A youth allowance should replace existing out-of-work benefits for 18–24-year-olds and provide financial support for young people who need it, conditional on participation in purposeful training or intensive job-search. Access to inactive benefits should be closed off for all but a very small minority. To pay for this substantial expansion of financial support for young people who are currently NEET or in further education, the youth allowance should be paid at a standard rate and be means tested on the basis of parental income until the young person is over the age of 21. This would mirror the rules for access to the higher education maintenance grant. There should also be a presumption that young people are housed by their parents until they are over 21, with exceptions for those with a child, a disability or in employment.

2. A youth guarantee should be established that offers young people access to further education or vocational training plus intensive support to find work or an apprenticeship. For those not learning or earning after six months, paid work experience and traineeships should be provided, with no option to refuse and continue receiving the youth allowance. The youth guarantee would ensure that young people can complete their initial education and gain practical employability skills, while not drifting into inactivity. To pay for this substantial expansion of provision for young people, expenditure on 18–24-year-olds in the Work Programme should be re-directed, along with adult skills and apprenticeship funding for over-24s. In addition, parents’ entitlement to child benefit and child tax credit should cease at the end of the school year after their child has turned 18, when their entitlement to youth allowance begins.

3. The government should set national objectives and priorities for the youth guarantee, but the leadership of local areas should be mobilised to organise and deliver it. Decentralisation should start with London and the eight ‘core cities’ in England taking on resources and responsibility for their young people. These cities should establish strong governance arrangements, including a central role for employers, along with plans for commissioning a diverse network of local providers. In other parts of England the youth guarantee should be commissioned nationally and delivered through existing agencies and providers (with local input wherever possible). In every area, the personal adviser model should be paramount and data on performance against headline national objectives should be regularly published. To increase opportunity and drive employer engagement, large firms that do not offer apprenticeships for young people should pay a ‘youth levy’ to train and prepare the future workforce.

There are devolved aspects of this plan that would need to be agreed by the Scottish Parliament. It also fits in well with suggestions that Scotland’s cities should take responsibility for welfare to work programmes.