sam boyd | politics

Clegg’s ‘youth contract’: what it really tells us

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25 November 2011

So the government is finally kicking into gear over tackling youth unemployment. From next April, £1bn will be paid to companies that give jobs to young people who have been unemployed for nine months or longer. The government will provide about half of each new employee’s minimum wage for six months.

It is expected that 160,000 jobs will be created in this way; a welcome prospect, especially given yesterday’s news that the number of NEETS – young people not in education, employment or training – has hit a record high of 1.16 million.  The TUC has called the wage subsidy “long overdue”, which is something of an understatement.

How it will be funded we don’t yet know – expect more detail in George Osborne’s autumn statement on Tuesday. It will be “new money”, apparently; not taken from a reduction in tax credits for low and middle earners, as reported in the Evening Standard yesterday. The cash will also fund 250,000 ‘work experience’ placements. We must hope these do simply accelerate the trend which has seen job centres force young jobseekers to work unpaid for 30 hours a week, stacking shelves in Tesco and Poundland, or else lose their benefits.

Labour has, for a while now, suggested a £2bn tax on bankers’ bonuses to fund 100,000 jobs for young people and 25,000 new affordable homes. The party will feel vindicated that the government is following its lead with a similar plan, and it will be interesting to see how the coalition’s funding proposals compare.

Miliband and Balls will also note the strong whiff of familiarity about the new ‘youth contract’ scheme: it is strikingly similar to Labour’s future jobs fund, which was axed by the coalition last year. In a line that may as well have been lifted from the future jobs fund press release, Nick Clegg explained today that,

“The aim of the youth contract is to get every unemployed young person earning or learning again before long-term damage is done.”

The negligence of his government means that point may have already passed: 260,000 young people have now been out of work for a year or more. The axed future jobs fund was introduced at a time when pre-emptive action could forestall the soaring youth unemployment levels from which we now suffer. Clegg and co were even provided with these prescient words from the Commons work and pensions select committee in December 2010:

“… the potential gap between the Future Jobs Fund and the Work Programme may lead to a substantial number of unemployed young people failing to receive any specialist support.”

It was nonetheless cancelled and replaced with nothing more than a misguided faith in the private sector’s capacity to create 2.5 million jobs, which obviously hasn’t happened. The Work Programme is now rolling out, but, as I note below, is having little impact on young people.

So, as much as it represents a belated U-turn, Clegg’s £1bn ‘youth contract’ is a positive step towards helping young people suffering disproportionately in the ongoing downturn. However, as I have argued before, youth unemployment will only be substantially reversed by a return to growth in the economy – programmes like these are mere palliatives.

But the new announcement does tell us two other important things. First, that the government has realised scrapping the future jobs fund without a replacement was dangerous folly. Second, and most significant, it represents a tacit admission that the Work Programme – the government’s flagship welfare-to-work scheme – is failing young people.

I’ll be posting more on this last point soon. But as a pointer, see the National Council for Voluntary Organisations’ (NCVO) report that shows huge numbers of specialist voluntary sector organisations involved in the work programme are yet to receive one referral, despite 2.62 million unemployed people. After six months of the scheme, others have not even been contacted by the large private sector companies supposed to sub-contract work to them. But more on this next time..

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Written by Sam Boyd

November 25, 2011 at 4:13 pm

Posted in Politics

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