The Tories economic offer? Rising poverty and inequality

Analysis published today by the Institute for Fiscal Studies (IFS) has confirmed young people are being left behind by this Tory-led government. The IFS work found there has been a shocking 15% fall in the earnings of young people since the recession hit. So as bonuses rapidly rise and the richest get a tax cut under David Cameron, young people have seen their earnings and opportunities fall.

While the Tories are complacently claiming the economy is fixed there are still more than 800,000 under-25 year olds out of work and long-term youth unemployment has soared. For those in work, far too many are stuck in low-paid, low-skilled jobs that offer little security or prospects for the future.

This is deeply worrying for young people at school, college and university and for their parents and grandparents. And it’s a big threat to Britain’s future prosperity and our chances of earning our way out of the cost-of-living crisis. We simply can’t succeed as a country if we aren’t making full use of the talents and potential of the next generation.

Yesterday I visited Ockendon Studio School  with Labour’s parliamentary candidate for Thurrock, Polly Billington. We met young people who were being given the opportunity to take part in extended work placements and training, alongside their A-Levels, to make them ready for work. The work placements range from small businesses in Thurrock to multinational organisations in London. One student told me how the experience had made her much more confident person in the workplace and at school. Another explained how the new skills they learned during the placement had opened their eyes to careers they never knew existed before. Some were happy to go to university, others to take up apprenticeships. All of them had a lot more knowledge and experience because of their work experience.

Not every young person will be lucky enough to have a brilliant school like Ockendon Studio on their doorstep. And far too many are leaving school without the skills they need to find and hold down a job.

But young people on Jobseeker’s Allowance (JSA) are currently told they will lose financial support if they want to spend more than 16 hours a week learning new skills and training. These are the young people who are most in need of training, but they are being held back.

A Labour government will ensure young people who don’t have the skills they need for work are in training, not on benefits. We’ll replace JSA for 18-21 year olds who lack the skills and experience they need with a Youth Allowance. The Youth Allowance will require young people to take part in training while they look for work. The Youth Allowance will be means-tested in the same way as maintenance grants for the university students. We recognise that some people cannot rely on support from their parents and will ensure they are protected. The Youth Allowance will increase support for the forgotten fifty per cent who don’t go to university.

And in addition to the Youth Allowance we will bring in a Compulsory Jobs Guarantee to offer job seekers a six month job, paid at least the National Minimum Wage funded by a tax on bank bonuses and a restriction on pensions tax relief for people earning over £150,000. A similar scheme run by the Welsh government, Jobs Growth Wales, has seen 10,000 young people find work since it was launched two years ago. Labour’s Jobs Guarantee will give young people the skills they need to find and hold down a job before the impact of long-term unemployment sets back their lifetime earnings and employment prospects.

It’s clear the Tories have no plan to help the thousands of young people who don’t have the skills they need. They trebled tuition fees, scrapped the EMA and their “Youth Contract” has been a complete flop, with the latest figures showing just 6% of the promised wage incentive payments have been made so far. They also want to end Housing Benefit for everyone under 25, which would punish thousands of working people and parents with children. The Tories offer an economy where poverty and inequality are set to rise, not fall and people are increasingly denied the chances that previous generations enjoyed.

Britain can do better than this. Labour’s commitment to top quality vocational education, the Youth Allowance and our Compulsory Jobs Guarantee will give thousands of young people the chance to fulfil their potential and make Britain better off.

Rachel Reeves is Shadow Secretary of State for Work and Pensions