‘Labour must act now to tackle Britain’s growing Neet crisis’

Amidst recession in 1974, Labour’s Foreign Secretary, James Callaghan, famously remarked, “sometimes when I go to bed at night, I think that if I were a young man I would emigrate.” 

Callaghan’s comment made sense to contemporaries, with one-in-twenty under 25s winding up jobless.  But flash forward to today and the youth job market of the early 70s looks the picture of health. Almost one million – that is, one-in-eight – young people in the UK are now not in education, employment or training, otherwise known as “Neet”. 

Emigration is not an option for the vast majority of them. Official data makes clear that they are not the feckless offspring of the well-to-do, who can afford to hop on a plane to Australia for higher pay or to ‘find themself’ in Thailand. Over half live on less than £50 per week.

And their outcomes are disastrous. One study found that male Neets are ten times likelier than their peers to be economically inactive twenty years later, leaving them poorer, sicker, lonelier, and more likely to die early.

The government is aware of the issue. Arriving as Work and Pensions Secretary, Pat McFadden said that tackling the Neets crisis is his personal priority, and the Chancellor used her Conference speech to guarantee that every young person who has been on Universal Credit for 18 months without earning or learning will be offered paid work.

These plans are welcome, but they are not ambitious enough. Compare them to the efforts of the last Labour government. When Tony Blair entered office, youth unemployment had been a persistent problem for two decades. Nearly one-in-five under 25s were out of work in 1993. Until the financial crash, New Labour got the rate five percentage points or more lower.

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The cornerstone of New Labour’s success was the New Deal for Young People, which offered young people the opportunity to take on subsidised employment after four months of intensive job search – 12 months sooner than Labour’s current proposals.

Those 12 months matter. An alliance of over 800 frontline local charities feed directly into our work at the Centre for Social Justice (CSJ), and they tell us that, rightly or wrongly, employers perceive Neets as not work-ready and fear the cost of upskilling them.

The best way to get a young person work-ready is to provide real experience of work. Our charities tell us so and study after study confirms it. Waiting a year and half to offer a guaranteed job is just a year and a half for young people’s skills to atrophy and confidence to decay.

That’s why the government should learn from the ambition of the New Deal and introduce a Future Workforce Credit. This would cover 30 per cent of the annual wage of anyone who has been Neet for 3 months or more, a massive effective tax cut to help businesses transform the life chances of thousands of British youngsters. 

We estimate the Credit would help 120,000 under 25s into employment, generating £765 million in welfare savings and tax revenues. Not only would it benefit Neets sooner than the government’s plans, but it would also reach the 54 per cent of Neets that the government’s proposals miss because they are not on Universal Credit.

On top of the Credit, we believe the government can help even more young people by expanding successful employment schemes, like Connect to Work. This relies on a dedicated support worker who draws together local charities, health, housing, debt and family services to help people into jobs.

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To fund these proposals, Labour must finally grasp the nettle of welfare reform. The current approach to mental ill-health is too blunt. It treats less severe mental illnesses like unrecoverable physical conditions, when they are often driven by social factors that worklessness and welfare only exacerbate.

As the beneficiary of an employment charity in Wrexham put it, “I thought I needed CAHMS [Child and Adolescent Mental Health Services]. I just needed friends.”

The government should redirect funding from health benefits into treating the causes of less severe mental ill-health. They could add 300,000 extra courses of NHS Talking Therapies per year, greatly increase community mental health services, and fund the expansion of employment support while still delivering savings.

These reforms would tackle the root causes of young people’s struggles and offer them a route back into work. With them, Labour can ensure we have fewer young people going to bed as hopeless as Callaghan.

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