UK Government Launches £1 Billion Plan to Tackle Youth Unemployment

The UK government is launching a £1 billion package aimed at incentivizing employers to hire young people and create 200,000 jobs, as youth unemployment reaches its highest level in 11 years. The initiative, announced by Perform and Pensions Secretary Pat McFadden on Monday, March 16, 2026, seeks to reverse the growing number of young people not in education, employment, or training (often referred to as “Neets”).

Key Components of the “New Deal”

• Youth Jobs Grant: Businesses will receive a £3,000 bonus for each 18-24 year old hired who has been unemployed for six months or more. This is expected to support an estimated 60,000 individuals.
• Apprenticeship Incentive: Slight and medium-sized businesses (SMEs) will be eligible for a £2,000 incentive for every new 16-24 year old employee they hire as an apprentice.
• Expanded Jobs Guarantee: The existing jobs guarantee, which provides a six-month role to Universal Credit claimants unemployed for 18 months, will be expanded to include those up to 24 years old.

Rising Youth Unemployment Figures

Recent statistics reveal a concerning trend in youth unemployment. From September to November 2025, there were 729,000 people aged 16-24 not in a job, representing 15.9% of young people – an increase from 14.4% the previous year. This translates to 103,000 more young people out of work compared to the year before. 946,000 young people were not in employment, education, or training (12.7% of all 16 to 24-year-olds) between July and September 2025.

Government Response and Justification

Pat McFadden emphasized the government’s commitment to addressing this issue, stating, “These measures will provide life-changing opportunities to young people and significantly reverse the increase we inherited in those not in education, employment or training.” He added, “We are focusing funding where it’s needed most and giving employers the flexibility and support they’ve asked for. These reforms will give young people a vital first step on the career ladder and help business leaders recruit the talent that will grow their companies.”

McFadden too defended the government’s policies against criticism, asserting that youth unemployment is a “long-term problem” that predates the current administration. He pointed out that employers are exempt from paying national insurance contributions for workers under the age of 21 and that raising the minimum wage is important for ensuring fair compensation.

Support from Political Leaders

Prime Minister Sir Keir Starmer affirmed his government’s commitment to tackling youth unemployment, highlighting the importance of expanding practical routes into work, boosting apprenticeships, and providing employers with clarity. He stated, “These reforms underpin our ambition to create an economy that works for everyone, closing the skills gap and supporting more young people into meaningful employment.”

Addressing Concerns and Long-Term Goals

The initiative has received support from various figures, including Michelin star chef Tom Kerridge. The government acknowledges the concerns surrounding the current unemployment figures among young people, recognizing it as a long-term challenge. The overarching goal is to provide hope and better prospects for a generation facing a difficult labor market.

Source: Independent, Source: LBC