A commission chaired by David Miliband has called for co-ordinated action to address the lack of leadership in addressing 600 hotspots of youth unemployment, covering 152 local authority areas.
The report, commissioned by Acevo, the voluntary and charity groups organisation, suggests the government needs to revamp the Department for Work and Pensions work programme so that it addresses more urgently the tens of thousands of young unemployed.
The report makes no judgment on whether a broader stimulus is needed in the economy, and concedes that youth unemployment in the UK is a structural labour market problem that pre-dates the recession of 2008.
Ministers have tried to address the problem through a new youth contract, a more private-sector-oriented wage subsidy than the Labour government’s abolished youth jobs guarantee.
The report points out that one in five young people are not in employment, education or training, and a quarter of a million have been unemployed for more than a year. It claims the current levels of youth unemployment will cost the public purse at least £4.8bn in 2012.
The worst accumulations are in south Wales, Greater Manchester, Tyneside, Glasgow and on the Yorkshire coast, and it points out that pockets of youth unemployment can be found in relatively prosperous areas.
In these youth unemployment hotspots, local agencies should be required to co-ordinate more, and in return be given greater flexibility by the DWP. The hotspots are defined as those areas where the proportion of young people claiming unemployment benefit is twice the national average.
The report will be seen as another attempt by Miliband to make a foray into domestic politics without being seen to undermine his brother Ed, the Labour leader. David Miliband said he was not interested in fuelling a soap opera about the party leadership.
The report suggests the government should frontload its youth contract initiative by doubling the number of job subsidies available in 2012, and suggests young people should be given a guarantee of a part-time job if they have been on the government’s work programme for a year without finding employment.
It describes the 50% who are not going to university as a forgotten generation who need better careers advice.
Miliband said: “Britain faces a youth unemployment emergency. This is a crisis we cannot afford. The government has set the right goal – abolishing long-term youth unemployment – but we will need big change if we are to achieve it.
“Young people, government, communities and employers will all need to up their game if young people are to succeed in a radically changing jobs market.”
The report admits there is a long-term structural problem, pointing out that even before the recession roughly 7% to 9% of 16-year-olds were becoming long-term neither in education, employment or training (Neet). The report argues that immigration, benefits and the minimum wage are largely red herrings in the debate about the causes of this unemployment.
“In the current economic context, the clear danger is that the proportion of young people becoming long-term Neets will be substantially higher than the 7% to9% we saw in more prosperous times,” it warns.
The report suggests that the youth contract is not adequate. The subsidy will be worth up to £2,275 each for private and voluntary sector employers who take on an 18- to 24-year-olds from the work programme, and the government anticipates making 160,000 such subsidies available over the next three years.
The Acevo report says more than 250,000 young people have already been unemployed for more than a year, and a further 200,000 young people have been unemployed for six to 12 months. It suggests bringing forward the third year of spending into 2012, with a view to doubling the number of subsidised jobs available in 2012.
In addition to this temporary stimulus, the report proposes permanent change to the welfare state so that young people who have still not found a job after a year on the work programme are guaranteed a “first step” part-time job, combined with intensive support to find unsupported employment, with providers paid by results.
It suggests a social impact bond might be possible to encourage private providers to intervene in this market.
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