Chancellor Rachel Reeves will today pledge to abolish long-term youth unemployment with a new scheme guaranteeing paid work placements for young people who have been without work or education for 18 months.
In her keynote speech to Labour’s annual conference in Liverpool, Reeves will unveil a policy aimed at tackling what she described as the “scarring” effect of unemployment on young people’s futures. Under the initiative, every young person on Universal Credit for 18 months without “earning or learning” will be offered a guaranteed paid placement.
Those who refuse the opportunity without a valid reason risk losing their benefits, the chancellor confirmed. Reeves argued the scheme is designed to give young people the skills and experience needed to secure full-time jobs, while also delivering value to businesses and taxpayers.
“This government will commit to nothing less than the abolition of long-term youth unemployment,” Reeves is expected to say. “It is bad for business, bad for taxpayers, bad for our economy, and it scars people’s prospects throughout their lives.”
The initiative expands on Labour’s “youth guarantee,” launched last November, which promised every 18 to 21-year-old access to apprenticeships, training or support into work. According to government figures, an estimated 948,000 people aged 16–24 are currently not in education, employment or training – one in eight young people. Numbers reached an 11-year high of 987,000 at the end of last year.
While no businesses have formally signed up yet, Reeves insisted that business organisations support the principle. The government anticipates companies will help cover at least part of the wages for the placements. Full funding details will be announced in November’s Budget.
The Federation of Small Businesses welcomed the announcement, calling it “hugely important” and urging ministers to ensure the scheme supports those over 25 and people with health challenges. Policy chair Tina McKenzie said small firms should also be central to the scheme’s delivery.
However, questions remain over whether businesses facing rising costs, including increases in National Insurance Contributions and the National Minimum Wage, will be able to absorb large numbers of placements. Job vacancies in the UK have also been falling, hitting their lowest level since the pandemic.
Reeves faces mounting fiscal pressure ahead of November’s Budget, with economists warning that she may need to raise taxes or cut spending to meet her own borrowing rules. When pressed on potential VAT increases, the chancellor reiterated Labour’s manifesto pledge not to raise VAT, income tax or National Insurance.
Alongside the youth unemployment initiative, Reeves will also commit to funding a library in every primary school in England. About 1,700 state primary schools – one in seven – lack a library, with the figure rising to one in four in disadvantaged areas.
Framing her speech around fairness and contribution, Reeves will say: “I believe in a Britain founded on contribution – where we do our duty for each other, and where hard work is matched by fair reward.”
The announcement marks Labour’s attempt to restore economic confidence while addressing a problem that has plagued successive governments: the stubborn persistence of youth unemployment.