Youth Unemployment

I inform the House that Mr Speaker has selected the amendment tabled in the name of the Prime Minister.

I beg to move,

That this House regrets that both youth unemployment and the numbers of young people not in education, employment or training are rising as a result of the Government’s policies, such as increasing the rate of employer’s National Insurance contributions, reducing business rates relief for 2025-26 for retail, leisure and hospitality businesses, and passing the Employment Rights Act 2025; notes that these policies have heavily impacted the retail, leisure and hospitality sectors where young people often have their first job; further regrets that the Government’s inability to reform the welfare system will mean that young people struggling to find work are more likely to become trapped in welfare benefits dependency; and calls on the Government to back business, scrap business rates for pubs and high street shops, and back job opportunities for young people.

This afternoon we are here to talk about young people—the young people who wake up every morning with nowhere to go: no classroom, no workplace, no sense that today will be different from yesterday. It is part of our job to put ourselves in other people’s shoes. Today, those are the shoes of a young man or woman who has just left school, college or university, and is setting out on real life in the world of work. That should be a moment of liberation, trepidation and excitement because the world is at their feet, but right now, for hundreds of thousands of young people, it is not.

Just a few days ago, I was with a constituent who has just finished school. She is great; she has GCSEs and A-levels, she has done work experience, and she is charming and presentable. She has been applying for jobs day after day, but can she get one? Not a squeak—and that is in the bustling and vibrant economy of the south-east of England. She told me that it can be lonely being stuck at home all day applying for jobs, but she is not alone; she is in the company of many thousands of young people. Over 700,000 young people are unemployed—more than the entire population of Sheffield—and the figures are getting worse. Our youth unemployment rate is rising faster than that of any other G7 country. Nearly 1 million young people are not in education, employment or training, and over 700,000 university graduates are on out-of-work benefits.

Those are not just statistics; they are lives knocked off course—young women and men putting in hundreds of job applications and getting hundreds of rejections. They are getting knocked back again and again, and signing on to benefits because they see no other way. They are missing out on the chance to have money in their pockets that they have earned themselves, on the first step towards independence, and on the experience gained in the early years in work, on which future working lives are built. Forget saving to buy a first car or home; dreams and ambitions are being shot to pieces. These people are becoming Britain’s lost generation.

I have a lot of sympathy for the situation that the hon. Lady describes. The number of people who are NEET is very high, but that trend started in 2021, when her party was in government—the election was not until two years ago. Why did the Conservatives not do anything about the situation then?

I am glad that the hon. Lady has some sympathy with the position of young people who are struggling to get jobs. My party halved unemployment; her party’s record is of unemployment going up and up. Since Labour has been in power, unemployment has gone up every single month.

What is going on? What is going on is them: the Labour Government. Same old Labour—in they come and up go taxes and up goes unemployment, every single time. They put taxes up by £36 billion in their first Budget, and not just any old taxes. Their national insurance hike was specifically a tax on employment—literally a jobs tax. If you tax it, you will get less of it. That is not rocket science; it is basic economics.

UKHospitality says that we could be seeing the death of the great British summer job, and even Labour’s own Alan Milburn has warned that there is a long-standing decline in the number of 16 and 17-year-olds getting Saturday jobs. Previous Labour Governments always shoved up youth unemployment, but never before has Labour threatened to destroy the great British summer job. That is much to be regretted, and it is about time that the Government turned around their jobs tax and Employment Rights Bill policies.

My right hon. Friend is absolutely right. Summer and holiday jobs are important ways for young people to gain experience before they leave education and seek full-time jobs, but there has been a shocking decline in the availability of such jobs because of this Government, who have increased regulation and the cost of employment—that is exactly the problem.

On exactly the point about regulation and red tape, the Employment Rights Bill is making it harder for businesses to employ people. Labour says that it wants to achieve growth, but its policies are obviously going to achieve the exact opposite. The problem is that Labour Members do not understand business. Have they any idea how hard it is to break even, let alone to make a profit; any idea how hard it is for people who have started a business to bring in enough to cover the payroll each month, never mind pay themselves; or any idea how hard it is for business owners to make their staff redundant because they cannot afford to keep paying them? Of course they do not, because how many Labour Front Benchers have worked in a business—I am not counting union officials—let alone run one?

As my previous career was in advising businesses up and down the country, I take some issue with the hon. Lady’s point that there is no experience among Labour Members. She says that taxes, particularly the rise in national insurance, are causing the rise in youth unemployment, but does she know at what level of income young people, specifically those under 21, start to attract national insurance contributions?

I am perfectly well aware of the policy on national insurance. I take the hon. Gentleman’s point that some Labour MPs do have business experience, but if we look at Labour Front Benchers, particularly those in the Cabinet, we will see that they are few and far between. If he has been talking to businesses—he clearly knows some—he will hear them say, as they have said directly to me and many of my hon. Friends, that it is the Labour Government’s policies that are making it so hard and so expensive to employ people, particularly young people. Even if Government Members do not have business experience, they could and should listen to what businesses have been telling them.

For instance, Kate Nicholls of UKHospitality said that Labour’s 2024 Budget did “unthinkable damage” to the sector. She was backed up by her colleague, Allen Simpson, who said recently that if the Government continue their approach,

“we will only see job losses and business closures accelerate.”

That sector has shed over 100,000 jobs under this Government.

Jane Gratton, from the British Chambers of Commerce, said that Labour’s policies are

“deeply worrying for employers. They will increase employment costs, complexity and risk for firms, particularly SMEs…Government needs to help not hinder businesses”.

That is the crux of the matter: Labour sees businesses as a cash cow, not as the engine of the economy, and young people in particular are suffering as a result.

Before businesses start letting people go, they generally stop hiring, and that is what they are doing. And when they stop hiring, who gets hit hardest? Young people. By hitting hospitality—all those pubs and cafés where people get their first jobs—the Government are hitting young people again. The simple fact is that there are fewer jobs for young people under this Government. This unemployment disaster for young people is not something that has just happened on this Labour Government’s watch—it is a disaster of their making.

My hon. Friend makes the point so well. It is deeply worrying that in the Walsall borough, in my constituency, youth unemployment is higher than the national average. The truth is that youth unemployment has skyrocketed under Labour’s watch. Does my hon. Friend agree that a big part of the problem is that we have a Labour Government who do not understand that the more they squeeze business, the more they squeeze job opportunities for young people?

My right hon. Friend makes the point so clearly. It is so obvious to the Conservatives, as the party of business, that if the Government keep taxing business, there will be fewer jobs—but they just do not seem to get it.

Labour Members do know that they are in trouble, though. That is why they are talking up their youth programmes, youth hubs and youth guarantees—[Laughter.] Labour Members are laughing, but they should listen. The hon. Member for Exeter (Steve Race) says from a sedentary position that it was our programme —exactly that! Most of these things are just rebrands of programmes that the Conservatives started. We started youth hubs. Changing the name of the youth offer to the “youth guarantee” does not solve the problem. Of course there is part to play for training programmes and work placements in helping people to bridge the gap between school and work, but Government programmes are not the answer to the fundamental problem. Young people want jobs, and this Government are killing jobs.

The shadow Secretary of State is obviously well known for speaking clearly and candidly, which is refreshing. Can she clearly and candidly answer these questions? Which rights does she think young people should be denied in order to get into work? By how much would she cut the minimum wage to facilitate those young people getting back into work? Unfortunately, she cannot have it both ways. She has just made the point that those rights are hindering business, so what would she do to cut them? Will she make a clear commitment at the Dispatch Box?

I enjoyed the way in which the hon. Gentleman led into his question with a bit of flattery, but I will not be drawn on his attempt to make me talk about the minimum wage or down the routes that he asks me to take, as much as he may love me to do so.

However, I will talk about our record in government. We halved unemployment. We got record numbers of people into work. We backed businesses to create 800 jobs for every day that we were in government. We reformed welfare to make work pay. We brought down the benefits bill. None of those things are on the cards under this Labour Government. They are crushing businesses with taxes and red tape, destroying jobs and driving up unemployment. They U-turned on welfare savings and put up taxes on working people by £26 billion at the last Budget to pay for the ballooning benefits bill.

I will not argue that we got everything right. Some of the graduates struggling to get jobs have degrees that are not actually of any help to them, and they took those degrees when we were in government. Under us, through the pandemic and afterwards, the number of young people dropping out of work and on to benefits because of their mental health went up. We wanted to end the stigma around mental illness, but the consequences have been far-reaching. Our welfare system was not designed to support people with milder mental health problems or milder neurodiversity, or for a time when a quarter of people report themselves as disabled.

The system is not working; instead, it is funnelling people off work and on to benefits. Now, with the Government’s failure to reform welfare, young people are stuck in a benefits trap—they are better off on benefits and fearful of losing them if they get a job. Let us add to that the stress and misery of trying and failing again and again to get a job, because jobs are fewer and farther between. Most young people I have spoken to do not want to be on benefits, but that is where they are ending up.

Does the hon. Lady at least welcome the job guarantee for 18 to 21-year-olds? Does she think that that represents this Government working with employers such as the Premier League and the FA to create opportunities? Is that not in stark contrast with her Government, who watched opportunities disappear while they did FA?

If the hon. Gentleman had been listening, he would have heard me say that there is a place for programmes that support young people into work, particularly if they find that they do not have the skills needed to do the jobs in their area. When we were in government, we had programmes like that, and those programmes are being continued under this Government.

However, there is a fundamental problem with the idea and concept of a youth guarantee, which has wobbled a bit at different announcements and different times. The problem is that the Government are trying to guarantee somebody a job, but destroying the jobs that businesses are creating. The right way to solve the problem is to back businesses to create jobs, not take some kind of socialist, communist or even Marxist approach and create a job with taxpayers’ money so that somebody is in work.

The situation is looking pretty bleak. That is a disaster for a generation of young people and our economy, but it does not have to be like this. Even in a world of artificial intelligence, there is another way. It starts with backing businesses, because they are the ones that create jobs, and cutting taxes, cutting red tape, scrapping the swathes of regulation that stop businesses giving young people a summer job or a Saturday shift, and getting government out of the way so that young people can get on.

I welcome the Government’s U-turn on probation periods—many businesses told me that that policy would have deterred them from taking a chance on a young person. I also welcome the Government’s latest U-turn on business rates for pubs How many U-turns are we on? Is it 13? What about the rest of hospitality? Why not adopt our policy and scrap business rates, not just for pubs, but for high street shops too? I ask the Minister not just to send young people off on more training courses or work experience schemes. What young people want now is jobs. Why not adopt our policy to double the number of apprenticeships and end debt-trap degrees, too?

I beg to move an amendment, to leave out from “House” to end and insert:

“welcomes the Government’s commitment to invest in young people’s futures; notes that the UK has the second highest youth employment rate in the G7; recognises that the Government announced more than £1.5 billion of investment over the next three years, consisting of £820 million of funding for the Youth Guarantee to support young people to earn or learn, and £725 million for the Growth and Skills Levy; further welcomes that the expanded Youth Guarantee will reach almost 900,000 young people, including through Youth Hubs in every area in Great Britain and a new Youth Guarantee Gateway; further notes that this investment will also create around 300,000 more opportunities to gain workplace experience and training; and further recognises that, as part of the Youth Guarantee, the Government is breaking the cycle of unemployment by guaranteeing paid work to around 55,000 young people aged 18 to 21 who have been on Universal Credit and looking for work for 18 months.”

In the north, we would say that the hon. Member for Faversham and Mid Kent (Helen Whately) has some brass neck to make the speech she has just delivered. As an MP who has been in the House for some time, it might be helpful to us all if I remind the hon. Lady about her party’s record over the past 14 years. Her party fumbled the handling of the pandemic, setting back a whole generation of kids. It failed to deal with the growing mental health crisis among young people, left school buildings to crumble, and decimated youth centres.

Let us just look at the facts about youth employment specifically. Under the last Conservative Government, the number of young people not in education, employment or training grew by 45% in just three years. Scarily, that left almost 1 million young people—one in eight—on the sidelines when the Conservatives were chucked out of office.

I am just going to complete the Conservatives’ record, because I think it would be beneficial for us all to hear it. When the Conservatives were chucked out, the youth unemployment rate stood at 13%, compared with just over 9% two years earlier, and the number of young people economically inactive due to long-term sickness had more than doubled in five years to over a quarter of a million on the Conservatives’ watch. They also failed to support young people in the face of the changing retail sector, for example. Many young people start their careers in that sector—I certainly started with a Saturday job—but retail job opportunities have fallen since 2017 as new technology changes how people shop and how shops employ people. The Conservatives took no action on that, so their legacy for young people looks pretty dismal from virtually every angle.