Youth Unemployment: Autumn Budget 2025

11. What assessment she has made of the potential impact of the autumn Budget 2025 on levels of youth unemployment.

18. What assessment she has made of the potential impact of the autumn Budget 2025 on levels of youth unemployment.

Last week, the Office for Budget Responsibility set out its updated forecast for the UK economy, including for unemployment to peak this year before falling in each and every year thereafter. Longer-term problems for young people have been building in our labour market for far too long, with employment rates that are too low and levels of those not in education, employment or training soaring in the last Parliament. We will not allow a generation of young people to be left behind, which is why the Government have committed £820 million for the youth guarantee, strengthening employment support and guaranteeing jobs for the long-term unemployed.

I first entered the job market in the wake of the 2008 financial crisis, and it was a difficult time for young people, yet today they face even more difficult and uncertain times. The Chancellor’s jobs tax is bearing down on opportunities, and AI is making this worse by potentially pulling up the ladder on graduate jobs that previously included things such as note taking and supporting senior employees in meetings. Will the Chancellor correct course on the unemployment of young people and do more to support their career progress?

The hon. Member’s phrasing of his question was very telling about the challenges we all face in our labour market, because while we have seen more jobs created over the last year, there is a longer-term challenge with youth unemployment. If we look at the last Government, we never saw youth employment rates recover to the level seen under the previous Labour Government after the financial crisis, which was exactly the experience he mentioned.

It is important that we grapple with that long-term challenge, and there is the newer challenge with the huge increase in NEET rates in the last Parliament specifically. We absolutely need to focus on both of those, which is why we are focusing apprenticeship funding on young people in particular, why we are introducing the youth guarantee, and why we have the independent review led by Alan Milburn to focus on the root causes of these challenges.

The Government’s changes to employer national insurance contributions have made it more expensive for employers to take on staff, particularly in the hospitality sector, which employs a high proportion of young people and part-time workers. Does the Minister agree that these changes have made it more difficult for young people in Melksham and Devizes and across the country to get a foot on the career ladder and start their working lives?

I think all of us recognise that our hospitality and retail sectors have had a difficult time in recent years. For retail, that goes back before the pandemic, with the growth of online shopping. The squeeze on energy costs in the outrun of the pandemic has squeezed how much people are spending on hospitality.

Specifically on the hon. Member’s question about national insurance, I am sure he is aware that those under the age of 21 and on youth apprenticeships are exempt from national insurance entirely. I would gently point out that the youth employment pattern we see in the labour market long predates the changes to national insurance last year.

I call the Chair of the Treasury Committee.

I am glad that the Government are introducing things like the youth guarantee and working to help those who are not in education, employment or training. However, as the hon. Member for Henley and Thame (Freddie van Mierlo) highlighted, AI is also an increasing concern. Businesses I have spoken to are concerned about the number of people they will not be employing in the future. The Minister has hinted that the Government are looking at this systemically. What conversations is he having across Government and, crucially, with businesses so that we can plan for what could be a real crisis in the future?

My hon. Friend has rightly been raising this issue for some time, predating the election. I will take the two parts of her question in turn. The impact of AI is something that is being looked at across countries—there is a unit inside Government looking at exactly that. More importantly, though, she mentions the crisis happening now, with some young people unable to get the job opportunities that we all want them to have, which they have not had for some time. We will bring forward further measures to strengthen the youth guarantee, which is an important measure to increase the employment support available to our young people and to ensure that a job guarantee is there for those who are long-term unemployed.

The unemployment situation in my constituency and across the Yorkshire coalfield is becoming a crisis. There are 1,980 people out of work in my constituency and 70 job vacancies—that is almost 30 unemployed people pursuing every single job. No Labour Minister would ever say that employment is a price worth paying, but will the Minister tell the House that he will equally prioritise tackling unemployment and reassuring the bond markets?

My hon. Friend and I have discussed these issues on many occasions, particularly as they are specific to his constituency and other coalfield communities. There are challenges, particularly with youth employment, which goes back to the last decade in particular, and we absolutely need to prioritise that. However, I would also say a word of warning on the view of the overall labour market. Looking at the employment level last year, which was around 75%, there have been only two years in peacetime in the past 100 years when Britain has had a higher employment rate. I think we should be a bit careful about talking down the resilience of the UK economy or, as in this case, the resilience of the labour market. We have had only two years in the past 100 in peacetime when Britain has had a higher employment rate than last year.

I call the shadow Minister.

Last month, The Times reported that the Government may drop their pledge on minimum wage equalisation over fears of youth joblessness, and the BBC reports that the Government are considering a delay. Can the Minister advise whether the Government have considered any such delay or policy changes, and if so, what decision has been reached?

I want to offer my condolences to the hon. Gentleman for the recent loss of his father. It is something we all have to face at some point in our lives, but it is a lot to deal with. All our thoughts are with him at this time.

In answer to the hon. Gentleman’s question, no, there is no change in Government policy. Our view is that we should see alignment of the national minimum wage and national living wage rates, but that should happen in the right way, which is with the guidance of the Low Pay Commission, which will continue to play an important role.