“We are focusing funding where it's needed most"
Companies are to be paid grants to hire more young people under new government proposals aimed at tackling youth unemployment.
Ministers want to create 200,000 jobs and have pledged £1 billion to fund several initiatives designed to help young people enter the workforce.
Businesses will receive £3,000 for every person aged 18 to 24 they employ who has been searching for work for six months or more. Small and medium-sized firms will also receive £2,000 for each new apprentice they hire.
The measures come as concerns grow about the number of young people not currently in education, employment or training (NEETs).
In the final quarter of 2025, the number of young people in this category approached one million.
Pat McFadden is expected to formally announce the Youth Jobs Grant on March 16, 2026.
Around 60,000 people are expected to be supported by the proposals.
An existing jobs guarantee scheme will also be expanded. The programme currently promises young people a six-month job if they receive Universal Credit and have been searching for work for 18 months.
The eligibility age will rise from 18 to 21 years old to include those aged up to 24.
Mr McFadden said the plans were designed to help young people access opportunities and reduce the number who remain outside education or employment.
He said the measures would give “life-changing opportunities to young people” that will “significantly reverse the increase we inherited in those not in education, employment or training”.
Mr McFadden added: “We are focusing funding where it’s needed most and giving employers the flexibility and support they’ve asked for.”
Sir Keir Starmer said the reforms formed part of the government’s wider economic plans.
He said they “underpin our ambition to create an economy that works for everyone, closing the skills gap and supporting more young people into meaningful employment”.
Support for the scheme has also come from the hospitality industry.
Chef Tom Kerridge backed the initiative, saying “these incentives will give our industry a great boost”.
The proposals arrive amid criticism from the Conservatives, who have argued government policies are reducing job opportunities.
They have claimed that Labour’s Employment Rights Act and increases in national insurance contributions for employers have made it harder for businesses to hire young workers.
Helen Whately said:
“The best way to tackle youth unemployment is to back businesses to create jobs, not tax them out of existence to fund benefits and subsidies.”
The Conservatives say they would cut business rates for “thousands of high street businesses” and “roll back” the legislation scheduled to come into effect later in 2026.
Under the act, which applies to England, Scotland and Wales, workers will gain the right to claim unfair dismissal after six months in a job.
Currently, employees must wait two years before they can bring such a claim.
Labour had originally pledged to give workers the right to claim unfair dismissal from their first day of employment as part of its election manifesto.
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