Labour's youth jobs scheme paves way for welfare shake-up

Labour MPs have no reason to oppose a fresh government attempt to overhaul the welfare system, the work and pensions secretary has said, as he unveiled a £1bn youth employment scheme.

- Ben Quinn Richard Partington

The announcement by Pat McFadden, who said the public wanted the system to promote work and “value for money”, is regarded as a prelude to a renewed effort to change the welfare system after plans by his predecessor, Liz Kendall, were blocked last year by a Labour backbench rebellion.

Companies will get a £3,000 grant for each hire of a person aged 18 to 24 who is on benefits and has been looking for a job for at least six months, under a new policy designed to tackle the rising rate of youth unemployment.

The funding, which is aimed at creating 200,000 jobs, is part of what was described by McFadden as a “new deal for young people”.

It was announced alongside a new apprenticeship incentive, under which small-and medium-sized businesses will be paid £2,000 for every new employee aged between 16 and 24 they take on. Payments to firms will be staggered under the scheme, which will start in June.

Ministers also paved the way for a slower rise in the minimum wage for younger workers, amid pressure to bring down the highest levels of youth unemployment in a decade.

At the same time, the government is getting rid of a number of management apprenticeships, of which eight in 10 are taken up by existing employees over 25.