Britain will invest an additional 1 billion pounds ($1.3 billion) to unlock jobs for young people, the government said on Monday, part of a drive to reduce the nearly 1 million 16- to 24-year-olds not in education, employment or training.
Britain’s youth unemployment has reached a 10-year high, according to figures released last month, outpacing other European nations and posing tough questions for the governing Labour Party over its decision to raise the minimum wage.
Work and pensions minister Pat McFadden announced that the 1 billion pounds will be invested in grants to companies willing to engage young people and in more subsidised jobs – measures that he says will help create 200,000 jobs.
FIRMS TO GET MONEY FOR HIRING YOUNG UNEMPLOYED
“These measures will give life-changing opportunities to young people and significantly reverse the increase we inherited in those not in education, employment or training,” McFadden said in a statement.
Businesses will receive a 3,000-pound subsidy if they hire someone aged 18-24 who has been receiving unemployment benefits for the past six months. Small and medium-sized businesses will get 2,000 pounds for each apprentice aged 16-24.
A scheme offering 25 hours a week of subsidised work to people who have been unable to find work for 18 months will be widened to include those aged up to 24.
Some companies say they struggle to afford to hire younger people, citing increases to the minimum wage alongside a rise in employers’ social security contributions and other costs.
The Recruitment and Employment Confederation, an industry body, welcomed the steps but said rules around apprenticeships remained too rigid and hiring costs were too high.
“It is time for more decisive action to get young people into work by making taking a chance on young people more practical for firms, from employment tax costs to the approach taken to new employment rights,” REC Chief Executive Neil Carberry said.
Some employers complain that new legislation giving more rights to workers will make hiring more expensive.
RISING YOUTH MINIMUM WAGE RATE UNDER SCRUTINY
The government has also pledged to end lower minimum pay rates for 18- to 20-year-old workers. The main minimum wage rate now stands at 12.21 pounds an hour – up 29% over the past three years – while the rate for 18- to 20-year-old workers has risen 46% to 10 pounds an hour over the same period and is due to increase to 10.85 pounds in April.
McFadden said he accepted that “business costs matter, and of course we’re mindful of them, but this issue is deep-rooted and is long term”.
Later on Monday, business minister Peter Kyle told the body that oversees Britain’s minimum wage that he was giving it “full flexibility” on the rate it recommends for 2027 for workers aged 18-20 “with priority being given to the employment prospects of younger workers”.
Kyle said the government was still committed to abolishing the lower minimum wage rate, but the remit he has given to the Low Pay Commission this year places greater emphasis on minimising the impact on employment than in 2025.
Official figures show Britain’s jobless rate for people aged 16-24 rose to 16.1% in the final quarter of last year, up from 13.8% in the middle of 2025.
($1 = 0.7563 pounds)