How to prevent another '80s style lost generation

Jim KnightLord Jim Knight of Weymouth is Labour’s Shadow DEFRA Minister in the House of Lords


Yesterday in the Lords I used one of the four oral questions to the Government to ask the Treasury about youth unemployment.  


Youth unemployment is now over one million and long term unemployment is rising all the time.  I was 18 in the early eighties when the then Tory Government allowed unemployment to scar a whole generation with hopelessness.  This was when benefit dependency became embedded in families and communities and we must do all we can to prevent it reoccurring.


Youth joblessness is extending across the country.  My son graduates from University next year and, like many other parents, I am worried about what lies in store for him when he moves into the labour market.  


I was interested to see a Treasury Minister answer a question in the Commons last October about employers’ national insurance contributions.  It included the information that in the last tax year the under 20s accounted for £200m of a total of £54.2bn in total contributions.  This amounts to just 0.37%.


Labour's Five Point Plan for Jobs includes both a bankers’ bonus tax to fund 100,000 jobs for young people building 25,000 new homes and a one year national insurance tax break for small firms to take on more workers.  I don't expect Ministers to support this plan because in politics Governments don't tend to agree with the Opposition, so I was looking for a suggestion for the Budget that is more modest but plays to the good sense of Ed Balls' plan.


Labour's bank payroll tax yielded £3.46bn, according to the HMRC.  It therefore seems modest to suggest foregoing £200m in order to offer all employers a waiver on national insurance contributions (NICs) for all employees under 20.  This incentive would encourage more to take on younger new staff rather than opt for more experienced older workers.


In answering the question Lord Sassoon referred to the £126m being spent by the Government on the Youth Contract Programme.  This is a scheme like the Work Programme but specifically for young people.  What he failed to say was this is targeted only at 16 and 17 year olds, ignoring the plight of young adults.  What the programme also misses is what we learned from the Future Jobs Fund – people don’t want another scheme, they want a job.


I have had support for this from other Peers, including the former head of the CBI, Lord Digby Jones.  Indeed, one fellow Peer has raised the lack of take up of the government’s incentive of waiving employers’ NICs for new jobs in small businesses in regions outside southern and eastern England.  This unused funding would easily pay for employers to take on under 20’s without having to pay employers’ national insurance.


All in all I was glad to have raised the issue.  Maybe the Government will listen and we’ll get something in the Budget.  But don’t hold your breath.  On past performance this is unlikely.  They have not shown anything like the commitment to tackling youth unemployment that we did in the months leading up to the 2010 General Election, when as Inclusion have shown we managed to get unemployment falling.

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