Labour’s economic vandalism is ruining the lives of the young

The pathway to long term employment has been disrupted by the Government’s punitive taxation changes Daily Telegraph 17/03/26 We need to talk about Neets. For the first time in over a decade, the number of 16- to 24-year-olds not in education, employment or training has crept back towards the million mark. That’s roughly one in eight young people.

And the details are more troubling still. Around 57 per cent are economically inactive – not working and not even looking for work. Nearly half say they have a health condition related to mental health: in just five years the number of young people claiming disability benefits has almost doubled. Our youth unemployment rate, now about 16.1 per cent, sits awkwardly above the European average. However one chooses to dress it up, this is not a healthy picture. We have a crisis. The truth is that much of this was predictable. A string of policy choices has quietly raised the cost – and risk – of hiring. The rise in employers’ National Insurance, higher business rates and changes to the minimum wage have together created a heavier burden for firms, particularly the smaller ones that tend to give young people their first chance. Take the minimum wage. The intention, of course, is admirable. But economics has a habit of intruding on good intentions. When the cost of employing an inexperienced 18-year-old begins to resemble the cost of hiring someone older and already trained, the arithmetic for employers changes. Faced with that choice, many will simply opt for the safer bet. Then there is National Insurance. Moving the rate from 13.5 per cent to 15 per cent has been a big blow. For many small and medium-sized businesses, employment costs already swallow more than 40 per cent of turnover – easily their largest expense. Push that higher and something has to give. Add the Employment Rights Act into the mix and you start to see why hiring has cooled. Businesses worry that the balance of risk has shifted. Stronger sick pay rules, tougher dismissal protections and the prospect of greater workplace disputes all add to the sense that taking on a new employee is becoming dangerous. HR advice is clear: tighten recruitment, be more selective, take fewer risks. If it becomes harder to part ways with someone who simply isn’t working out, the safest move is not to hire them in the first place. This all hits younger workers hardest. Hospitality offers a good example. It has long been a gateway sector for first jobs. Ask around and you’ll hear endless stories of first shifts, first pay packets and first lessons in turning up on time (I personally have the owners of the Black Horse Pub on the Harrow Road for mine in the late 1990s). Yet the sector has taken a battering. Since the Budget, more than 100,000 jobs have disappeared. By many accounts, 2025 became the most expensive year on record for businesses employing minimum-wage staff. The government has clocked that something isn’t quite right and so has made an announcement. Employers will be offered a £3,000 subsidy for taking on under-25s who have spent six months on Universal Credit. More support for smaller firms hiring apprentices, and a promise that 40,000 young people will be guaranteed paid work placements under a jobs guarantee scheme. The sad truth is that none of this will change the fundamentals. A few thousand pounds in subsidy does not alter the equation if the ongoing costs and legal risks of employment remain high. Businesses are still struggling with rising taxes, heavier regulation and uncertain margins. Against that backdrop, a short-term payment rarely shifts long-term behaviour. The apprenticeship system illustrates the point. In theory it should be a powerful bridge between education and work. In practice many firms find the Apprenticeships Levy so rigid and bureaucratic that they simply leave the money untouched. Estimates suggest more than £1 billion a year goes unclaimed because drawing it down is too cumbersome. That is money sitting idle while both businesses and potential apprentices lose out. It’s one reason why the number of young people starting apprenticeships is falling even as the country wrestles with stubborn labour shortages in key sectors. Opportunities exist, but the pipeline connecting young people to those opportunities is clogged. Which brings us back to the million young people on the margins. If we want fewer of them claiming welfare and more of them building careers, the answer is not more taxpayer subsidy alone. It lies in making work easier to offer in the first place – lighter burdens on employers, a more flexible apprenticeship model, and a labour market that rewards firms for taking a chance on the next generation. Right now, that system simply isn’t functioning as it should. And until it does, the Neet numbers will remain a stubborn reminder that something in our economic machinery has gone wrong.