Young people who have not worked for 18 months will be guaranteed jobs under new plans to tackle unemployment, Rachel Reeves will announce today.
Under the chancellor’s ‘youth guarantee’, set to be unveiled at the Labour Party conference, those who do not to take up the offer could face being stripped of their benefits.
In her speech to Labour’s annual conference in Liverpool, the chancellor is expected to promise ‘nothing less than the abolition of long-term youth unemployment’.
This morning, Ms Reeves told Sky News: ‘There are almost a million young people who are not in education, employment or training.
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‘That has a terrible impact on them throughout their lives, there is loads of evidence that shows if you are out of work for long periods early on in what should be the beginning of your working life, then you’re more likely to experience other bouts of unemployment, lower wages, mental health problems.’
The announcement is part of Labour’s determination to get Britain working and provide targeted support for young people at risk of long-term unemployment.
One in eight 16 to 24-year-olds are currently not in education, work, or training, having risen by almost a third over the last four years of the Conservatives’ tenure.
Pressed on how the government would fund the scheme, Reeves told LBC this would be outlined in the budget.
The chancellor is expected to say: ‘I will never be satisfied while too many people’s potential is wasted, frozen out of employment, education, or training. There’s no defending it.
‘It’s bad for business, bad for taxpayers, bad for our economy, and it scars people’s prospects throughout their lives.’
The chancellor, tasked with plugging a £30billion black hole, will also outline her approach to the Budget in November.
The government’s economic outlook has taken a hit amid an expectation that the Office for Budget Responsibility (OBR) will downgrade the UK’s productivity forecasts.
For some years, the OBR’s productivity forecasts – a key indicator of economic growth – have been more optimistic than other modelers.
But the OBR is now expected to cut future growth forecasts by up to 0.2%, bring it more in line with other forecaster, putting Reeves £20bn off course.
Government figures are expected to argue, therefore, that the downgraded forecasts have little to do with the Labour government’s policies.
Some Labour MPs are now reportedly pressing Reeves to slacken the the Treasury’s self-imposed fiscal rules.
There are also growing calls within the Labour Party to break the manifesto promise of not hiking income tax, VAT or employee contributions to national insurance.