From the TUC

What has happened to the Government’s Youth Contract?

07 Sep 2012, by in Labour market

Earlier this year the Deputy Prime Minister was keen to sing the praises of the Youth Contract, in particular the 160,000 ‘wage incentives’ which were intended to “reduce the cost to employers of taking on a young person from the Work Programme”. The incentive payment of £2,275 for each young person recruited is intended to cover the employer’s National Insurance contributions for the first six months of young people’s employment. In most parts of the country these ‘incentives’ apply when employers take on young people who have been unemployed for nine months, although employers hiring young people who have been out of work for six months are eligible in the most deprived parts of the UK. As the most significant part of the Government’s package the programme aims to ‘provide hope‘ to unemployed young people.

But despite the scheme starting close to six months ago there are still no data available on take up – suggesting that not as much hope is being provided as was initially  anticipated.

The Government have produced a short analysis demonstrating that since the Work Programme started 17,000 young people have moved into work. But it comes with an important caveat:

The 17,000 figure covers all job entries for young people from the Work Programme. It is not a measure of job entries for which wage incentives will in due course be paid to employers.

The analysis provides no sense at all of how many of these jobs have been sustained beyond six months, or of how many employers taking young people on have expressed an interest in the wage subsidy scheme.

But given the programme started in April, the first subsidies should be paid at the end of September, which partly explains the lack of statistics. However, it might be expected that DWP would have some information by now with respect to how many young people have sustained employment of close to six months, and on how many claim forms Jobcentre Plus has so far received. In addition, small employers can receive a part-payment after eight weeks. If all is going well, it seems fair to assume that these payments should have been leaving DWP since June of this year. But as yet no data are available from on how many have been made.

Given the sorry end that the Government’s last similar employment scheme came to, and recent EEF evidence that few employers are aware of the Youth Contract’s existence, it would be no surprise if the programme was under-performing. Evidence shows that while job subsidies can work they depend upon high levels of employer awareness and have high levels of deadweight. In contrast to job guarantee programmes, they also depend upon private sector employers taking young people on in the first place, and also provide Government with less scope to guaratee that young participants have capacity to boost their skills and undertake job search while on the programme.

Time will tell whether the job subsidy scheme has been a success. But if take up is low, the Government will need to explain why it cut the effective Future Jobs Fund, and replaced it with a poorer alternative that will mean outcomes for thousands of unemployed young people are worse. It will also be important to track how the programme is being marketed – correcting for poor preformance by offering subsidies to employers who would hire young people without them is as bad as no one claiming them at all.


2 Responses to What has happened to the Government’s Youth Contract?

  1. Ben
    Sep 7th 2012, 7:40 pm

    I saw the ad hoc analysis from DWP quoting the 17,000 figure. I put in an FOI request asking for some context behind that number, and their response was risible (they even got my name wrong). You can read it here:

    I’ve asked them to confirm that their ‘analysis’ was actually as poor as it appears.

  2. Tristram Hooley
    Sep 12th 2012, 12:19 pm

    I’ve also been struggling to get to grips with the Youth Contract. I’ve written a summary of what I understand at – any comments would be appreciated.