Youth Contract wage subsidy to end early

The Department for Work and Pensions (DWP) has confirmed it will bring forward by one month the date from which it will no longer accept applications from employers for the wage incentive element of the scheme. It will now end on 6 August, rather than early September as originally planned.

Under the Youth Contract, payments of £2,275 are offered to employers as an incentive to hire 16- to 24-year-olds who have been unemployed for six months or longer on a 26-week placement but the DWP wants to reinvest the funding elsewhere.

The department says it will use the funding to provide targeted support through Jobcentre Plus for jobless 18- and 19-year-olds from black and minority ethnic communities, who the DWP claims face greater barriers to work than other young people.

The payments, introduced as part of the Youth Contract in April 2012, were branded a failure by campaigners in July 2013 when it emerged that the government had made only 4,690 payments in its first year.

Since then the number of incentive payments made has rocketed to 141,000, but is still short of the 160,000 target set when the scheme was launched.

A DWP spokesman said the wage subsidy is ending a month earlier than planned because youth unemployment has fallen significantly.

He said: “We now have record employment in this country, with the largest fall in youth unemployment since the 1980s.

“The Youth Contract has contributed to that by providing over 200,000 opportunities for young people, helping them to get the experience and training they need.

“As part of the government’s long-term economic plan, we’ll be re-investing the wage incentive money in other projects targeted at those young people who face the biggest challenges to getting into work, so everyone can share in the growing economy and improving jobs market.”

Liam Preston, parliamentary and policy officer at YMCA England, was one of the campaigners who spoke out against the wage incentive last year but has concerns about the DWP’s decision.

He said: “The DWP is right to target those who are finding it most difficult to access employment.

“However, with youth unemployment levels still high, we would question the decision to end a programme designed to encourage employers to take on young people, without alternative plans or programmes in place to continue to tackle such a key issue.”

The £1bn Youth Contract was introduced by Deputy Prime Minister Nick Clegg in November 2011 with the aim of helping 410,000 16- to 24-year-olds into work. It is due to end on 31 March 2015.

The Youth Contract for 16- to 17-year-olds not in education, employment or training (Neet) evaluation, published last month by the Institute for Employment Studies, the University of Warwick and Leeds Metropolitan University on behalf of the Department for Education, recommends that premium payments could be used by local authorities to fund services for 16- to 17-year-olds who are Neet.

Government data published in March revealed that the initiative had only helped five 16- to 17-year-olds with the most severe problems back into education, employment or training since the eligibility criteria was extended in January last year.

In June, the Local Government Association called on the government to hand over responsibility for youth employment schemes to councils, citing problems with the Youth Contract programme.