Reeves unveils £820m funding to support jobless young people

The Chancellor has announced £820m of funding to guarantee paid work placements for 18 to 21-year-olds "not earning or learning" for over 18 months.

The funding will pay for three years of the Youth Guarantee scheme offering young people in England an apprenticeship, training, education, or help to find a job.

Latest figures show almost a million young people not in education, employment or training - known as Neets.

Making her Budget speech on Wednesday, Rachel Reeves said the money would "give the young people who were let down by the Conservatives the support and opportunity they deserve".

Under the scheme, 18 to 21-year-olds on Universal Credit for 18 months without working or studying will be offered six-month paid work placements - and those not taking up the offer face being stripped of their benefits.

Reeves also announced the government would be funding a scheme to make apprenticeship training for under-25s at small and medium businesses "completely free".

Nick Harrison, CEO of education think tank the Sutton Trust, welcomed the planned changes to apprenticeship schemes but called on the government to go further.

"Apprenticeships have the potential to be a powerful tool for social mobility, offering an alternative route to highly skilled industries," he said.

Association of Colleges head David Hughes said the money would enable colleges to support more young people so they do not end up not in education, employment or training.

But he said more money was needed, adding: "To fully support the nearly one million young people who are Neets, there will need to be more adult education funding, and to ensure millions of adults are not left behind by the tech and green revolutions we are seeing before our eyes, that budget will need to grow even more."

Lancaster University warned the scheme may be "too blunt an instrument to successfully support young people into secure and sustained employment".

Rebecca Florisson, lead analyst at the university's Work Foundation, said the "evidence is clear that forcing individuals into 'any job' can do more harm than good to their future employment prospects."

The announcement comes amid rising concern about youth inactivity. Nearly 946,000 people aged 16 to 24 are currently Neets - around one in eight of the age group - close to an 11-year high.

The DWP recently launched an investigation into why the figure is so stubbornly high.

The jobs market is particularly challenging for young people, with 2025 figures showing a falling number of vacancies and fewer people on payrolls.

Official stats on Neets include stay-at-home parents as well as jobseekers.

The majority of young people (580,000) who are Neets fall into the economically inactive category, compared to 366,000 who are unemployed.

A rise in long-term sickness among young people has been one of the main causes of economic inactivity over the past three years, according to research by the Youth Futures Foundation.

Youth Guarantee funding formed part of a wider welfare reform package in the Budget, where Reeves said the system should "protect people who cannot work and empower those who can".

Forecasts released alongside the Budget by the Office for Budget Responsibility (OBR) predict relatively few inactive people returning to work before the next election, despite the changes.

The legal minimum wage for over-21s is to rise 4.1% in April, from £12.21 to £12.71 per hour, with the wage for 18 to 20-year-olds rising from £10 to £10.85.

Some businesses - especially in the hospitality sector - have warned this could put companies off hiring young people, undoing the government's efforts to increase youth employment.

Sign up for our Politics Essential newsletter to keep up with the inner workings of Westminster and beyond.