The government is promising major reforms in order to reduce the benefits bill by getting more people into work.
It has unveiled plans entitled “Get Britain Working” which include a £240m investment to overhaul the current network of job centres across Britain, and more funding for mental health services.
Prime Minister Sir Keir Starmer said the reforms would tackle the “biggest drivers of unemployment and inactivity”.
However, many crucial details of what the reforms will mean in practice have not been confirmed, and it is understood such decisions will not be made until next year.
For example, the government has said young people must take up offers of a job or training, or lose their benefits, but it has not spelled out how such sanctions will work or when they will come into force.
The government has pledged to increase the employment rate to 80% from its current level of around 75%, which would mean around two million more people in work.
“We’re overhauling jobcentres to make them fit for the modern age. We’re giving young people the skills and opportunities they need to prepare them for the jobs of the future,” Sir Keir said.
The prime minister added the government’s reforms would “put an end to the culture of blaming and shaming people who for too long haven’t been getting the support they need to get back to work”.
On Tuesday, Work and Pensions Secretary Liz Kendall will announce funds to provide extra capacity to cut waiting lists at the 20 NHS trusts with the highest levels of economic inactivity, in a bid to get more people currently off sick back to work.
She will also announce plans to expand mental health support and efforts to tackle obesity.
In other measures to be unveiled:
- Job centres will be rebranded as the National Jobs and Careers Service
- Every 18 to 21-year-old in England will get access to an apprenticeship, training or education opportunities or help to finding a job as part of a new “Youth Guarantee” project
- There will be independent review of what UK employers are doing to promote health and inclusive workplaces
- The North East, South Yorkshire and West Yorkshire will get more cash to stop people falling out of work because of ill health.
The government sees its employment reforms as a key move in achieving its main goal of growing the UK economy to create more jobs and improve living standards.
But it also wants to be seen as not be seen as a “soft touch” by some on welfare payments. Getting more people into work and equipping younger people with skills, is seen as essential in boosting productivity and delivering growth.
However, the Conservatives said the government’s latest announcement showed Labour was “not prepared to take the tough but necessary choices to bring down the benefits bill”.
“They have even dodged the difficult decisions on sickness benefits, which are needed to make the welfare system sustainable in the long term,” said Helen Whately, shadow secretary of state for work and pensions.
In 2024 to 2025, the government says it will spend £137.4bn on “working age and children” welfare. This includes spending on benefits like universal credit. In comparison, the UK expects to spend £137.5bn on the state pension over the same period.
While unemployment stands at almost 1.5 million, the number of people classed as economically inactive – not employed or actively looking for work – has jumped to more than nine million. It surged during Covid, but has remained persistently high since.
The pandemic has also been a factor in 2.8 million people not working because of long-term sickness.
But tax rises announced in the Budget have resulted in a backlash from businesses who have warned the policy decisions will make it harder for employers to hire more people.
On Monday, Chancellor Rachel Reeves defended her decision to raise National Insurance on employers. She said despite “a lot of feedback” on her tax and spending plans, she had not heard many alternatives.
However, Gary Wroe, managing director of Hockley Mint, a jewellery manufacturer in Birmingham, said the Budget had “hindered” the company’s “growth opportunities”.
They employ 98 people and take on a number of apprentices each year but Mr Wroe said the business would struggle to continue recruit apprentices given the National Insurance rise.
One of his current apprentices, Abi, 17, said she knew of people who had left school but had not gone on to work.
“I think a lot of it does actually come down to lockdown. I think because people just kind of sat in the house and they didn’t do anything,” she added.
The government’s plans have been welcomed by the Chartered Institute for Personal Development, whose chief executive Peter Cheese said they were “a step in the right direction” but called for “more ambition” to “make apprenticeships a viable alternative to university”.
But Catherine Parsons, who oversees the Big Issue’s specialist employability service Big Issue Recruit, said that “scare tactics” would only exacerbate Britain’s worker shortages.
“We know that the steep rise in anxiety and mental health problems in young people has had a direct impact on their ability to find and retain good jobs,” she added.
“The new looming threat of having their benefits axed should they fail to summon the mental strength to accept work or training will only continue the vicious cycle of failure that has seen economic inactivity and the welfare bill spiralling out of control in recent years.”