Government Plans to Cut Benefits for Young People Not Seeking Work
In a recent statement, Rachel Reeves, the Chancellor, hinted that young individuals who are not actively seeking employment may face reductions in their benefits. She described the high number of young people who are not engaged in education, employment, or training (NEET) as a “travesty,” asserting that under a Labour government, the majority of these young people would find gainful employment.
This announcement precedes a forthcoming speech by the Work and Pensions Secretary, Liz Kendall, who is anticipated to reveal proposed welfare cuts aimed at addressing the alarming increase in health-related benefits. Later this month, the Office for Budget Responsibility (OBR) is slated to release a forecast that is expected to indicate that the £9.9 billion in “fiscal headroom” that Reeves previously established in last October’s Budget has been eradicated.
This development implies that the Chancellor will be required to introduce new spending cuts to align with her self-imposed fiscal constraints, which limit borrowing. Reeves has suggested that significant reductions in the benefits bill will be necessary as a consequence of this fiscal reality.
She stated, “We must reform our welfare system because, at present, it is failing taxpayers by incurring excessive costs, hindering our economy due to the high number of individuals trapped on out-of-work benefits, and ultimately letting down the recipients of these benefits who remain reliant on them instead of being actively supported back into the workforce.”
In a conversation with Sky’s Beth Rigby on the Electoral Dysfunction podcast, Reeves elaborated, “Consider this statistic: there are currently a million young people not in education, employment, or training. This is indeed a travesty. I believe that many of these individuals—most, in fact—should be gainfully employed. With the plans we intend to introduce, they will be working, and importantly, they will receive the necessary support to facilitate their return to work.”
Kendall has previously indicated that young individuals aged 18 to 21 who decline job or training offers under a new initiative called the “Youth Guarantee” may have their benefits reduced. On Thursday, the Institute for Fiscal Studies (IFS) emphasized that the Government would need to persuade the OBR that any anticipated savings from welfare reform would genuinely materialize.
Isabel Stockton, a senior research economist at the IFS, remarked, “The challenge will be identifying a sufficiently reliable measure that the OBR is willing to endorse in advance.” Paul Johnson, the director of the think tank, noted that it is “not surprising” the Government is seeking savings from welfare, especially given the “astonishing speed” at which health-related benefits have escalated. The expenditure on such benefits has surged from approximately £40 billion prior to the coronavirus pandemic to an astounding £65 billion last year. Johnson added that even if the government manages to “curb the rate of growth,” it could result in substantial savings.
