MPs highlight scheme’s flaws

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The Government’s youth contract is “insufficient” to tackle youth unemployment, a group of MPs has said.

The Work and Pensions Select Committee acknowledged that the contract was “a good start” but warned it would not be enough on its own, “given the scale of the current problem”.

The latest official statistics showed youth unemployment rose by 7,000 to 1.02 million in the three months to July.

The Work and Pensions Committee said it was worried the Government would fall short of a number of targets set out in its youth contract and identified other areas of concern.

A report by the committee found the target of providing 160,000 wage incentives were “unlikely to be sufficient to encourage employers to create jobs” and was a “very ambitious target”.

The flat incentive rate of £2,275 may also need to be increased to encourage recruitment in particularly depressed areas and to encourage the recruitment of disabled people, the report found.

The report also said that careful monitoring was needed to ensure work placements were given to young people with little or no previous job experience and that unpaid work for experienced candidates could prove counter-productive.

Committee Chair Dame Anne Begg MP, said: “The youth contract is welcome but on its own it will not be enough to address the current unacceptably high level of youth unemployment.

“Young people need effective support from Government to counteract the disadvantage they have long suffered in the labour market but they also need a return to economic growth and a substantial increase in the number of new jobs.

“Some of the measures in the youth contract have been shown to be effective but they will only make a significant impact if all the targets are met.

“Our concern is that there is a real risk that the Government will fall short of its more eye-catching targets.

“In particular, past experience shows that 160,000 wage incentives is a very ambitious target in the current economic climate. And 250,000 additional work experience placements for young people may also be unrealistic.”

Welfare Minister Mark Hoban said the scheme was “ambitious” and “reflected the scale of the challenge” the Government faced.

He told the BBC Radio 4 Today programme the Youth Contract was “bold and imaginative” and tackled issues that youngsters and businesses raised with ministers.

Mr Hoban defended the £2,275 subsidy from the Government, adding: “There are additional costs around recruiting young people - maybe additional training, maybe additional supervision they need - and that helps offset that cost.

“One of the key things is that the wage incentive is paid at the end of six months, so it does mean that young people have to be in sustainable employment before an employer qualifies for the payment.

“That is a good incentive to get employers to take on young people and give them a real chance.”