A Better Deal: Tackling the UK’s Youth Employment Crisis

Around one million young people in the UK are now not in education, employment or training, often referred to as NEET. According to IPPR’s September 2026 report A Better Deal: Tackling the NEET Crisis, this is the highest number for more than a decade.

The report argues that the problem cannot be explained simply by young people lacking skills or motivation. Instead, it points to a combination of weak local labour markets, shrinking routes into first jobs, an apprenticeship system that is difficult to access and employment support that does not always reflect the circumstances young people face.

IPPR proposes bringing reforms together under what it calls a “New Youth Contract”, centred on creating more first jobs, strengthening apprenticeships and redesigning employment and financial support for young people.

The scale of the problem

More than one in eight young people are now outside employment, education or training, according to the figures used in the report. Young people have also faced an unemployment rate more than three times that of the workforce as a whole. Around two-thirds of the increase in NEET numbers since mid-2021 has come from young people who are economically inactive rather than actively looking for work.

Health has become a much bigger part of the picture. In 2025, one in five young people who were NEET reported having a mental health condition, more than double the proportion recorded in 2012. More than half reported some form of health condition.

The report argues that extended periods outside education and employment can have longer-term consequences, including weaker earnings, poorer health and economic insecurity. It also says there are wider economic effects through lower labour supply, reduced productivity and increased welfare spending.

Where you live can shape your employment prospects

One of the report’s strongest findings is the geographical divide in opportunity.

The number of suitable vacancies available to young people varies significantly across the country. IPPR finds that regions with higher NEET rates generally have fewer vacancies available relative to the number of young people looking for opportunities.

Its analysis places the North East towards the bottom for suitable vacancies per NEET young person, while areas including the South East and South West have considerably more opportunities available.

The report therefore argues that employment policy cannot concentrate solely on making young people more employable. In areas where too few jobs exist, additional employment opportunities would also need to be created.

Why entry-level opportunities are under pressure

IPPR identifies several developments affecting traditional routes into work:

• Vacancies have fallen in sectors that employ large numbers of younger workers, including retail, hospitality and leisure. Retail vacancies cited in the report were 15 per cent lower than a year earlier and less than half the level of a decade ago.
• Older people remaining in the workforce for longer may mean fewer vacancies opening up in some occupations traditionally used as first jobs.
• Emerging US evidence suggests AI could be reducing some early-career opportunities in occupations particularly exposed to the technology, although IPPR stresses that the implications for the UK remain uncertain.
• Rising employment costs may also affect recruitment decisions, although the report says the evidence does not yet establish that recent cost increases have caused the deterioration in youth employment.

Proposal 1: WorkStart

To address places where there are too few entry-level jobs, IPPR proposes a programme called WorkStart.

Under the proposal, government would fund additional paid jobs for young people at risk of becoming long-term NEET. The placements would include supervision, training and help moving into permanent employment, an apprenticeship or further education.

Rather than running the entire programme centrally, IPPR proposes national funding combined with considerable local control.

Local and mayoral authorities could work with employers, colleges, employment services, trade unions and community organisations to create placements connected to the needs of their local economies.

What WorkStart would involve

• Paid, additional jobs rather than subsidies for positions that employers would have created anyway.
• Greater funding for places with high youth inactivity and relatively few vacancies.
• Jobs connected to local growth sectors and economic priorities.
• Training, supervision and employment support alongside the placement.
• Local organisations helping young people progress into permanent jobs or further training.

IPPR estimates a placement lasting six months, involving 16 hours of work per week and paid at the real living wage, would have a gross cost of roughly £6,000 per person. Providing placements to 350,000 young people would therefore have an illustrative upfront cost of about £2.1 billion, although the report expects the net cost to government to be lower once additional tax receipts and lower benefit expenditure are considered.

Proposal 2: Rebuild apprenticeships as a route into work

The second major issue identified by the report is the weakening of the path between education and employment.

Young people have fewer opportunities to gain early experience through part-time jobs and summer work, while recruitment processes can disadvantage applicants who have little previous experience.

IPPR regards apprenticeships as one of the stronger routes into skilled work, but argues that too few suitable opportunities are available to young people starting their careers.

Apprenticeships vary dramatically between industries

Some sectors make much more use of apprenticeships than others.

Health and social care is among the strongest apprenticeship providers relative to its workforce, while industries such as information and communications provide considerably fewer apprenticeships.

IPPR estimates that simply halving the gap between the highest and lowest apprenticeship-performing sectors could have produced around 110,000 additional apprenticeship starts a year based on 2023/24 figures. The report describes this as an illustrative estimate rather than suggesting every industry should have identical apprenticeship rates.

The report recommends five apprenticeship reforms

1. Prioritise younger people in apprenticeship funding

IPPR proposes reserving a greater share of Growth and Skills Levy funding for people under 25, including protection for entry-level apprenticeships.

2. Develop sector-specific apprenticeship plans

Industries with relatively few apprenticeships would have tailored plans looking at issues such as employer incentives, apprenticeship standards and shared-employer models.

3. Give SMEs more help

Smaller employers can find the administration and cost of apprenticeships difficult. The report proposes a national network of apprenticeship intermediaries to help employers find training providers, recruit candidates and navigate funding requirements.

4. Change English and maths requirements

IPPR proposes removing mandatory English and maths exit requirements for 16 to 18-year-old apprentices who have not already achieved Level 2 qualifications. It argues that literacy and numeracy support could instead be incorporated into vocational training.

5. Remove financial penalties for low-income families

A young person starting an apprenticeship can cause their family to lose some benefits because apprentices are treated differently from children remaining in full-time education.

Depending on household circumstances, the losses identified by IPPR can include child benefit, Universal Credit child elements and other support. The report argues that these rules can discourage apprenticeship participation among lower-income families.

Proposal 3: Replace fragmented employment support with a youth-focused service

The final part of the report focuses on the young people who may need more support before moving into work.

IPPR argues that the traditional Jobcentre model was largely built around unemployment and job-search requirements, whereas an increasing proportion of young people outside work are dealing with long-term health problems, disability or several overlapping barriers.

For example, evidence cited in the report found that more than a quarter of NEET young people said their mental health had stopped them applying for jobs, while one in five said it had prevented them attending an interview.

A specialist youth employment service

IPPR proposes creating a separate youth-focused employment service.

Every young person using the service would have a dedicated adviser and an individual plan. Support could bring together employment, health, education, housing and other services rather than expecting young people to navigate each system independently.

Access would also not depend on claiming Universal Credit. The report proposes working through colleges, councils, health services, youth organisations and community groups so young people can receive help before long periods of inactivity become established.

The service would also work directly with employers to create or broker suitable jobs, work experience and apprenticeships rather than simply directing young people towards advertised vacancies.

A different approach to financial support

IPPR also proposes an enhanced youth allowance within Universal Credit.

The idea is to provide young people with a common personal rate of financial support regardless of their formal work-capability status. The report argues that linking higher financial support too closely to being assessed as unable to work can create a risk for young people who want to try education, volunteering or gradual steps back towards employment.

The allowance would also allow some independently living young people to continue receiving financial support while undertaking agreed education or training.

IPPR says the reform should be broadly cost-neutral across new claimants. It acknowledges that this could leave some disabled young people with lower entitlement than under the existing system and therefore proposes protections developed with disabled young people and disability organisations. Personal Independence Payment would remain separate.

The report’s main argument in brief

The central message of A Better Deal is that Britain’s youth employment problem is not one problem with one solution.

IPPR identifies a chain of issues. Some young people live in places where there simply are not enough suitable first jobs. Others struggle to access apprenticeships or face financial penalties for doing so. A growing group also faces health, disability or other barriers that cannot easily be addressed through conventional job-search requirements.

Its proposed New Youth Contract therefore brings together:

• WorkStart, creating paid first-job opportunities where local labour markets are weak.
• A major expansion and reform of apprenticeships, particularly for younger people and SMEs.
• A specialist youth employment service, providing longer-term, personalised support.
• An enhanced youth allowance, intended to make education, training and gradual progress towards employment financially easier.
• Greater local control, so employment programmes respond to the labour market and services available in individual places.

The report’s broader argument is that simply asking young people to search harder for existing jobs will not address the problem where opportunities themselves are limited. Its proposed approach combines job creation, skills policy, social security and employment support, with the aim of making the transition from education into working life easier and less dependent on where someone happens to live.

Primary source: IPPR’s September 2026 report A Better Deal: Tackling the NEET Crisis