Nearly one million young people in the UK are now out of work and education, a figure that has surged by almost a quarter of a million since 2021 and represents a profound economic and social challenge for the government.
In response, the Work and Pensions Secretary, Pat McFadden, has announced the creation of 80 new youth hubs across Great Britain, aiming to place a hub in every local area. The expansion is a central pillar of what the government terms its “New Deal” for young people, a £1 billion investment over three years designed to create 200,000 jobs and apprenticeships.
One-stop shops for employment and support
The core function of the youth hubs is to break down the barriers that young people face by bringing key services together under one roof. Each hub will be required to meet a set of minimum standards, providing on-site Jobcentre Plus support alongside access to mental health and housing advice, skills training, and careers guidance.
Critically, the hubs are designed to forge direct connections between young people and employers. They will host live job and apprenticeship opportunities and facilitate introductions. This integrated model aims to offer accessible, joined-up support for 16 to 24-year-olds, a group where the unemployment rate recently hit 16.1%, the highest in a decade outside of the pandemic.
To widen their reach, the Department for Work and Pensions is partnering with community sports organisations. Mr McFadden announced a partnership with the SPFL Trust to deliver hubs across Scotland, building on similar work with the English Premier League. Nicky Reid, chief executive of the SPFL Trust, said football clubs were a natural fit as they are places where many young people already feel a strong sense of connection.
The scale of the challenge is underscored by the long-term “scarring” effects of youth unemployment, which can include reduced lifelong earnings, mental health issues, and an increased risk of substance misuse or homelessness. The economic cost is also stark, with the post-pandemic surge in young people not in education, employment or training (NEET) estimated to have cost the UK economy £20 billion in lost GDP.
Financial incentives and levy overhaul
Backing the hub network are significant financial measures aimed at both employers and young people. A central plank is the Youth Jobs Grant, which will pay businesses £3,000 for each young person aged 18-24 they hire who has been on Universal Credit for at least six months. The government expects this to support 60,000 young people over three years.
Furthermore, the existing Jobs Guarantee scheme, offering six months of paid work for the long-term unemployed, is being expanded to cover all 18 to 24-year-olds, aiming to create over 35,000 extra subsidised jobs. A new “Youth Guarantee Gateway” will also offer nearly 900,000 16-24 year olds a dedicated session followed by four weeks of intensive support.
From April 2026, the apprenticeship system will undergo its biggest overhaul in nearly a decade with the transition from the Apprenticeship Levy to a new Growth and Skills Levy. The government is investing an additional £725 million in this levy over the next three years. The reformed system will offer employers more flexibility to use funds for shorter, modular training and will see the government cover the full cost of apprenticeships for eligible under-25s at small and medium-sized businesses.
While industry bodies have welcomed the focus, some, like the Recruitment and Employment Confederation, have warned that apprenticeship rules remain too rigid. Economists have also raised concerns about “deadweight” spending, where employer incentives subsidise hires that would have happened anyway. The Bank of England has separately suggested that recent rises in the minimum wage and payroll taxes have contributed to the sharp increase in youth unemployment.
For the government, the policy is framed as a essential welfare reform. Pat McFadden stated that for every young person brought back into work, they will earn an extra £1 million over their lifetime while the Treasury saves a further million. He positioned the youth guarantee as the “best form of welfare reform,” a push for change after his predecessor’s plans were voted down by Labour MPs.
The announcement was made during a visit to Glasgow, where Mr McFadden opened Scotland’s first youth guarantee jobs fair at the Royal Concert Hall, attended by employers including HSBC, Barclays, Police Scotland and the NHS.
