Companies offered £3,000 to hire jobless under-24s

The government is to pay more companies to hire young people, under Labour's latest plan to tackle spiralling rates of youth unemployment.

Firms will get a £3,000 grant for every person they take on aged 18 to 24 who is on benefits and has been looking for a job for six months or more.

An existing scheme that pays firms to take on those who have been out of work for even longer will also be expanded.

It comes as ministers grapple with an unemployment crisis among young people, with over 950,000 16 to 24 year-olds not in education, employment or training, around one in eight people in that age group.

Announcing the measures in a speech in east London, Work and Pensions Secretary Pat McFadden described the issue as "deep rooted", pointing to rising youth unemployment in the years before Labour entered office.

But Helen Whately, his Conservative counterpart, said state-funded jobs were "economic madness" and "not the answer".

Her party has pinned the blame for the rise on Labour policies, including a hike to employer's National Insurance last year and a law passed last year creating a series of new employment rights in Britain.

The government hopes the new £3,000 "youth jobs grants" will support around 60,000 young people into employment over the next three years. Ministers are yet to set out how employers will qualify for the payments.

Alongside this, an existing scheme that subsidises six-month minimum wage jobs for benefit claimants who have been looking for work for 18 months will also be widened this autumn, covering those aged up to 24 rather than 21 now.

Government-supported foundation apprenticeships, where employers are paid up to £2,000 in instalments, will expand into hospitality and retail from April.

The changes mean government jobs subsidies will now target a slightly older cohort of young people than had previously been the case.

Employers currently do not have to pay National Insurance (NI) on the salaries of employees under 21 unless they earn more than £50,270.

The government has also set out changes to apprenticeships in a bid to refocus schemes towards younger people.

A number of management apprenticeships, typically taken by those over 25, are being scrapped, with funding diverted to new courses in areas such as AI leadership and electric vehicle charging point installation.

Alan Milburn - a former minister in the New Labour government - has been drafted in to conduct an official review into youth unemployment, with conclusions due to be published in the summer.

Ministers are also considering slowing down plans to pay adults of all ages the same minimum wage, after criticism from some employers, who said it would make it too expensive to hire young people.

However, government sources have previously indicated the commitment is unlikely to be reversed entirely.

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