The UK Government’s Funding Package Plan to Tackle Youth Unemployment

Youth unemployment is on the rise everywhere, including the United Kingdom. Even more so, many of these youth are not undergoing education or training either. In this light, the UK Government has launched a funding package to increase work opportunities for youth. What does this package entail?

UK’s Youth Unemployment

Between July and September 2025, 702,000 young people aged 16-24 in the UK were unemployed. Data by the Office for National Statistics (ONS) shows that the unemployment rate increased from 14.8% in 2024 to 15.3% in 2025.

Meanwhile, the number of young people not in employment, education, or training (NEET) reached 940,000 between April and June 2025. The government highlights that the COVID-19 pandemic has aggravated the unemployment crisis, making it even more challenging to address. Beyond its impacts on the economy, the crisis also puts a toll on young people’s health and wellbeing.

A report published by the Youth Unemployment Committee in 2021 found several causes behind the crisis, including skill gaps and shortages, the availability of apprenticeships, and access to career advice. There is a mismatch between the academic curriculum and the skills needed in emerging industries, such as green jobs and digital sectors, while access to quality career advice still needs expansion. Additionally, the report noted a lack of apprenticeship opportunities, particularly those that incentivize hiring young people.

Government’s Response: £820 million funding package

In an effort to tackle youth unemployment, the Department for Work and Pensions announced on December 6, 2025, a major £820 million funding package to provide more training and employment opportunities.

“Every young person deserves a fair chance to succeed. When given the right support and opportunities, they will grasp them. That’s why we are introducing a range of reforms to help young people take that vital step into the workplace or training and to go on and make something of their lives,” said Work and Pensions Secretary Pat McFadden.

Essentially, this funding package aims to facilitate the creation of new training or workplace opportunities for jobseekers aged 18–21 who have been on Universal Credit, a monthly benefit to help with living costs, for 18 months. These young people will receive 25 hours/week of fully subsidized six-month paid work, a relevant minimum wage payment, and fully funded support.

The government plans to create 350,000 new opportunities available for sectors such as construction, health and social care, and hospitality, with participating companies to be announced in the future. In terms of capacity development, young people will receive a dedicated work support session and training to help them develop relevant job skills, build networks, create CVs, and improve interview skills.

Additionally, the department also plans to grant a government-backed guaranteed job starting Spring 2026 for young people in areas with the highest need: Birmingham & Solihull; East Midlands; Greater Manchester; Hertfordshire & Essex; Central & East Scotland; and Southwest & Southeast Wales.

Safeguarding Youth’s Future

With the UK government’s plan to provide more jobs and training opportunities for young people, concerns also arise regarding the possibility of sanctioning those who do not engage with the offered support without a ‘good reason’. Ben Harrison, Director of the Work Foundation at Lancaster University, said that the sanction might push young people to take any jobs that can harm their prospects.

“Evidence from the UK and overseas is clear that these schemes must focus on connecting individuals to ‘good’ jobs with a living wage, job security and opportunities to progress if they are to lead to long-term sustained employment,” said Ben Harrison.

Prolonged youth unemployment is not only detrimental to their current economic, social, and mental wellbeing, but also can hinder their development and ability to achieve a better future. Therefore, providing a systemic intervention to tackle the causes of youth unemployment is crucial, with the emphasis on youth’s welfare and wellbeing.

Editor: Nazalea Kusuma