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Every young person who has been out of work or education for 18 months will be given paid work under a scheme to be announced by chancellor Rachel Reeves on Monday.
Under the scheme, young people who are on the universal credit benefit will be offered mandatory work.
“We won’t leave a generation of young people to languish without prospects — denied the dignity, the security and the ladders of opportunity that good work provides,” Reeves will say during her speech at the Labour party conference on Monday.
“I can commit this government to nothing less than the abolition of long-term youth unemployment. We’ve done it before and we’ll do it again.”
Those who refuse the offer of a job are expected to face sanctions, including potentially having their benefits docked, according to people briefed on the plans.
Work and pensions secretary Pat McFadden will say on Monday that with the opportunity “comes responsibility too — to take up the training, the apprenticeship or the work that is offered”.
The chancellor is set to announce funding for the scheme at the Budget on November 26, and the government will clarify at a later date whether it plans to subsidise or pay outright for the jobs.
Earlier this year, the government announced it had earmarked £3.8bn for health-related job support.
The move forms part of the Labour government’s “Youth Guarantee” initiative, where it has pledged that people aged 18-21 will be assured a place in college, an apprenticeship or a job. One in eight 16-24-year-olds are currently not in education, work or training, a rise of almost a third over the past four years.
The Youth Guarantee is currently limited to a handful of “trailblazer” areas, which are piloting ways to steer more young people towards existing sources of help.
Both unions and business groups have been calling for the government to put more money into a scheme for subsidised jobs.
The Trades Union Congress said this month that the government should create a £1bn-a-year jobs guarantee programme similar to schemes that ran following the global financial crisis and Covid-19 pandemic, subsidising employers to offer six-month work placements paid at the national minimum wage.
The British Chambers of Commerce, which helped deliver the earlier scheme, also called last week for the government to explore a wage subsidy scheme. But it said employers already struggling with higher national insurance contributions would hesitate to hire young people with no work history just as the new protections of the Employment Rights Bill kicked in.
Previous schemes were shortlived. The Future Jobs Fund, introduced in 2009, was scrapped by the coalition government, which viewed it as too expensive. The Kickstart scheme, introduced by chancellor Rishi Sunak to forestall a youth jobs crisis during the pandemic, ended up undersubscribed as hiring recovered rapidly after lockdown.
The government’s proposed scheme is likely to be more limited in scope as it will be open only to young people who have been claiming benefits for more than 18 months. Many young people who are in long-term inactivity do not claim out-of-work benefits, while others are unemployed for shorter periods.
The government has not yet said what level of subsidy the scheme will offer or what types of job or employer it will encompass.
It will need to convince potential critics that the jobs are genuinely new roles that will help young people into sustainable, long-term work, rather than giving public money to employers who will put people into low-quality roles they would have filled anyway.
A senior business leader said: “It’s a good scheme but for the question of where these jobs will be.”
Rain Newton-Smith, chief executive of the CBI, Britain’s biggest business lobby group, said that tackling youth unemployment was critical for the economy and that she was waiting for full details of how the scheme would be implemented.
She also echoed recent criticism from business about the government having made it harder and more expensive for companies to hire young workers.
“To ensure we have a comprehensive plan to support higher employment for everyone, we also need to ensure we are tackling increases in the costs of employment and ensuring the Employment Rights Bill doesn’t discourage employers from hiring.”
Lord Simon Wolfson, boss of retailer Next, warned this month that the jobs market was already in decline.