Chancellor Jeremy Hunt delivered his much-anticipated Autumn Statement in Parliament yesterday and this is our response
In his statement, the Chancellor acknowledged that the UK is now in a recession and set out his plan, a combination of tax rises and public spending cuts, to bring stability to the economy. The Chancellor made reference to the Office for Budget Responsibility’s predictions which included an expectation that unemployment rates will rise from 3.6% today to 4.9% in 2024. We know that rises in unemployment often impact younger workers disproportionately and economic recession compounds young people’s barriers to employment. So how will the Autumn Statement impact young people?
Inflation-level rises to benefits and the National Living Wage
The Chancellor announced plans to protect low earners and the least well-off in society by announcing inflation-level increases to working-age benefits and pensions and raising the National Living Wage, National Minimum Wage and Apprenticeship rates in line with inflation, a recommendation that Youth Employment UK made in response to the Low Pay Commission’s consultation earlier this year. Both of these measures should help to alleviate the financial burden young people are facing with the rising cost of living, however, the National Minimum Wage rates for young people under 23 remain at lower levels than the National Living Wage. In addition, the rise in the National Living Wage rate will not come into effect until April 2023, leaving many young people continuing to struggle over the winter months with rising inflation and energy bills. Action on low wages is needed more urgently.
Freeze on income-tax and National Insurance
As part of the Chancellor’s plan to raise more money for the Treasury, the thresholds for Income Tax have been frozen for a further two years until 2028. Income Tax is paid at 20% on earnings over £12,570, and then 40% on earnings over £50,270 a year, however, bands in Scotland are different. There are some concerns that freezing these bands will mean that people who have not previously paid either the 20% or 40% tax rates will move into paying tax as wages begin to rise to reflect the growing cost of living. There is a risk that more low-earning young people will now face paying income tax on their wages at a time when their earnings and budgets are already being squeezed.
Education Spending and Skills Review
The Chancellor also pledged an additional £2.3 billion in funding for schools per-year for the next two years as part of a pledge to raise school standards and protect education. The Chancellor raised concerns that,”not all school leavers get the skills they need for a modern economy” and announced the appointment of Sir Michael Barber as an adviser on the implementation of the government’s skills reform programme. We welcome this prioritisation of skills and the recognition that more needs to be done in the education sector to adequately prepare young people for the demands of a modern economy to prepare them on their journey to work.
Focus on economic inactivity and those on Universal Credit
The Chancellor recognised growing concerns around the rising number of people who are out of the labour market due to economic inactivity (meaning they are out of work and not ready or able to look for work) and announced that he would be asking the Work and Pensions Secretary, Mel Stride, “to thoroughly review issues holding back workforce participation”. In addition to this review, the Chancellor also said that he would be asking over 600,000 people currently on Universal Credit to meet with a work coach to get support to increase their hours or earnings.
We would like to see as part of this proposed review into economic inactivity a focus on the specific barriers facing young people who are economically inactive with robust plans from the government which seek to reduce this figure and help young people in to employment. Recent data from the latest Office for National Statistics Labour Force Surveyshows that the number of young people aged 16-24 who are economically inactive and not in full-time education currently stands at 886,000. Young people in this group often face systemic and individual challenges to gaining employment, including long-term sickness, disability, mental health problems and caring responsibilities, the government should consider the support offer for these young people to help them into good quality work.
What does this mean for young people?
This year’s Youth Voice Census told us what young people want and need from services to support their education and journey to work.
The key findings were:
- Mental Health Emergency
- The difference is the disadvantage
- Unprepared for the future
- Quality of work
Mental Health Emergency
- 51% of young people aged 19 plus thought their mental health challenges were the biggest barrier to accessing work now or in the future.
- 52% of those in work cite anxiety as their biggest barrier
- 42.5% of young people aged 19 plus feel ‘confident’ or ‘very confident they had self-belief.
- Of those in work, 31.2% struggle with their wellbeing at work.
Whilst some of the announcements in the Chancellor’s statement go some way to alleviating the pressures of the rising cost of living and may ease some of the challenges facing young people’s mental health there was little in the statement that addressed this serious issue head-on. We hope that the pledges made in the NHS Long Term Plan to expand mental health services are kept, along with the commitment to create a new approach for young adult mental health services to ensure young people aged 18-25 are fully supported in their transition to adulthood.
Difference is the disadvantage
- Those with protected characteristics, carers and care leavers were around 20% less likely to feel safe in their local community.
- Young people with protected characteristics, carers, and care leavers were 15% less likely to be confident that there are quality jobs available to them.
- Those eligible for free school meals were 17% more likely to state that covid continues to disrupt their work ‘a lot’ or a ‘great deal’
- Self-belief, confidence and staying positive scores were more likely to be at least 10% lower for those with protected characteristics, carers, and care leavers.
Given the precarious state of the economy and the challenges facing the nation’s finances the statement was always going to be focused on taxes and spending. However, it is disappointing that the Chancellor’s statement failed to address the reality that young people who are different in this country are more likely to face disadvantages economically, socially, and in their life chances.
Unprepared for the Future
- Only 34.4% of those in education thought they understood the skills employers were looking for.
- Over half (56%) of those looking for work right now think their biggest barrier to work will be a lack of work experience.
- 41.5% feel confident they are prepared to start employment.
We know that young people are not feeling confident and prepared to enter the world of work when they leave education, we also know that young people are feeling confused and uncertain about the skills they need for future work. This is why we welcome the renewed commitment to implementing the government skills reform programme which has promised to equip young people with the skills they need for the jobs of the future. We hope that the government will ensure that young people are involved in this process alongside employers to ensure that any forthcoming reforms reflect the needs of the young people it intends to serve.
Quality of work
- 14.2% of young people were ‘confident’ or ‘extremely confident’ they could find quality work where they lived.
- 28.7% of young people thought employers were supportive of hiring them
- 56.3% of young people in work think they are paid fairly for the work that they do.
Young people have told us that they are not confident they will find good quality work where they live, furthermore, young people feel undervalued by employers and the majority of young people in this year’s Youth Voice Census do not believe that they are paid fairly for the work that they do. The inflation-level rises to the National Living Wage and National Minimum wages are a step in the right direction in showing young people that they are valued and will be entitled to a fair wage, however there still remains disparity for the youngest workers and for apprentices. We continue to urge the government to consider reducing the gap between the all-age rate and the rates of younger workers and apprentices.
Conclusions
It’s probably most fair to say it was a mixed bag for young people, with still more detail to come. We know that young people are not feeling confident in their futures and the Chancellor missed an opportunity to speak about opportunity, and the role of the government in supporting young people into quality careers in the UK. Young people will be affected by the economic instability we now face and it is imperative that the government ensures that there is a quality education, employment or training opportunity for everyone.
We also remain concerned about the impact of mental ill health and anxiety on young people and that their experiences are holding them back from making positive steps. We will continue to work with our government colleagues, our partners, employers and young people to press the importance of government policy meeting the needs of young people whoever and wherever they are.
