Expanded Jobs Guarantee could bring £4.6bn long run boost to public finances as TUC urges ministers to put “turbo-boosters” on scheme

• TUC calls for an expanded Jobs Guarantee at the heart of the government's plan to tackle the NEET crisis

• A scaled-up Jobs Guarantee scheme with 225,000 places over three years would generate almost £4.6bn in long-term benefits, and support thousands of young people into sustained employment 

• Every £1 of government spending would generate around £2.69 in long-term returns to the Exchequer

New TUC analysis published today shows that by expanding its Jobs Guarantee scheme the government could generate £4.6bn of long-run benefits to the Treasury, while helping hundreds of thousands more young people into work.

The government has committed to a Jobs Guarantee providing fully funded, six-month paid jobs for eligible 18 to 24-year-olds who have been on Universal Credit and looking for work for 18 months. 

The scheme is expected to support more than 90,000 young people over the next three years, which the TUC says is an important first step. 

But the union body says the scale of the youth employment crisis means the government should put the turbo-boosters on the scheme.

The union body is calling on ministers to:

• Extend eligibility from those who have been on Universal Credit for 18 months to those on it for six months;
• Increase the number of places available from 90,000 to 225,000 over three years.

The TUC says expanding the Jobs Guarantee is an urgent priority as the number of young people not in education, employment or training (NEET) remains at historically high levels.

The union body points to evidence from the previous Future Jobs Fund, which provided young people with paid work, valuable experience, skills and employer references.

By reducing the waiting period from 18 months to six months, and expanding the number of places available, ministers could help more young people gain work before they become entrenched in long-term unemployment or inactivity.

Job subsidy schemes are already in place in many other European countries, including in the Netherlands which has a very low NEET rate. 

Strong return on investment

The TUC analysis shows the expanded scheme would require around £1bn of additional upfront investment beyond the government's existing commitment.

However, that investment would be more than repaid through higher employment, increased tax revenues, lower benefit payments and reduced pressure on public services.

The modelling estimates that an expanded scheme with 225,000 places would generate £4.56bn in long-term benefits, including:

• £3.55bn from higher tax receipts and lower social security spending
• £1.01bn from reduced costs to public services

The analysis shows the scheme would deliver a benefit-cost ratio of 2.69, meaning every £1 spent returns £2.69 in benefits over time.

Even a more moderate expansion of scheme, bringing eligibility forward to 12 months and increasing the number of places to 135,000, would generate £2.74bn in long-term benefits, with a benefit-cost ratio of 2.67 (from around £337m of additional upfront spending).

Generational gains instead of generational costs

The modelling shows that the expanded scheme would break even within eight years, with the gains accruing across 30 years. 

The TUC says this makes it a strong policy for inclusion in the 10-year plan for Britain due to be unveiled by the Prime Minister.

While the full long-term gains may take a generation to accrue, this should be set against the generational costs created by the scarring effects of youth unemployment and the wider benefits of bringing down NEET rates and securing higher employment.

Long periods out of work at the start of adult life can reduce lifetime earnings, weaken future employment prospects and increase the risk of poor health and long-term economic inactivity. 

Government analysis has found that every year a young person spends unemployed, or outside education and training, can leave them around £52,000 worse off over their working life.

Put the scheme on a permanent footing

The TUC is also calling for the Jobs Guarantee to become a permanent part of the UK's employment support system, with the flexibility to expand during economic downturns and contract when labour market conditions improve.

The union body says too many youth employment programmes have been introduced and then withdrawn before their full benefits could be realised.

It is also urging ministers to develop routes into the scheme for "hidden NEETs" who are not claiming Universal Credit but remain disconnected from work and education.

TUC General Secretary Paul Nowak said: 

"Every young person needs their first step in working life. But a decade and a half of failure under the Conservatives, which saw insecure work explode, public service austerity and vocational education and apprenticeships neglected, created a perfect storm for young people trying to get on today. 

“The government's Jobs Guarantee is an important first step to fixing this. It means young people who are struggling to land a job can get meaningful paid experience in the world of work. 

“But the scale of the crisis means the government must go further and faster. We must put turbo-boosters on the Jobs Guarantee so it reaches more young people sooner. 

"It's an investment that more than pays for itself. The government's 10-year plan should put an expanded Jobs Guarantee at the heart of its plans to end the NEET crisis, alongside greater financial support for young people in further education."