Labor MPs have no reason to oppose a new Government attempt to reform the welfare system, the Work and Pensions Secretary has said as he unveils a £1bn youth employment plan.
The announcement by Pat McFadden – who said the public wanted the system to promote work and the “value of money” – is seen as a prelude to a renewed attempt to reform the welfare system after his predecessor Liz Kendall’s plans were blocked by a Labor rebellion last year.
Businesses will receive a £3,000 grant for every hire of a person aged 18 to 24 who is on benefits and has been looking for work for at least six months, under a new policy designed to tackle the rising rate of youth unemployment.
The funding, which aims to create 200,000 jobs, is part of what McFadden described as a “new deal for young people”.
It was announced alongside a new apprenticeship incentive, under which small and medium-sized businesses will receive £2,000 for every new employee aged 16 to 24 they hire. Payments to businesses will be staggered under the plan, which will begin in June.
At the same time, the government is getting rid of a number of management practices, eight in 10 of which are carried out by employees over 25 years old.
However, McFadden also sent strong signals that the government was laying the groundwork for a new attempt to make changes to the social welfare system, after the government was forced last year to water down plans announced by Kendall.
A U-turn on cuts to disability benefits was carried out last summer to prevent a rebellion by more than 120 Labor MPs, while 47 MPs later rebelled against proposed cuts to welfare.
“I want to give people a chance. I want to give them a level of support that they haven’t had in the past and I think that’s what welfare reform is about and I see no reason why Labor MPs shouldn’t support welfare reform that puts work and opportunity at the heart of it,” McFadden said when asked if he was ready to face MPs once again over wider changes to welfare.
He previously used a speech at a further education college in east London to advocate for “radical” change to the welfare system.
“The welfare state is only as strong as the political and public support it receives,” he said. “It has survived because society accepts that we should support the unemployed, the sick, the disabled and the elderly. But the public also wants the system to promote work and profitability, and they are right to do so.”
McFadden said the number of young people not in education, employment or training – a group sometimes referred to as NEETs – was too high – almost a million.
Within that group, the proportion of sick or disabled people has doubled and now represents approximately 45% of the total.
The Conservatives said job opportunities were “disappearing” under the Labor government, blaming the Employment Rights Act and rising national insurance contributions for employers.
Helen Whately, shadow work and pensions secretary, said: “The best way to tackle youth unemployment is to support businesses to create jobs, not tax them out of business to fund benefits and subsidies.”
McFadden was questioned at the event by Nancy Conroy, chief executive of the Apprenticeships Association, who said there was “real concern” among some employers about what she described as the “defunding” of some apprenticeships and age restrictions.
“We had to make a decision here,” he told her, adding that many people would be surprised to learn that most of the funding for apprenticeships in recent years went to people over 25 who were already in work.
