LSN budget response re youth unemployment

24 March 2010

As predictions abound regarding the content of today's Budget, the extent of measures to address youth unemployment will be a crucial battleground. At LSN, we believe that tackling the thorny issue of our unemployed youth is vital, yet one that is fraught with complexity.

It is certainly the case that young people aged 16 to 25 have felt the full force of the latest recession. Whilst a key feature of this recession has been that many employers have tried to retain their existing workforce, they have also cut back or frozen new recruitment, thus hitting young people disproportionately.

However, youth unemployment had started to increase before the recession – there is an underlying change taking place in the labour market that isn't simply due to the recession. Short-term recession measures will thus have limited impact on their own.

The profile of the young unemployed is also changing. Whilst the majority of 16 to 19 who are unemployed have left the education system with below or at Level 2 qualifications, the profile of those aged 20-24 is polarised. Those with Level 2 qualifications or below are the largest group of young unemployed but this is followed by graduates with degrees. Although the government has increased funding for 16 to 19 year olds, young adults (i.e. those aged 19 and over) are finding it harder than ever to get started in the world of work.

It is thus important that opportunity and choice within the learning and skills system is improved if a more diverse group of young people are to be helped. Short-term youth unemployment programmes may help in specific circumstances but the overall evidence about their real impact is poor, with many often ending up unemployed again through a 'revolving door' syndrome.

LSN believes that it is therefore crucial not just to have short-term funding but that the Chancellor moves to a more sustainable and innovative model of funding for learning and skills. We at LSN strongly believe that further education should be put on par with universities, which have much more flexibility and where student loans contribute to funding.

At the same time, the Chancellor should introduce cash-based Individual Learning Accounts for further education, empowering learners to make their own decisions as to when and how they spend money on education. The government would invest a certain amount of funding, directly supporting individuals, which can be topped up by the individual themselves and by employers. This responsiveness is diametrically opposed to the strict funding criteria and planning targets which currently dictate the system. Some people such as unemployed people and particular disadvantaged targets groups would get much higher levels of investment in their learning accounts to cover the cost of their training.

This would help create a truly demand-led funding system and also help empower unemployed people to help them get back into work – we hope to see the beginnings of such a system outlined in tomorrow's budget.