Moves to curb the spiralling welfare bill could see both Universal Credit and PIP payments to young adults slashed, it has emerged.
The controversial plan is part of radical moves by the new Labour Government to push hundreds of thousands of young people to take up training or apprenticeships under back-to-work plans which will be unveiled later this month.
The shake-up will see a new partnership with local councils and mayors who will be tasked with helping those aged 18 to 21 who are either unemployed or on sickness leave to either find a job or training as part of a “youth guarantee”.
DWP secretary Liz Kendall is expected to publish a three-point plan for getting Britain’s youth back into the workplace.
It is understood she will cite the post-Covid increase in economic inactivity as being one of the greatest issues impacting the UK economy.
New work capability assessments are expected to see hundreds of thousands of people lose the right to claim PIP, which is the primary disability benefit provided by the Department for Work and Pensions (DWP).
An estimated 2.8 million individuals are not in work due to suffering from long-term illness with the cost of DWP sickness benefits jumping from £40 billion before Covid to £65 billion now. And without any action, this figure is expected to exceed £100billion by the end of this Parliament.
Among the groups which have seen a hike in the number of claims are young people, particularly for mental health conditions which make up a third of all claims for disability support.
Liz McKeown, the director of economic statistics at the ONS, warned earlier this year there had been a particularly sharp rise in young people staying away from the job market. Ms McKeown noted 16- to 24-year-olds were the exception to a wider overall trend of rising employment.
More than 2.5 million people who are currently in education have said their studies are the reason they are not looking for a job following a sharp rise in the number of university students.
A “get Britain working” white paper is set to be published within the next weeks to outline how Kendall plans to work with local authorities to carry out this DWP overhaul.
The rumoured “youth guarantee” will target those aged 16 to 24 who are not in education, employment or training.
Local businesses will be urged to work alongside colleges, housing bodies and other local authorities to co-ordinate outreach but mayors and councils have overall accountability for the changes.
Before the general election, Labour promised to introduce “a new Youth Guarantee which will make sure young people are either earning or learning”.
The party said it stood ready to take “the tough action necessary” to boost the career prospects of young people.
The Secretary of State has told MPs that the “youth guarantee” is for “finding those who are already not in education, employment or training, join up the support and bring them back in”.
Last week, Ms Kendall said jobless people should not be called “economically inactive” because it dehumanises them.
When pressed by the Work and Pensions Committee about what her upcoming White Paper would involve, she said: “I think this is the biggest employment challenge we face, although we’ve seen some changes in the latest stats, unemployment – official unemployment – is still low by historic standards.
“But we have seen this really worrying increase in the number of people who are what’s termed economically inactive. In a way, it’s a terrible phrase, because this is (sic) real human beings.”
Any DWP claimant can lose benefits if they do not take up job offers or attend interviews. However, the white paper is expected to propose imposing similar punishments for those who reject education and training.
A Government source told The Times: “We will expect engagement with our attractive offer of support to get on in life that will come through our white paper, which will bring in the biggest reforms to employment support in a generation.
“Conditionality is a fundamental principle of the social security system and has always existed. That’s not going to change.”
