Youth Unemployment and the Future Jobs Fund - Work and Pensions Committee Contents


The Future Jobs Fund (FJF) was established by the previous Government in April 2009 as an emergency response to the rise in youth unemployment in 2008 and 2009. Its aim was the creation of job opportunities for young people on Jobseeker's Allowance and adults on any benefit who lived in areas with particularly high rates of unemployment. The initial target was to create 150,000 temporary (six-month) posts by March 2011, to ensure no young people were left behind due to unemployment. The scheme was then extended and expanded with the aim of creating 200,000 temporary posts by March 2012.

In May 2010, the Coalition Government cancelled the extension of the programme as a measure to address the public spending deficit, and announced that no new entrants would be permitted beyond March 2011. The new Government's view was that the FJF was a high-cost programme, with each job costing up to £6,500, and that similar results and job sustainability could be achieved through other interventions that represented better for value for money, notably its new overarching welfare-to-work scheme, the Work Programme.

We found that it was too soon to assess whether the Future Jobs Fund has been successful in supporting unemployed young people in finding permanent employment. It is also too early to say whether the FJF is a cost-effective method to support young people facing significant obstacles to employment.

We accept that interventions like the FJF represent a more expensive option, even when adjusted to take account of the fact that Jobseeker's Allowance is not paid to FJF workers. However, despite the relatively high cost, programmes such as the FJF may still be a cost-effective option for young unemployed people who are furthest from the labour market, and who are less likely to benefit from other less intensive approaches.

The Department for Work and Pensions should conduct a comprehensive evaluation of the effectiveness of the Future Jobs Fund and publish the results.

The overwhelming majority of jobs created through the Future Jobs Fund were in the public and voluntary sector. The Department told us that, to comply with European Union state aid rules, FJF jobs were required to be "additional"—that is, they would not have been created without FJF funding—and that they had to benefit the community. These restrictions, as applied by the Department, placed a genuine limitation on the programme. The Department should clarify exactly what is and is not allowed under state aid rules for employers in the private sector when employing young and disadvantaged people using a government subsidy, and produce a simple guide to help build confidence of employers.

Referrals to the Future Jobs Fund will cease by March 2011, and the final participants are expected to finish their FJF posts by September 2011. In future, young people at risk of long-term unemployment will be referred to the Work Programme. However, this programme will not launch fully until June 2011. We are concerned about the resulting potential gap in provision for unemployed young people and wish to see effective transitional arrangements put in place, especially in those areas of the country where the Work Programme will not be fully operational from June 2011.

The Government needs to learn lessons from the FJF and ensure that the Work Programme includes sufficient levers and financial incentives to prevent providers ignoring young people who are more difficult to place in work. The Work Programme should also include mechanisms to ensure that providers build on the experience and skills of the local partnerships that delivered the FJF programme, as well as drawing on the experience of smaller local and specialised providers.

We welcome the Government's increased funding for apprenticeships. We are, however, concerned that apprenticeships may not be the most suitable route into employment for those young people at the highest risk of long-term unemployment. These young people may have left school with no qualifications, have no experience of work, or have difficult family circumstances, and in some cases they may not be ready to start an apprenticeship. We are keen to ensure that alternative provision (for example, pre-apprenticeships, personal support, training and work opportunities) should be available to help those who are not ready for an apprenticeship.

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Prepared 21 December 2010