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Skills for every young person Contents

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Executive summary

Unemployment1 amongst young people aged 16 to 24 has long been a blight on our society. Today 800,000 young people (12.6% of 16 to 24-year-olds) are neither working nor in full-time study. 2  631,000 (9.3%) are not in any form of education, employment or training (NEET).3 475,000 (7%) are unemployed and 163,000 (2.4%) of them have been unemployed for at least six months. Many who are in work do not report receiving any training. For example, 21.8% (141,000) of 18-year-olds are neither in full-time education nor employment with training.4

The UK’s youth unemployment rate5 (currently 11.7%) continues to be worse than other comparable countries including Japan, Germany, the Czech Republic, Israel, Mexico and Switzerland.6 The impact of youth unemployment can endure for years, damaging individuals’ life chances and work prospects. It could potentially cost the economy £10 billion in 2022 in lost productivity, tax revenue, and additional welfare costs.7

Despite this, total funding for post-18 further education (FE) has fallen by over 50% since 2009–10, while spending per student in colleges is 11% lower than a decade earlier.8 The supply of opportunities for young people to take on apprenticeships9 continues to lag behind demand, and long-running biases against technical education continue to persist. At the same time, economic changes, technological advances and the drive towards the green agenda have resulted in skills shortages in the jobs market that our young people are not being effectively prepared to meet.

In the face of these challenges, the House of Lords Youth Unemployment Select Committee was appointed in January 2021 to consider youth unemployment, education and skills in England. The report focuses on England as many of the matters we consider are devolved in Northern Ireland, Scotland and Wales; however, we have drawn on good practice from other parts of the UK where relevant and some recommendations may have UK-wide application where they concern reserved matters.

Alongside speaking to Government ministers, experts, charities and businesses, we were particularly keen to hear and emphasise the voices of young people. We held four meetings including with young people who had experience of unemployment, as well as representatives from the organisations that support them. In the first of these sessions we heard from young representatives from across the country; during the second and third we heard from young people in the East Midlands and the Bolton and wider Lancashire area respectively; and the final session focused on young people from ethnic minority backgrounds based in and near London.

The longstanding drivers of youth unemployment

The underlying drivers of the UK’s high youth unemployment rates in comparison both to the wider population and internationally are many, complex, and widely debated. We recognise the most important issues as follows:

• Skills gaps affecting young people: the prevalence of low skill and the related shortages of skill including those needed for the future; the role of the national curriculum in supporting digital, essential and life skills (see Chapter 2)
• Careers education and work experience: the Gatsby Benchmarks, adherence to the Baker Clause, the availability of work experience opportunities and barriers to take up (see Chapter 3)
• Further education (FE): the role of FE in tackling youth unemployment, parity of esteem with higher education (HE), and its role in skills provision including the Government’s new Lifetime Skills Guarantee (see Chapter 4)
• Apprenticeships: the shortage of apprenticeship opportunities for young people, the impact of the apprenticeship levy, and obstacles to take up (see Chapter 5)
• Tackling disadvantage10: identifying disadvantaged groups, addressing ongoing employment disparities, addressing discrimination and prejudice, and targeted programmes (see Chapter 6)
• Government initiatives and responsibilities: departmental coordination, existing and future initiatives, and reforms needed to improve delivery (see Chapter 7)

Skills gaps affecting young people

There are skills gaps and shortages11 (see Chapter 2) in a variety of existing sectors of high importance, which has a hugely damaging impact on productivity. Recent news coverage bears this out. For example, the Road Haulage Association estimates there is now a shortage of over 100,000 qualified HGV drivers in the UK. Before COVID-19, there was a shortage of 60,000.12 Brexit has played a role in this; in the year to March 2021, there were 28,000 EU nationals working as HGV drivers, down from 44,000 the previous year, and 39,000 the year before.13 Equally, social care employers were unable to fill 8% of roles before the pandemic, which has risen to 8.2%. The adult social care vacancy rate has risen 2.3 percentage points since 2012/13.14 With an ageing population, this issue is likely to increase.

This is a challenge facing a number of key growth areas of crucial importance for the future economy such as the green and digital economies. The green economy could provide more than a million new jobs in low-carbon sectors by 2050.15 These include those in electricity generation, low-emission vehicles, manufacturing, hydrogen and retrofitting.

Digital skills are a near-universal requirement today and will remain so in future as the digital economy grows. There is no universal definition of these skills; broadly, they are skills needed to use computers and other digital technologies to carry out activities and achieve outcomes.16 This includes a broad range of skills from basic use of word processing packages, to proficiency in computer science or ‘computing’, which focuses on information, computation, digital systems and programming.17 We have heard that there is a huge expansion in the number of employers looking to fill posts in in cyber security, artificial intelligence (AI), computing, coding, electrification, and data analysis. 76% of businesses told the Learning and Work Institute that a lack of digital skills would affect their profitability.18 This is a critical issue because the nature of digital skills in demand is constantly changing as technology develops.

Despite this pressing need, there is no official body responsible for reporting and forecasting skills needs. This role was once carried out by the UK Commission for Employment and Skills (UKCES), but this organisation was disbanded in 2017. As part of the Government’s ‘levelling up’ agenda, the Skills and Post-16 Education Bill (‘the Skills Bill’) is intended to reform technical education, not least by asking employers to work with FE colleges on Local Skills Improvement Plans (LSIPs) to better align courses with employers’ needs. The ambitions of some of the reforms laid out in the Skills Bill are welcome; however, it does not go far enough towards anticipating the needs of the future economy, nor does it influence the thousands of young people who attend mainstream secondary schools.

We have received evidence that there is a mismatch between what schools and colleges teach, and what skills and knowledge employers expect students to have learnt. We heard that the national curriculum is often restricted by the expectations set through the English Baccalaureate (EBacc) and Progress 8, and is too reliant on high stakes written examinations. This system does not help many young people to demonstrate that they have the digital, technical, green or creative skills the economy needs, nor does it enable them to demonstrate essential skills such as problem-solving, teamworking, adaptability or oracy. While acquiring skills for work is not the sole purpose of education, it is a fundamental one. Equally, it does not prepare young people with the life skills they need such as financial literacy, which is more important than ever given the growing ‘gig economy’.

Careers guidance and work experience

Access to high quality careers education, information, advice and guidance (CEIAG) enables young people to understand all the possible careers open to them and the routes they can choose to take to reach their goals. Significant progress has been made since the creation of the Careers & Enterprise Company (CEC) and the rollout of the Gatsby Benchmarks19, but more could be done. Despite its benefits, CEIAG is not a compulsory element of the curriculum in all schools and given that career-defining views develop when children are in primary school, we believe that beginning CEIAG provision in secondary school is too late.20

We have heard that provision of high quality CEIAG is patchy across the country, proving a challenge for both young people and employers.21 It is paramount that young people, particularly those from disadvantaged backgrounds who do not have access to networks, connections and familial advice to rely upon, have access to targeted, one-to-one careers advice and guidance at school or college. Employer engagement is critical to ensuring quality.22

Furthermore, more could be done to target CEIAG towards sectors of high and emerging skills needs in the economy as it transitions towards a green and ever more technologically advanced future (see Chapter 2). We have heard that the Baker Clause, which allows providers of technical education (including T levels and apprenticeships) to speak to students in secondary schools, is not being rigorously enforced in all schools.23 This is despite appetite from young people to hear about these options.

Further to classroom-based careers education, work experience enables young people to understand the workplace and the skills they need to be successful. The removal of the statutory duty on schools to ensure 14- to 16-year-olds undertook work experience at Key Stage 4 has had a devastating impact on this. We heard that a third of employers are either dissatisfied or very dissatisfied by the amount of relevant work experience young people have.24

There are many laudable initiatives for work experience in the education sector, including formal programmes like traineeships, the T Level industry placement and Kickstart. However, we recognise that there are challenges for both small businesses in offering work experience, and schools in co-ordinating the available opportunities, and not enough is being done to tackle these issues.25

Further education (FE)

FE (see Chapter 4) is a fundamentally important component of post-16 education provision but for many years it has been undervalued and significantly underfunded.  Its providers—including FE Colleges, Sixth Form Colleges and specialist colleges such as Land-based or Art, Design and Performing Arts Colleges—sit between secondary and tertiary education, offering 1.7 million learners in England opportunities to study for a range of qualifications at a range of levels. It is a crucial springboard into employment for many young people.

The post-18 FE sector has faced severe funding cuts of over 50% since 2009–10.26 The sector has suffered real cuts of around 11% per pupil (aged 16 to 18) compared to other types of post-16 education.27 Analysis by the Institute for Fiscal Studies (IFS) shows that cuts to FE and sixth forms are only partially reversed by the Budget and will still be 10% down on their 2010 levels in 2024.28 In fact, most of the funding announced in the Budget is capital expenditure to be used on improving the infrastructure of colleges and FE institutions (£2.8 billion). While important, this will not be enough to deliver the wholescale changes the sector needs to meet to the Government’s ‘levelling up’ ambitions.

FE is held back by a system of funding student places that is no longer fit for purpose. This has limited the sector’s capacity to support its students, many of whom come from the most disadvantaged groups in society. There is no pupil premium to support these students as exists in primary and secondary schools, nor is there adequate additional support outside tuition fees such as exists in HE via maintenance loans.

Furthermore, despite the benefits it can offer, FE is often regarded by schools, parents and students as a less prestigious and less desirable option than HE. Some young people told us that they were encouraged away from FE colleges in favour of sixth forms and routes of study considered more academic.29

Together, these factors are limiting the potential of the FE sector to contribute as much as it could, and should, to the ambitious plans laid out by the Government in the Skills Bill, not least in relation to apprenticeship provision and the rollout of T Levels.

Apprenticeships

Apprenticeships (see Chapter 5) are highly valued by learners and employers and are a crucial pathway for young people who do not want to go to university, who want to earn a wage whilst learning, or who want to take on practical, technical work. We have heard that there are simply not enough apprenticeships available for young people who want to take them. Data from the Institute for Apprenticeships and Technical Education (IfATE) shows that in the year to mid July 2021, a total of 142,124 candidates under 25 years old submitted at least one application using the Find an Apprenticeship service, of whom just 9,587 had an application marked as ‘successful’.30

The apprenticeship levy31 is intended to fund apprenticeships, but it does not properly incentivise the recruitment of young people aged 16 to 24. Systemic faults within the levy have resulted in employers converting existing roles into apprenticeships, benefitting older, more experienced workers. Furthermore, a number of the terms of the levy restrict businesses’ capacity to recruit younger workers. The IFS calculates that the number of 16- and 17-year-olds taking apprenticeships fell by 30% between 2019 and 2020 to just 3% of young people of that age, the lowest level since the 1980s.32

There are also not enough incentives, particularly for smaller and medium sized employers (SMEs), for businesses to recruit apprentices. The £3,000 incentives introduced during the pandemic were not targeted by age to increase the recruitment of young people.

We have also been told that young people are not properly supported or encouraged to take up apprenticeships for a number of reasons:

• Long-term developments in education policy have resulted in an over-reliance on academic routes, a focus on getting young people into university over and above all other pathways, and snobbery against technical routes and the outcomes and pay returns they can provide.
• Some young people might feel that they are not suited to an apprenticeship due to their gender, ethnicity or background. Young women in particular are not encouraged enough to take up apprenticeship roles in science, technology, engineering and mathematics (STEM). We heard that women make up 12% of the engineering workforce, and people from ethnic minorities just 9%.33
• Unlike completing university applications, which take place via UCAS, there is no central application portal for apprenticeships. This makes it more difficult for young people to know how to apply for an apprenticeship and see all the options available to them.
• CEIAG in schools and colleges is improving due to the Gatsby Benchmarks and Careers & Enterprise Company’s (CEC) Careers Hub networks. However, the Baker Clause, which provides for technical education providers to go into schools to explain the routes available, is not being rigorously enforced. Youth Employment UK’s 2021 Youth Voice Census found that many young people say they have never had traineeships (65.6%), T Levels (72.7%), or apprenticeships (14.2%) discussed with them at school.34

Tackling disadvantage

On top of wider issues affecting the labour market and economy, some groups of young people face additional barriers to work (see chapter 6). Identifying these groups is a challenge in itself due to difficulties in data collection methodology, and addressing the disparities the data highlights is even more complex.

However, the evidence we heard and data we saw makes absolutely clear that some Black, Asian and minority ethnic (BAME) groups, including Bangladeshi, Pakistani, Caribbean, African and Gypsy Roma and Traveller communities, are extremely disadvantaged in key areas of employment and education.

Bearing this in mind, we heard that there was a severe lack of programmes targeted specifically at some of the groups likeliest to face disadvantage, such as young people from BAME backgrounds. We heard that specific groups are at significant additional risk, often facing multiple disadvantages. Evidence revealed that:

• Children who are disadvantaged by their socio-economic background and who receive free school meals (FSM) do significantly worse in education than their more affluent peers.35
• Systemic challenges are faced by those with special educational needs and/or disabilities (SEND). They were largely ignored in the Government’s response to the COVID-19 pandemic.36
• Many young people from ethnic minority backgrounds face institutional and systemic racism, which impacts their experience in the labour market.37
• Young care leavers face a lack of support, opportunities and social networks, and have an increased likelihood of suffering from mental health problems and breaks in their education.38
• People who have spent time in custody often experience poor employment outcomes on release. There is a lack of attention given to prison education, and work, training or study during release on temporary licence (ROTL) is underused.39
• There are systemic issues with formal provision for those whose first language is not English, which means some young people are at a disadvantage in seeking employment or HE due to a lack of proficiency in English.40
• Swathes of young people face mental health challenges, particularly those in their final years of education who may have left school during periods of social isolation and disengagement during the pandemic. This may continue to have an impact on their experience of education and training.41
• Regional differences in employment and education availability mean that some young people face geographical disadvantages—for example, because they live in remote rural or coastal areas with weak transport links, or in deprived urban areas.42
• Parents aged 25 and under face specific challenges including gaps in their CV and structural barriers like lack of access to childcare.43
• Young women may face sexism at work and struggle to access childcare, leading to financial stress and limitations to their job prospects.44

Government initiatives and responsibilities

The issue of youth employment sits uneasily between a variety of government departments including the Department for Education (DfE), the Department for Work and Pensions (DWP), the Department for Business, Energy and Industrial Strategy (BEIS), and the Department for Digital, Culture, Media and Sport (DCMS) (see Chapter 7). This results in policy created in siloes with a lack of accountability at the top. It also results in a confusing landscape of policies intended to tackle the multiplicity of issues.

During periods of economic turbulence, past and present governments have introduced active labour market policies (ALMPs) to get young people into work or training. Examples include the Youth Training Programme of the 1980s and the Future Jobs Fund following the financial crash.

The present Government has introduced a series of welcome measures including Kickstart, Careers Hubs and Youth Hubs, and an expansion in the numbers of Jobcentre Plus (JCP) work coaches by 13,500 (see Appendix 7). This work has been supplemented by initiatives introduced by local authorities and Local Enterprise Partnerships (LEPs). Many of the Government’s schemes have had some success; however, while youth unemployment has decreased since its peak of 14.8% during the COVID-19 pandemic, it still sits at an uncomfortably high 11.7%.45 Government schemes must be improved, expanded and extended, and better connected to reach those most in need. Key concerns include the following:

• Restricting initiatives to Universal Credit (UC) recipients is limiting their potential. Kickstart is a welcome initiative for those aged 16 to 24 to get work experience and earn a wage. However, many 16 and 17-year-olds are not eligible for UC and therefore cannot access the scheme.46
• Limitations of publicly available data confine the extent to which we can fully understand the extent of the unemployment problem and how it differs from group to group and place to place. Furthermore, evaluation of the long-term potential of the Government’s initiatives relies on robust data collection and analysis. The speed at which these schemes were rolled out in response to the pandemic has made this difficult. For example, data on skills bootcamps outcomes is “incomplete” according to the DfE’s own analysis.47 It is imperative that data on gender, ethnicity and regional take up is recorded and published so the impact of initiatives can be properly assessed.
• Questions remain about to what extent the forthcoming UK Shared Prosperity Fund (UKSPF) will replace lost funding previously covered by the EU’s structural funds, specifically the European Social Fund (ESF).
• Local policy implementation can vastly differ from place to place. Local areas face different problems, leading to varied local economies, skills and unemployment rates. This has knock on effects for ‘brain drain’. We have heard that more effective local and regional coordination of policies is the most effective way of addressing the issues facing those most in need.

The impact of the COVID-19 pandemic

On top of these longstanding problems, the COVID-19 pandemic was a perfect storm for youth unemployment.48 Between January to March 2020 and June to August 2021, employment levels for 18- to 24-year-olds fell by 184,000. 70% of employee job losses between March 2020 and May 2021 were amongst under-25s.49 Nearly one in five (19%) young people who were working prior to the pandemic had lost their job by January 2021, compared to just 4% for those between the ages of 25 and 54.50 This was in part because they were more than twice as likely to work in a sector that was shut down than other age groups—for example, the arts, entertainment and recreation sector (12% fall in payrolled employees) and accommodation and food service sector and other services activities (5%).51

The situation for young people from ethnic minority backgrounds was even more severe. At the height of the pandemic, the unemployment rate for young black people increased by 17.1 percentage points to 41.6%, compared to just 2.3 percentage points (12.4%) for young white people.52 For many young people from disadvantaged53 groups, the pandemic simply exacerbated existing challenges. Latest data shows a slight decline to 36% and 13% respectively.54

Young people who were studying have faced two years of disruption to their education, training and social development. Children in England have missed 115 days of face-to-face learning, the biggest loss in education in a generation.55 This may affect their prospects, as well as further impacting on their mental health and wellbeing.

While our report focusses on the most disadvantaged young people, who are less likely to attend HE, we note that the situation for graduates remains challenging; graduate opportunities in June 2021 were 8% lower than before the pandemic.56

The route forward

No two young people in England are the same, and they all deserve equal support to prepare them for a job they aspire to, no matter their background, gender, ethnicity, whether they have additional needs, where they grew up, or which route they choose to take. Their pathway might include a traineeship, apprenticeship, Kickstart placement, T or A Level, GCSE, BTEC, university degree or degree apprenticeship. What is best for them must be equally understood, supported and valued, and youth employment policy must be designed around their needs.

The measures we propose in this report are intended to help ensure that all young people are supported into education, employment or training, equipped with the skills they need to get good jobs, and can avoid becoming NEET.57 Our priorities are as follows:

• The Government must develop a long-term national plan for identifying, measuring and addressing skills gaps and shortages with a focus on anticipating and meeting the needs of emerging and growth sectors such as the digital and green economy. It must update and publish this strategy annually. Bodies responsible for the new Local Skills Improvement Plans should do the same at local level and be accountable for securing an adequate local supply of training places for young people.
• The Government must recalibrate the compulsory components of the national curriculum, taking into account its capacity to equip young people with essential knowledge and the technical, cultural, creative and professional skills the economy demands. Skills development and the tackling of skills shortages should be central to curriculum development. The Government must also recalibrate progress indicators so that schools wishing to focus on practical, technical, cultural, business- and work-related skills alongside core subjects are able to do so without being downgraded on Government performance measures. This would not involve removing key subjects, but rather refocusing on those that are essential to a good education, increasing school autonomy and facilitating the development of a broad range of skills.
• The Government must devise a new method of funding for FE. Funding should be determined by student demand, and students accessing the Lifetime Skills Guarantee at levels 2 and 3 in approved institutions should attract automatic in-year funding determined by a tariff. This would help to ensure that there is a place in FE for any suitably qualified person who wants one. It would also result in significant additional funding for FE institutions so that they are able to compete with industry to hire high quality and experienced teachers and obtain the latest industry-standard equipment.
• The Government must require that any employer receiving funding from the apprenticeship levy must spend at least two thirds of that funding on people who begin apprenticeships between levels 2 and 3 before the age of 25. The other third could be spent on older workers and those studying at levels 4 and 5.
• The Government must launch an Education and Workplace Race Equality Strategy as a matter of urgency given the already longstanding employment disparities experienced by BAME youth, exacerbated by the impact that the COVID-19 pandemic and associated public health restrictions have had on their prospects. This should focus on removing barriers including through mandating regular collection of data. The strategy should also be intersectional given many of the issues concerning race and ethnicity are crosscutting with socio-economic background, gender, sexual orientation, disability, and migration status.
• The Government must ensure that every disadvantaged young person has access to tailored, one-to-one careers guidance. It should be assessed by Ofsted with reference to the Gatsby Benchmarks and how well they are being applied.
• The Government must appoint an independent Young People’s Commissioner for youth aged 16 to 24 with specific reference to youth unemployment, education and skills, including the new Youth Hubs. The purpose of this role should be to interrogate Government policy and be the voice of young people, in a similar role to that of the Children’s Commissioner, whose remit covers those aged 18 and under. At the point of overlap in their proposed remits, between the ages of 16 and 18, the Government must consider how they can work together to ensure the best outcomes for young people undertaking FE or training.

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