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Goverment to throw money at youth unemployment problem

Four surprise unemployment guarantees were unveiled in the Queen’s Speech.

  • An extra 10,000 places for unemployed 16-17 year olds, guaranteeing a place in education from January.
  • A commitment that 18-24 year olds will be offered a guaranteed job or training and will not have to wait until they have been out of work for a year.
  • A promise to help 18-24-year-olds find work from day one of their unemployment claim.
  • A promise that new graduates still out of work after six months will have access to a high-quality internship or training, as well as help to become self-employed.

The cost of the package is likely to be an extra £200m and comes on top of £5bn the government claims it has spent to keep unemployment down.

This is not convincing, and how typical of the government to think that it can solve a problem by throwing money at it.

 How about tax cuts for the under 20s instead? One could, for instance, give them the same tax allowances as the over 65s, and exempt them and their employers from National Insurance contributions. This would reduce the cost of employment and make younger people more attractive to employers.

One could go further. The following year, the threshold could be raised to 21, so that these youngsters did not receive their P45s as a birthday present. And the year after to 22, and so on. Of course the government has a monster deficit to pay back but if the cost of labour came down, business profits would start to rise, which would be reflected in business rental values. We do not particularly like the UBR but rising business profits would push up the potential yield from business rates.

It would help too if the government bit the bullet and outlawed upwards-only rent revision clauses, a proposal it drew back from a few years ago, but which would put firms in a stronger position to negotiate with their landlords when trading circumstances became difficult, or the government decided to raise more revenue from the property tax. And whilst on the subject of the UBR, it is time that computer-aided mass assessment (CAMA) was introduced so that valuations were carried out annually, which would get rid of the present phased increases which are unfair to many businesses.