The Department for Work and Pensions (DWP) may see an influx of 60,000 new benefits claimants as youth unemployment continues to rise, according to recent warnings. The unemployment rate for 16 to 24-year-olds is projected to surpass 800,000, posing a substantial challenge to the DWP’s budget.
The British Chambers of Commerce (BCC) has forecast that youth unemployment will increase to 17.6 per cent by 2027, marking the highest level since May 2014. Current official figures reveal that youth unemployment stood at 16.2 per cent in the three months leading to June, with many school leavers and university graduates struggling to secure employment.
The BCC anticipates the number of unemployed young people will rise by approximately 60,000 within the next 15 months, bringing the total to 815,000.
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Vicky Pryce, chair of the BCC’s economic advisory council, described the forecasts as indicative of an uncertain economic environment for the UK. She highlighted factors such as persistent inflation, weakened exports, and rising unemployment as ongoing challenges for businesses, especially small and medium-sized enterprises (SMEs). “The strong start to 2026 will soon be behind us as the UK economy remains in the slow lane,” Pryce stated.
Shevaun Haviland, director general of the BCC, called on the government to utilise the upcoming October Budget to introduce proactive measures aimed at reducing the cost of doing business, while enhancing skills development and productivity.
In response, a DWP spokesperson emphasised the department’s commitment to supporting young people, noting an investment of £2.5 billion to create half a million opportunities to earn or learn. This includes the introduction of 50,000 new youth apprenticeships. Additionally, businesses benefit from National Insurance tax exemptions for employees under 21 and apprentices under 25, along with hiring incentives worth up to £8,000 for eligible young recruits.
Labour Party Prime Minister Andy Burnham has pledged to elevate technical education to be on par with traditional academic routes, ensuring that young people leaving the education system face no dead ends. The government aims to provide high-quality technical education pathways that are respected and valued by students, parents, and employers alike. In a message directed at students, Burnham states, “Whether you choose construction, coding or classics, you’ll get the skills you need and be given the respect you deserve.”