The Department for Work and Pensions (DWP) is preparing to implement a new policy targeting young benefits claimants under the Labour government’s latest welfare reform. Chancellor Rachel Reeves unveiled a Youth Guarantee scheme aimed at reducing long-term reliance on Universal Credit and encouraging young people into paid work.
Starting in 2026, the scheme will apply to 18- to 21-year-olds who have been unemployed and claiming Universal Credit for 18 months. These young adults will be offered a guaranteed six-month paid work placement, designed to provide valuable experience and improve their employment prospects.
The Youth Guarantee will cover 100% of employment costs for 25 hours a week at the relevant minimum wage, along with additional wraparound support to help participants succeed. A government spokesperson stated, “We’re creating opportunities for young people they’ve been denied for too long, including through our Youth Guarantee offer of a chance to earn or learn.”
This initiative forms part of Chancellor Reeves’ broader plan to tackle the welfare bill and reduce economic inequality. Her recent budget packages included measures such as scrapping the two-child benefit cap, boosting taxes on the wealthiest households, and cutting energy bills to help working families.
Responding to critics, Reeves emphasized her commitment to social support: “Working people demanded and deserved change. I said there would be no return to austerity and I meant it … I said I would cut the cost of living and I meant it … I said I would cut debt and borrowing and I meant it.”
Following the budget announcement, Jonas Goltermann, deputy chief markets economist at Capital Economics, commented positively on the government’s fiscal approach. “The gilt market is breathing a sigh of relief after the much-anticipated UK budget announcement today delivered less bad news than feared, and the chancellor appears to have, so far, come out of a fraught fiscal process a bit stronger.”