A new £1bn wage subsidiary scheme for employers hiring jobless youths is likely to be funded by taxing "people with the broadest shoulders", Nick Clegg said today.
The Deputy Prime Minister announced that, from April next year, the £1 billion Youth Contract scheme will provide a subsidy worth £2,275 to any business owner taking on an unemployed 16 to 24 year-old for six months. The fund will be made available over three years and provide work placements, job subsidies and apprenticeships to 500,000 unemployed teenagers.
Although Clegg did not explain where the funding would come from, he hinted during his talk on the BBC’s Radio 4’s Today programme that the money would be raised in a similar way to previous measures via capital gains tax and a bank levy. He added that more would be announced in the chancellor’s Autumn Statement on Tuesday.
“Over the last year and a half, we’ve increased capital gains tax, we’ve slapped on a big bank levy, we’ve made sure that the loopholes that the wealthy enjoy are closed and we will have more of this kind of thing to make sure that the people with the broadest shoulders pay their fair share,” Clegg said.
Critics of the scheme have questioned how the £1bn pot will be funded. Shadow Work and Pensions Secretary Liam Byrne claimed it would be provided by freezing the tax credits of working families. The Telegraph compared it to the Thatcherite Youth Training Scheme of the 1980s and stated that, like YTS, it was likely to be criticised for allowing firms to benefit from cheap labour for unskilled jobs.
Adam Marshall, director of policy and external affairs at the British Chambers of Commerce, welcomed the scheme, saying the government must make it easier for businesses to hire young people and paying employers half of the minimum wage payment for the first six months will help businesses offset this cost.
Clegg’s announcement of the scheme follows news that the number of young people not in education, employment or training had risen by 12% over the last year to hit 1.163 million.
