McFadden opens youth jobs negotiation with Labour MPs over one million young people

Pat McFadden has told Labour MPs that the government faces a simple choice over youth unemployment: invest in young people's success or keep paying for failure. The Work and Pensions Secretary used a meeting of the parliamentary Labour Party to set out plans to get around one million 16 to 24-year-olds who are neither earning nor learning into jobs or apprenticeships. There was a strong cabinet turnout for the meeting, which was described as opening a negotiation with Labour MPs rather than a final briefing.

McFadden's argument rests on a broad agreement across the debate that the state currently subsidises downstream failure. The alternative, he said, is to subsidise upstream success through better training, stronger apprenticeships, a rebalanced education system and getting young people into work earlier, so reducing the need for benefits. He also stressed better pathways through education, stronger technical and vocational routes, better mental health support and more opportunities to gain work experience.

The immediate argument is about pace. Alan Milburn's review, due after the Budget, has prompted public debate about how quickly spending should move from benefits towards training. Upfront costs make the Treasury nervous. If money is shifted from benefits to training, conditionality and the stick of take this job or else could arrive earlier than Andy Burnham would find comfortable.

Burnham, in an interview with a youth outlet, said it is harder for young people to get a job than ever before and that generations of young people have been written off on benefits. His comments underline the political pressure on the government from within Labour to show that help is practical and fast.

In a studio discussion, Labour MP and economist Jeevun Sandher defended the government's approach. He said Labour is the party of work and that the government had already started with the Youth Jobs Guarantee and Youth Start. He said employment had risen since the general election and that the rise in employer national insurance did not apply to under-21s. He accepted that the cost of employment had gone up, but argued the money was needed for investment in people and public services.

Sandher was pressed on why the government offers businesses £3,000 for every eligible young person they hire while raising national insurance for over-21s. Critics including M&S, Tesco, Sainsbury's, the Cross Party Work and Pensions Committee, the Chartered Institute of Personnel and Development and the British Beer and Pub Association say the tax rise has hit recruitment for young people. Sandher acknowledged that the cost of employment had gone up, while arguing that the government was also making investments in people.