Labour’s NEET crackdown offers subsidised staff to hospitality, but sector warns of fragility

Labour has announced an £820 million “Plan for Change” package aimed at reducing youth unemployment and lowering welfare spending, with hospitality named alongside construction and health and social care as priority destinations for training and work experience. Ministers say the scheme will help nearly a million people into work or closer to work, with a particular focus on young adults who have been out of employment or education for long periods.   

What the government is offering

The Department for Work and Pensions plans to fund about 350,000 training and work-experience opportunities for young people on Universal Credit. A separate guaranteed jobs element will provide up to 55,000 six-month placements, fully subsidised for 25 hours a week at the legal minimum wage. These roles are expected to begin rolling out from spring 2026 in six areas of highest need: Birmingham and Solihull, the East Midlands, Greater Manchester, Hertfordshire and Essex, central and eastern Scotland, and south-west and south-eastern Wales.    

Around 900,000 young claimants will receive an initial work-support session and four further weeks of intensive coaching. Employment advisers will then route individuals towards one of six pathways including work, work experience, apprenticeships, wider training or a workplace training programme with a guaranteed interview. Ministers expect more than 1,000 young people to start jobs in the first six months, indicating a gradual build rather than an immediate surge.   

Work and Pensions Secretary Pat McFadden described the programme as a “downpayment” on young people’s futures, arguing that skills, routines and work history are essential to prevent long-term detachment from the labour market. He also said benefits could be reduced for 18 to 21 year olds who refuse a taxpayer-funded placement without a good reason, citing situations such as family emergencies as legitimate grounds to decline.   

Why hospitality is central to the plan

Hospitality is already one of the UK’s largest employers of young people and often provides first jobs that do not require long prior experience. By naming the sector explicitly, ministers are signalling that pubs, restaurants and takeaways will be a key landing zone for the new pipeline.   

For fish and chip shop owners in particular, this points towards potential recruits for front-of-house roles, food preparation, and fryer support positions, where local labour shortages have persisted since the pandemic. The formal pre-placement coaching may also raise baseline readiness among candidates who have never worked in fast-paced, safety-critical environments.

Listen to Kate Nicholls on the Ceres Podcast

The apprenticeship changes that matter to small operators

Alongside the jobs package, the DWP has set out a second £725 million apprenticeship reform fund. It includes £140 million for a mayoral pilot to connect young people, especially those not in education, employment or training, with local apprenticeship places. Most significantly for hospitality and fish and chip businesses, the government will cover the full cost of apprenticeships for eligible under-25s at small and medium-sized enterprises, removing the previous 5 per cent employer contribution.   

Kate Nicholls, chair of UKHospitality, said the sector “can play a key part in providing work, opportunities and training”, but added that “flexibility in the levy is key”. Her remarks underline industry support for the youth jobs drive, while signalling that apprenticeship levy reform will determine whether small operators can turn placements into long-term careers.

Ministers say the aim is to reverse a long decline in youth apprenticeship starts, which have fallen by almost 40 per cent since 2015-16. New short courses are expected from April 2026, and further foundation apprenticeships are planned for sectors including hospitality.  

For independent operators, these reforms potentially lower the cost of building skilled staff over time, offering a route to train young workers through structured frying, kitchen and service qualifications rather than relying solely on ad-hoc on-the-job learning.

A policy landing in a fragile market

Industry leaders have welcomed the ambition to help young people into work, but question whether hospitality can deliver the scale expected while businesses are contracting. The British Beer and Pub Association has warned that pubs are closing at a rate of more than one a day in 2025 and forecast hundreds more closures with thousands of job losses.  

Michael Kill, chief executive of the Night Time Industries Association, said subsidised placements risk “missing the point” if venues are being priced out of existence, adding that it is not possible to subsidise people into jobs that no longer exist.   

The Daily Mail report links those pressures to higher employer National Insurance contributions and minimum wage increases, arguing these measures reduce the willingness of firms to hire entry-level staff. McFadden rejected that interpretation, telling broadcasters that youth inactivity is an international problem influenced by post-Covid disruption and technology, and that an independent review led by Alan Milburn will explore the drivers of rising NEET levels.   

Listen to Michael Kill, on the Ceres Podcast

Political dispute over cause and effect

Conservatives have criticised the scheme as expensive and potentially short-lived. Shadow Work and Pensions Secretary Helen Whately said recent tax rises were driving up youth unemployment and described the plan as “taking with one hand to give with the other”. She also questioned how placements will convert into lasting jobs once subsidies expire, particularly as participating employers have not yet been confirmed.   

What this could mean for fish and chip shops

For many fish and chip businesses, the policy offers a possible recruitment channel at a time when owners report difficulty attracting younger workers for unsocial hours and high-intensity service. The guaranteed placements are fully wage-subsidised for six months, which may reduce short-term risk for employers willing to invest time in training.   

However, owners will still bear the practical cost of supervision, health and safety training, and maintaining standards in a busy frying operation. The bigger question is whether shops can afford to retain staff after the subsidy ends, particularly if labour costs and consumer demand continue to move in opposite directions. Here, the apprenticeship reforms may prove more valuable than short placements, because they reduce training costs for firms prepared to develop young workers into skilled, reliable staff.