Nick CleggEntering employment is one of the most significant transitions to adulthood. Young men who are not in education, employment or training (NEET) between the ages of 16 and 18 are four times more likely to be unemployed later in life and five times more likely to have a criminal record.

This is expensive. Research by the University of York suggests that a young person who is NEET will cost £56,000 in public services and  £104,000 in opportunity costs by retirement age. The costs of the current 16 to 18-year-old NEET cohort will run to tens of billions of pounds by the time they reach retirement.

Yesterday, Nick Clegg announced a ‘payment by results’ scheme where charities and businesses will get £2,200 for each 16 to 17-year-old NEET young person they help back into work or education—with payment staggered so that the full amount is given only if the young person is still in work or education a year later.

Given the huge costs involved, and the current challenges facing young people, this funding seems like good news, albeit a little late. But as ever, the devil will be in the detail…

Working it out

Being NEET for short periods of time is actually quite normal; it is the 10% who are NEET for six months or more that need help most. Although the scheme is focusing on those with below C grades at GCSE, it is not clear whether funding will prioritise the longer-term NEET and provide incentives for working with those who are most vulnerable. Unless this is factored into the targeting and reward structure of the fund, there is a risk that paying by results will simply encourage charities and businesses to ‘cherry pick’ the easiest cases and ‘park’ the more difficult ones.

It is also important to ask whether there will be payments for progress, as well as final outcomes. Building the confidence and skills of a very vulnerable young person, and taking them 90% of the way towards being job-ready, may be much more of a ‘result’ than getting a more able young person into a job. But unless the scheme recognises such improvements in soft skills, it is a result that is unlikely to generate payment.

Finally, tracking hard outcomes is not always as easy as is implied. I do not know of any organisation that can reliably say what happens to all its young people one year after they leave its services. It will be interesting to hear whether the burden of proof around employment outcomes will lie at the door of charities, funders or intermediate agencies. It would be great if the onus is on statutory agencies to capture and release the outcomes data, but I suspect it will be charities that have to carry the costs.

In March NPC is due to publish a report looking at measurement issues facing charities working with young people who are NEET or at risk. You can read Getting back on track, our 2009 report on young people who are NEET, on our website.

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