• New Community Jobs Fund could help local leaders pick up the baton from the Milburn Review and create paid starter jobs for young people aged 18-24 in places with the fewest opportunities
• The Work Foundation at Lancaster University warns the Government’s Youth Guarantee alone may not support young people where job availability is weakest, and calls for Government to work with Mayors and local authorities to create new good quality ‘community jobs’
• Estimates indicate a programme capable of reaching 54,000 young people in 80 of the toughest local labour markets could reduce the number of NEET young people in the UK by up to 5% – rolling back the recent growth in NEET rates to 2024 levels
• The UK is facing a youth employment drought and where you live matters. There are six young people aged 16-24 not in education, employment or training (NEET) in the North East for every starter job vacancy, compared to a national average of three to one.

A new Community Jobs Fund could give local leaders the resources to create paid jobs for young people shut out of the labour market in areas where opportunities are scarcest, according to a new report from the Work Foundation at Lancaster University.

The report finds that a new approach is required to support places to meet the Prime Minister’s twin ambitions of creating ‘good growth in every postcode’ and helping more young people into work. Drawing on previous UK schemes and emerging policies across Europe, the Fund would be designed to be flexible to local needs, enabling local and regional leaders to better respond to the specific labour market challenges of their area.

The Work Foundation at Lancaster University – a think tank aiming to improve working lives – say the Fund should focus on providing good quality jobs for young people across 80 local authorities with the most challenging local labour markets. Roles should be designed to be ‘socially valuable’, of up to 25 hours a week, last between 12 and 36 months, and pay at least the national minimum wage.

Researchers suggest the proposal could complement the Government’s existing Youth Guarantee programme which is primarily focussed on employment support, apprenticeships and short-term work placements in the private sector. By supporting local leaders to directly create additional jobs, the Fund would enable them to rise to the challenges identified in the Milburn Review and strengthen the follow-on opportunities available to young people where they are needed most. This could also help tackle key local issues such as declining high streets, unmet care needs, poor public realm and health inequalities.

Recent Work Foundation research, published in June, found average weekly "starter" vacancies accessible to someone entering the workforce for the first time fell by 49% between 2016-17 and 2025-26. The analysis highlights that where you live matters, with there being over six young people aged 16-24 not in education, employment or training (NEET) in the North East for every starter job vacancy, compared to a national average of three to one. Regions including the East Midland, Yorkshire and the Humber, West Midlands and the North West are also above average.

To focus a new Community Jobs Fund on tackling the NEET crisis, the report proposes:

• Introducing a pilot in local authorities in the North East, Tees Valley and South Yorkshire Mayoral Combined Authorities. Targeted at 12 local authorities, the Fund could create up to 11,000 good quality, guaranteed jobs in areas of weak labour market demand. Modelling indicates youth unemployment in these areas could be expected to fall by 33%, with youth unemployment effectively halving in places like North and South Tyneside
• Expanding a full programme to 80 local council areas, which could reach up to 54,000 participants. Analysis suggests youth unemployment rates could fall from an average of 17% in these areas to around 12%; while the cost of Universal Credit support to local young people would fall by 29%
• Researchers state that the Community Jobs Fund has the potential to boost struggling local economies and providing wider societal gains, reviving stagnant household income growth in participating authorities by supporting local spending and providing visible investment in communities.

The authors of the report say the Fund would represent a flexible investment to help address the NEET crisis in the places where it is most acute. Estimates suggest that if introduced across 80 local authorities to support 54,000 young people into work, the Fund would require a net investment of up to £545 million per year – with some of the costs offset by welfare savings and additional tax receipts, and new jobs and wages providing a direct boost to local economies. Estimates indicate this programme could reduce NEET levels in the UK by up to 5%, and reverse the recent growth in NEET rates to 2024 levels.

Evidence from Europe suggests place-based employment programmes can make long-term improvements to people’s financial security and wellbeing when they provide meaningful, paid work. The Community Jobs Fund is inspired by European schemes including France’s Territoires Zéro Chômeur de Longue Durée and Austria’s Marienthal Job Guarantee, which highlight the value of creating socially useful jobs around local needs and evaluating outcomes over time.

Ben Harrison, Director of the Work Foundation at Lancaster University, said: “The Prime Minister has set a big ambition – to deliver good growth and jobs to every postcode in the UK. But 40 years of deindustrialisation, together with the impact of the 2008 Financial Crisis, a decade of austerity and the Covid-19 pandemic, means many local economies struggle to provide the good quality jobs their local residents need.

“The challenge is particularly acute for young people in faltering local economies. They often face intense competition for too few jobs, and the prospect of entering insecure, poorly paid work with little scope to progress.

“The Government’s Youth Guarantee is an important step, but additional action is going to be needed to deliver lasting change in weaker local economies where secure and good quality follow-on opportunities for young people are more scarce.”

Alice Martin, Head of Research, Work Foundation at Lancaster University and one of the report authors, said: “A Community Jobs Fund would help local leaders take a hands-on, public sector-led approach to local economic renewal, creating good quality jobs where they are needed most.

“This is not about a postcode lottery – we know which places have been hit hardest by deindustrialisation and austerity. Rather than waiting for the private sector to reverse decades of decline, the Fund would give communities the power to create jobs that meet local needs today – improving parks, high streets and the local environmental; supporting libraries and community centres; and boosting care and youth services.”

The report ‘No one left behind: Creating Community Starter Jobs where they are needed most’ is available on the Work Foundation’s website.