As 2025 draws to a close, we asked our team to review their key moment from the world of work and the labour market.

Good green jobs, close to home

Alice Martin, Head of Research

In October, the Government launched its first national Clean Energy Jobs Plan so people no longer have to leave their hometowns for secure, well-paid work. With over 400,000 new jobs expected by 2030 the plan focuses on local roles like electricians, plumbers and welders in coastal and post-industrial communities. Five new clean energy colleges will train local people, support people transitioning from oil and gas jobs, and open doors for young people and others out of work. Union-backed and tied to public funding the plan is a step forward in guaranteeing high-quality work in local communities across the UK.

The smorgasbord Budget was historic for the wrong reasons

Aman Navani, Research and Policy Analyst

In what surely must be a first, the build-up to this year’s Budget was more eventful than the day itself. We had constant speculation on which taxes may or may not rise, an extraordinary breakfast intervention by the Chancellor and then to cap it all off, the dramatic early release of the OBR’s Economic and Fiscal outlook. The effect on the economy was stark as households and businesses held back on spending and investing in the face of the uncertainty.

If the Government has any chance to turn the economy around, it must hope that future fiscal events will be less dramatic. Greater fiscal headroom and falling inflation next year should lower the cost of Government borrowing and negate the need for further tax rises. Perhaps then, we can go back to enjoying our smorgasbords.

The Employment Rights Act

Ben Harrison, Director

The Government achieved Royal Assent for its flagship Employment Rights Bill on 16 December 2025, marking a significant milestone for workers across the country. The Act promises to deliver stronger protections from unfair dismissal, improved sick pay, better access to flexible working and a right to guaranteed hours at work, boosting security for millions across the country, and lifting 1.2 million workers out of the most severe insecurity. It also represents a major political win for the Government, who have delivered on a key manifesto commitment, albeit much work remains to implement the reforms over the coming years.

Building a fairer workplace: 2025’s family rights reform

Emelia Williams, Research and Policy Analyst

In July 2025, the Government announced that the Employment Rights Bill will be amended to extend bereavement leave to cover pregnancy loss before 24 weeks. This is a major change demonstrating a shift towards more compassionate, family friendly employment rights.

Also as part of the Bill, it was announced earlier in the year that ‘day one’ rights to paternity leave will be introduced as of April next year, meaning that working fathers will be entitled to paternity leave immediately upon starting employment without any service requirement. These reforms are positive steps towards easier balancing of work and childcare responsibilities, and more equitable sharing of leave between working parents.

Government U-turned on flagship welfare reforms, but for how long?

George Williams, Research and Policy Analyst

In the Spring, the Government announced major reforms to the UK’s welfare system including tightening eligibility criteria for Personal Independence Payments (PIP) and major cuts to the health element of Universal Credit (UC). Their hope was these changes would generate more than £5 billion in savings, providing the Chancellor with some much-needed breathing room ahead of the Budget.

Instead, what followed was another illustration of Lyndon Johnson’s time-worn adage that “the first rule of politics is to learn to count”. Despite its substantial majority, the Government ultimately had to offer major last-minute concessions, including dropping changes to PIP and UC and announcing the Timms Review into disability benefits, to avoid a defeat at the hands of unhappy Labour backbenchers. However, with the Timms Review due to conclude by the Autumn and the Prime Minister, Keir Starmer, talking up the need to get benefit spending under control, welfare reforms are poised to return in 2026.

Place-based experiments with Trailblazers

Jess Redmond, Policy Advisor

Announced in 2024 but launched and extended in 2025, the Government’s ‘Trailblazers’ programme is an interesting new approach to piloting labour market policy at a devolved level. 16 mayoral authorities, Welsh councils and London boroughs received funding to trial new interventions addressing youth unemployment and economic inactivity. Taking a place-based focus should allow for a greater focus on coordination between different parties, including the NHS, to test new delivery models. Whilst the budget for each programme is limited (up to £5 million allocated per youth inactivity trailblazer so far), it demonstrates a commitment to using devolution for policy experiments that can scale with greater ambition over time.

Almost one million young people aged 16-24 not earning or learning

Jon Fitzmaurice, Head of External Engagement

In 2025, the number of young people not in education, employment or training rose to almost one million.

While the UK has faced persistently high levels of young people not earning or learning for over two decades, recent growth has been driven in part by a sharp rise in the number of young people classified as disabled. The Keep Britain Working Review estimates that a 22-year-old who leaves work due to ill health could be more than £1 million poorer over their lifetime.

With labour market conditions weakening, it is vital that the Government’s £820 million youth participation investment is delivered effectively in 2026, or there is a risk more young people being locked into long-term worklessness.

New unfair dismissal threshold could boost job security for millions of workers

Rebecca Florisson, Principal Analyst

Government proposed to reduce the qualifying period to be able to claim unfair dismissal from the current two years to day one. Following lengthy ping-pong between the House of Commons and the Lords, agreement was reached to reduce this to six months. This has the advantage of aligning better with the usual probationary periods and provides clarity across the board. Our recent research shows that if this measure had been in place in 2023, the number of people in severely insecure work would have fallen by 1.2 million and an estimated 3.9 additional workers would have been in secure jobs.

Related Blogs

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  Employment Rights Bill: A sensible U-turn or is the Government turning their back on workers?

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  A pivotal budget for good jobs and economic growth

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  Will a ‘smorgasbord’ approach kick start economic and labour market renewal?

Disclaimer

The opinions expressed by our bloggers and those providing comments are personal, and may not necessarily reflect the opinions of Lancaster University. Responsibility for the accuracy of any of the information contained within blog posts belongs to the blogger.