While the labour market has been more resilient than the OBR forecast six months ago, there is cause for concern. Vacancies have fallen to 691,000 – their lowest level outside the pandemic since 2014 – and youth unemployment for 16-24 year olds has risen by 54,000 on the year and sits just below three quarters of a million. Higher household bills and weak private-sector wage growth are putting further pressure on living standards.

Like his predecessors did before him, many commentators and economists expect tough decisions on welfare and public spending to be pushed back into 2027 and the upcoming Spending Review. The Chancellor has committed to maintain fiscal headroom to meet the budgetary rules in a bid to keep the markets onside, so there are unlikely to many rabbits out of the hat to keep voters and businesses happy. But there is a growing risk that kicking the can down the road will make the complex challenges the UK faces worse.

However, the Government still has the opportunity ensure the Budget lays the foundations to boost good jobs in every postcode, help people enter and remain in work, and spread growth more widely. Four priorities should guide this first Budget.

1. Create jobs in places facing the deepest jobs droughts

Work Foundation research shows that the weekly average number of advertised starter jobs has almost halved in a decade, from around 139,000 in 2016–17 to 71,000 in 2025–26.

The Government has signalled an additional £20.4 billion for the National Wealth Fund and British Business Bank, which it says could support around 100,000 jobs by 2035. That could support long-term growth, but may not create accessible opportunities for young people in communities where employers are not recruiting.

Devolution could help close that gap. The Government has announced £285 million in initial Good Growth funding for mayors, alongside plans for a £1.5 billion borrowing facility and a share of local tax revenues. Giving local leaders more control is positive, particularly alongside plans to assess investment through a more place-based Treasury Green Book. But transport, buildings and high-street regeneration are only part of the answer.

There is a warning from previous regeneration programmes. Analysis by the Guardian found 821 of 1,347 levelling-up projects unfinished in May 2026, although some have since been completed. Delays underline the importance of delivery, not just announcements.

Refurbished high streets will only go so far if local people cannot find work and businesses lack customers with money to spend. The missing piece of the high-street renewal puzzle is good jobs.

That is why the Work Foundation has proposed a Community Jobs Fund, empowering local leaders to create socially valuable paid roles where the private jobs market is weakest. A first phase across 12 local authorities in South Yorkshire, Tees Valley and the North East could create up to 11,000 jobs, expanding to 80 areas and reaching up to 54,000 young people.

Devolution and investment should support job creation directly, not assume it automatically follows capital spending.

2. Helping employers hire young people

While headline unemployment has fallen in recent months to a historically low 4.7%, young people are finding it particularly difficult to take their first steps into work. Earlier this year, Work Foundation research found that 36% of employers had reduced entry-level jobs over the past 12 months.

The final report of the Milburn Review into young people and work has been delayed until after the Budget. It is expected that recommendations are likely to include changes to employment support, welfare and technical education to help tackle the near million young people not earning or learning.

However, the Chancellor is still facing pressure from businesses to make employing younger workers more attractive. The Government may announce recruitment subsidies or tax incentives for young workers. While these measures would be widely welcomed, it is unclear whether they would help create additional jobs or create jobs in the places or sectors that young people need them most.

The Government has created various vehicles to tackle youth unemployment through its Youth Guarantee programme, such as the Jobs Guarantee six-month placements for 90,000 young people over three years. Given the headwinds in the economy and with young people facing a particularly difficult labour market, the Chancellor should use the Budget to signal he’s prepared to extend and deepen support by providing further placements, extending the length of placements or rolling out support more quickly to key places.

The Chancellor has already made a difficult decision about minimum wage rates. The Government made a manifesto commitment to equalise minimum wage rates between younger and older workers. Our employer research found that 32% had targeted under-21s for recruitment to pay lower wages and businesses have suggested that higher rates put pressure on youth employment.

In response, reports suggest the Government will raise the National Living Wage (age 21+) by 3.9% to £13.20 – just above current inflation – and the wages of under 21s will raise by the same percentage. This breaks their manifesto commitment, and the Government should be careful not to treat fair pay and youth employment as competing objectives. Young people face the same cost of living pressures as older workers, and targeted Government employer support, accessible training and subsidised additional jobs could help businesses hire without relying on lower wages as the incentive.

3. Turn employment and health reforms into support people can use now

The latest ONS data shows 2.74 million people aged 16–64 remain economically inactive because of long-term sickness. Preventing workers from leaving their jobs when health problems emerge, and helping people return when they are ready, should be central to the Government's growth plans.

The Keep Britain Working agenda and local employment programmes provide an important foundation. But improvements depend on access to occupational health, flexible work and tailored support. Employers, particularly smaller businesses, will need practical help to make these changes.

Alan Milburn's young people and work review may propose difficult welfare decisions alongside extra employment support. However, changes to benefits should not substitute for creating suitable jobs or providing timely assistance.

Work Foundation research shows that 85% of disabled workers surveyed consider remote or hybrid working essential or very important, even as these opportunities have become harder to find. Supporting people into employment must mean improving the quality and accessibility of jobs, not simply increasing pressure to accept whatever work is available.

The Chancellor should take this opportunity to provide additional funding that supports earlier intervention to boost retention, access to occupational health and more personalised support, rather than allowing progress to depend entirely on next year's decisions.

4. Do not let the Spending Review become an excuse for inaction

There are legitimate reasons for a Government to settle major departmental budgets at a Spending Review. Yet difficult decisions on public sector pay, welfare and the services that support employment cannot be postponed without consequences.

The Institute for Fiscal Studies estimates that avoiding cuts to some services while meeting wider commitments could require up to £35 billion of additional annual spending by 2030–31 in an illustrative scenario. Higher inflation is already eroding the purchasing power of existing departmental settlements.

The pressure is compounded by assumptions of 1.2% annual public service productivity growth, against a historical average of 0.2%. Departments need credible plans and investment to deliver it. That includes sufficient capacity for employment support and for enforcing new rights through the Fair Work Agency.

The Budget should therefore spell out what funding is available now, how local areas can use it, and what decisions remain for 2027. Simply maintaining cash budgets while costs increase will not necessarily sustain services or deliver the Government's employment ambitions.

Good growth must mean good jobs

The Chancellor will understandably be judged on tax decisions, fiscal forecasts and immediate help with household bills. But the longer-term test is whether more people can find and remain in secure, rewarding work, and whether communities see the benefit of growth.

A Budget that leaves job creation and employment support until next year risks missing that test. The Government's ambition of good growth in every postcode must start with creating good jobs in the places that have too few.

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