The Government has set an ambitious agenda of creating ‘good growth in every postcode’. Achieving these ambitions will require creating work in some of the toughest labour markets in the country, and overcoming a drought of starter jobs that has left nearly a million young people outside education and employment.

To understand how these objectives can be achieved, the Work Foundation at Lancaster University conducted a review of previous UK job creation schemes and emerging policies across Europe, and designed a proposal for a new Community Jobs Fund. The Fund would aim to give local leaders the resources to create paid jobs for young people shut out of the labour market in areas where opportunities are scarcest.

Under the scheme, local authorities would be empowered to create ‘socially valuable’ jobs that respond to local community needs, providing opportunities in education and care, libraries, community centres and green-space renewal.

The report includes an indicative costing for the progressive rollout of the Fund, and an assessment of its impact on youth unemployment and local communities.

Key findings include:

• Jobs droughts: A recent slowdown in job creation has left more than a million young people outside employment and education, and has aggravated long-running inequalities in local labour markets, with the worst performing local authorities having experienced virtually no job growth in two decades.
• Missing pieces: The government has responded to these challenges with an ambitious Youth Guarantee, but with different places facing different labour market challenges, current responses may struggle to work everywhere. Communities and youth workers both require policy support tailored to their needs.
• Emerging responses: In new models utilised across Europe, the public sector directly guarantees meaningful paid work in the places where private demand is weakest. These jobs can provide a route into work for young people, while contributing to local economic renewal by addressing unmet community needs.
• Our solution: Delivering this guarantee through a Community Jobs Fund could create up to 54,000 jobs for young people across the most challenging local labour markets, and could be expanded to meet the future priorities of devolved economies, including challenges like health-related inactivity and long-term unemployment.

Recommendations

The report recommends the creation of a Community Jobs Fund that:

1. Empowers local authorities to guarantee ‘socially valuable’ jobs, of up to 25 hours a week, that last between 12 and 36 months, and pay at least the national minimum wage.

2. Starts with 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.

3. Expands to a full programme to 80 local council areas, which could reach up to 54,000 participants. Estimates indicate this 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 – while the cost of Universal Credit support to local young people would fall by 29%.

Read the full report here.

Sign-up for our online event: Tackling jobs droughts: Why the UK needs a Community Jobs Fund (3 Nov 2026 | Zoom)

Figure: Proposed roll out of Community Jobs Fund for young people aged 18-24 across 12 pilot areas, expanding to a full programme of 80 local authorities

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