Companies offered £3,000 to hire jobless under-24s

Under Labour's new initiative to combat spiralling unemployment rates, the government is expected to pay more companies to recruit young people.

Any person they take on aged 18 to 24 who is on welfare and has been looking for a job for six months or more will get a £3,000 grant.

An existing grant programme that pays employees to take on those who have been out of work for longer will be extended.

It comes as ministers deal with a youth unemployment crisis, with over 950,000 16- to 24-year-olds not engaged in education, work, or training out of every eight people in the age group.

The government hopes that the new £3,000 youth jobs grants will help around 60,000 young people get into jobs over the next three years. The government has yet to decide which employers will be eligible for the payments.

This fall, an existing scheme that subsidises six-month minimum wage jobs for benefit claimants who have been looking for work for 18 months will also be widened, covering those aged up to 24 rather than 21.

From April, government-funded foundation apprenticeships, where employers are paid up to £2,000 in instalments, will expand to hospitality and retail.

The changes mean that government services will now focus on a younger population of young people than had been the case before.

Employers now do not have to pay National Insurance (NI) on employees under the age of 21 unless they make more than £50,270.

Last year, Labour was chastised for raising the NI rate by a third party, with the Conservatives calling the increase a "jobs tax.

Work and Pensions Secretary Pat McFadden said it would give younger employees a critical first step on the career ladder in a speech in which he would announce the changes.

In a BBC Breakfast interview, he argued that the rise in youth unemployment was a long-term issue, with retail jobs in sectors such as retail downsizing for the first decade.

Alan Milburn, a former Labour minister, has been asked to conduct an official inquiry into youth unemployment, with findings set to be announced in the summer.

Following criticism from some employers, ministers are considering lowering down payments to pay adults of all ages the same minimum wage, despite complaints that it would make it too costly to recruit young people.

However, government reports have previously stated that the pledge is unlikely to be fully reversed.