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Employers in Great Britain will be given £3,000 for every long-term unemployed young person they hire under government plans to reduce the welfare bill and joblessness.

The scheme, which will be available to firms from Tuesday, is aimed at helping 60,000 people aged 18-24 enter work over the next three years.

Employers in England, Scotland and Wales can access the grant if they take on an eligible young person who has been out of work for six months or more.

Labour has faced fierce criticism from opposition leaders and business groups who say its policy decisions, including the increase in employers’ national insurance contributions and a rising minimum wage, have added to Britain’s crisis in youth jobs.

A government-commissioned report by the former minister Alan Milburn recently found the UK was an outlier, with 1 million people aged 16 to 24 – about one in eight – not in employment, education or training (Neet).

A decade ago the Neet rate in Britain was near the EU average. In 2025, only Romania had a higher rate than the UK.

On Monday, Keir Starmer and the work and pensions secretary, Pat McFadden, will host a roundtable in Downing Street with hospitality businesses supporting the grant scheme.

The first employer to back the scheme will be Merlin Entertainments, which owns Legoland Windsor, Chessington World of Adventures, Alton Towers and London’s Sea Life Aquarium. Merlin will create 300 jobs for young people over the next three years.

Starmer said: “We often say in this country that every child or young person should go as far as their talents will take them. But too often they are held back by a status quo that doesn’t work for them.

“We are turning the page on that, putting in place the building blocks of real reform to expand opportunity for young people and helping them into work.

“This is the foundation for a new contract with the next generation, so every young person has a clear path into learning or earning, and the chance to build a secure and successful future.”

Andy Burnham, the newly elected Makerfield MP who is likely to become the next prime minister, has previously welcomed the Milburn report.

The former mayor of Greater Manchester is expected to face the challenge of reducing welfare spending without making cuts that could prove unpopular with the parliamentary Labour party. Getting more people into work is an important part of doing that.

Burnham has vowed to take a “much more devolved” approach to increasing employment and bringing down welfare spending.

“We’ve all got to be concerned with getting the welfare bill down. I don’t think there’s any debate about that, to be honest, it’s how you do it,” he said last month.

The Milburn report noted there was regional disparity in the youth jobs crisis. In Barnet, north London, just 1% of 16- and 17-year-olds are classed as Neet, while in Dudley, in the West Midlands, the figure is 21.5%.

Of the 10 English local authorities with the highest proportion of young people not in work, training or education, eight are in the north or the Midlands. The report also found youth unemployment was costing Britain more than £125bn a year.

McFadden said: “Young people want the chance to work, earn, learn and build a better future.

“That’s why this government is backing employers large and small with a £3,000 grant to take a chance on young people who are ready to work and need that first step on the ladder, and subsidised work for those who face more challenges.”

Paul Nowak, the Trades Union Congress general secretary, said: “This is an important step forward to help tackle the number of young people stuck out of work.

“But the scale of the crisis means the government must go further and faster. That means putting the turbo boosters on the jobs guarantee scheme to ensure it’s more widely available and available sooner to those who need it.”

He added: “And while increased investment is essential, we must also ensure every apprenticeship offers a genuine opportunity to learn and earn.”

The jobs guarantee scheme – currently being piloted – enables eligible 18- to 24-year-olds who have been claiming universal credit and looking for work for 18 months to get a fully funded job for six months.

The government will fund 100% of employment costs for up to 25 hours a week at the relevant minimum wage.