26 November 2025
Chancellor of the Exchequer, Rachel Reeves, has set out the Government’s spending plans for the next year in the Budget.
In a Budget that had also been heavily briefed to media beforehand, the Chancellor committed to protecting public spending but warned that “fair but necessary choices” lie ahead as Britain grapples with frozen income tax thresholds and a lower growth forecast.
Today’s Budget shows some green shoots for young people, though the overall picture remains mixed.
Jacob Diggle, Chief Impact Officer at UK Youth, said: “UK Youth welcomes the Government’s recognition of the vital role that young people have in shaping the country’s future.
“We particularly welcome the reversal of the two-child benefit cap, a policy that has caused significant hardship and deepened poverty for many children and families. This is an important and long-overdue step towards ensuring that every young person has the chance to grow up safe, supported and free from hardship.
“We also welcome continued commitments to invest in the Youth Guarantee, which will help many young people access quality training and employment opportunities.
“However, today’s Budget does not go far enough to address the long-term decline in youth services. Young people need safe spaces to go, trusted adults to talk to, and sustained support for their wellbeing and development. While recent capital funding for youth spaces is positive, youth organisations urgently require stable revenue funding to keep services open and meet rising demand.
“After more than fifteen years of devastating cuts, the youth sector is still operating under enormous pressure. Without a comprehensive, long-term settlement for youth work, too many young people will continue to miss out on the life changing – even life saving – support that youth workers can offer.
As the Government finalises the National Youth Strategy in the coming weeks, UK Youth urges Ministers to work with the sector to build a sustainable funding model that recognises youth work as essential social infrastructure – preventing harm, supporting mental health, and creating brighter futures for young people across the UK.”
What does the Budget mean for young people and the youth sector?
The Chancellor confirmed the removal of the two-child benefit cap. This cap prevented parents from claiming child tax credit or universal credit for more than two children.
It will be fully lifted in April 2026, with the Chancellor highlighting this will lift 450,000 children and young people out of poverty, which she cited as “the biggest barrier to opportunity.” The Child Poverty Strategy, due to be launched next week will also highlight the Government’s plans to address systemic drivers of poverty for young people, including employment and housing.
2. Youth Guarantee and Apprenticeships Update
The Chancellor provided more detail on the previously announced Youth Guarantee, with £820m of investment allocated over the next three years aimed to support the growing numbers of young people classified as NEET (not in education, employment or training). This will provide either a place in in college, an apprenticeship or personalised employment support for young people aged 18 to 21. After 18 months, young people who have been on Universal Credit and looking for work will be offered a guaranteed six-month paid work placement.
However, £820m is not a sufficient amount to address the huge challenges faced by nearly one million young people classified as NEET. As outlined in UK Youth’s representation to Treasury ahead of the Budget, the Government must recognise the role of youth work as a preventative intervention and an effective solution to the challenges young people face entering the workplace.
For the Youth Guarantee to be successful, there needs to be a stronger join-up between youth work, employment support and health services to enable more stable economic growth for future generations.
There will also be an independent review conducted by former Health Secretary Alan Milburn to tackle youth inactivity in work and education, focusing particularly on the impact of mental health conditions and disabilities. This is due to be published in Summer 2026.
It was also announced that new funding will make apprenticeships for under 25s free for SMEs (Small and Medium Enterprises) as part of the Growth and Skills Levy.
The Chancellor confirmed a 4 per cent rise in the national living wage to £12.71 per hour, with a bigger rise of 8.5% for 18-20 year olds taking their pay to £10.85 per hour.
UK Youth welcomes this increase in the minimum wage for young people. Too many young workers face low pay, insecure work, and rising living costs. This uplift will provide much-needed support. Increasing the minimum wage is a positive step towards fairer treatment of young workers and will help more young people to build financial stability as they move into adulthood.
Other announcements of note included freezes on existing prescription and rail fare charges and additional funding for devolved administration.
Conclusion
This Budget offers some welcome progress for young people – particularly the long-overdue end to the two-child benefit cap, steps to strengthen the Youth Guarantee, and rises in the minimum wage.
But without a long-term commitment to rebuild the youth sector after years of cuts, these green shoots risk withering. As Ministers finalise the forthcoming National Youth Strategy, they must seize the opportunity to create a sustainable funding model that puts youth work at the heart of national growth and renewal.