Agencia research the cost of economic inactivity for young people

During 2021, Agencia were commissioned through the LGA's economic growth programme to support Hull City Council in understanding the challenges faced by young people together with the cost of economic inactivity.

Here's what we did.

The Challenge

Covid-19 has had a significant impact on the UK economy. Young people have been particularly severely affected during the current crisis, as they are likely to be employed in the sectors that have been hardest hit by COVID-19.

Hull is the fourth most deprived place in the UK, with 45% of the city falling within the most deprived 10% of the country. Rates of worklessness in Hull are generally above average, and evidence suggests the disproportionate impact the pandemic has had on disadvantaged and deprived people and neighbourhoods.

By June 2020, 10,400 (32%) of 16- to 24-year-olds were estimated to have been on out of work benefits or furloughed as a result of the pandemic. Whilst the number of those furloughed has reduced over the life of the scheme, in April 2021, 3,100 (12%) young people were still claiming benefits and 8,400 were economically inactive (Jan-Dec 2020).

In planning for the future, post-covid, Hull City Council commissioned Agencia to further support and improve the Council’s understanding of costs and benefits associated with delivery of employment interventions, particularly for young people. This will serve to inform the council’s consideration of developing and piloting support programmes designed to tackle the issue of intergenerational worklessness and deprivation.

The Action

In 2021, Hull City Council commissioned Agencia to produce an economic model demonstrating the costs and benefits of providing opportunities to support all young people into a range of positive pathways including employment, further or higher education, or self-employment and so avoiding economic inactivity.

We started by researching potential data sources which enabled us to collect all the data necessary for the project and combined this with other findings from desk research. The next step involved calculating costs associated with economically inactive young people. We used a modelling technique for this section, which involved simplifying the data to remove complexity and ascertaining the costs associated with the Universal Credit benefit. We then projected these costs for a young person who remains economically inactive over their working life. The final step was creating an Excel Tool. We started by considering different interventions and how they would be implemented and measured. The tool needed to be useful for any given intervention, so we added a variety of input variables that can be tailored for any program. The outputs were also created to be easily interpreted and shareable. After creating an initial draft of the tool, we consulted with Hull City Council and made some amendments before finalising the tool.

Our approach also included the following areas of analysis:

Estimating the numbers of young people by single year that currently follow different career pathways and options taken by young people (including as a minimum apprenticeship, higher education, further education, employment, self-employment, unemployment, or economic inactive for other reasons), and where relevant, breaking down numbers into sub groups to help the council understand the reasons for e.g. economic inactivity.

Estimating the current costs of welfare, and any other relevant, public sector benefits and costs that are attributed to young people who are economically inactive through unemployment or other reasons excluding students as an average per person, by year group, and as a total for the current year as a baseline to evaluate the delivery of the programme.

Estimating the projected costs for an average per person who is economically inactive and / or remains low-skilled between 18 and 30 years old over their working life including reference to any distress costs such as criminal activities and poor health and lifestyle choices.

Estimating the numbers of individuals who may require direct intervention together with those who will follow existing economically active career pathways (i.e. direct into employment or self-employment) as well as further direct participation into further or higher education without direct intervention in order to help in determining the requirement for commissioning of services.

The Result

The research we carried out produced a simple economic model which identifies those that were in education, employment, economically inactive, along with in receipt of unemployment benefits.

The model has been designed and developed to enable the determination of the costs and benefits of implementing a range of pilot programmes that would provide opportunities to support all young people into whichever positive pathway they might choose, ranging from employment, further or higher education, or self-employment, and so avoiding the significant cost of economic inactivity. To ensure flexibility, we have designed a toolkit that can flex and provide a robust an approach as possible, while also keeping it functionality as seamless and simple enough to use, regardless of technical expertise.

This model will serve to inform the council’s consideration of developing and piloting support programmes designed to tackle the issue of intergenerational worklessness and deprivation. This includes providing opportunities to support all young people into a range of positive pathways including employment, further or higher education, or self-employment; thereby reducing economic inactivity.

For example, the research findings have already been used to:

Support and inform the development of Hull’s economic strategy

Shape future funding bids and partnership working

Bring together partners to consider the future offer for young people within Hull Training and Adult Education service

About Agencia

Agencia has been transforming organisations for 25 years. We not only design the change but also make it happen, turning strategy into action and action into results.

We are a team of industry experts with years of on the ground experience. Our solutions are pragmatic and down to earth.

We are a family run business with values based on collaboration, practical and realistic methods for making a difference.

We have been trusted to deliver over 500 contracts, developing and exporting British public service expertise. We have improved government capabilities, transformed entire organisations, developed communities and changed lives.

We thrive on the most challenging projects, finding inspiration where others may find difficulty.

We operate worldwide.

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