Rachel Reeves’s proposed strategy to eliminate youth unemployment appears to overlook a significant number of young individuals unable to work due to anxiety or other mental health issues, it was highlighted yesterday.

As part of the Chancellor’s ‘youth guarantee,’ young adults aged 18 to 21 who have been receiving Universal Credit for 18 months without engaging in work or education will be presented with an opportunity for paid employment.

If they refuse without a good reason, they will be stripped of their benefits, Ms Reeves said.

But thousands of youngsters on sickness benefits will not be included in the scheme, the Treasury confirmed. 

It means young people signed off work with anxiety or depression will not be forced to try one of the government-backed jobs.

Last night the Tories warned that the scheme risked ‘incentivising’ those who ‘game the system’. 

Shadow work and pensions spokesman Helen Whately told the Daily Mail: ‘Rachel Reeves’s so-called youth jobs guarantee is already unravelling.

‘By excluding young people on sickness benefits, it risks trapping many on welfare and even incentivising those who game the system. 

‘Worse still, Labour’s £25billion jobs tax and Unemployment Rights Bill makes it harder for businesses to hire and for young people to get on.’

Ms. Whately further commented: ‘If Labour truly intended to reform welfare, the Prime Minister would consider Kemi Badenoch’s proposal to collaborate on creating a savings plan to manage the benefits expenditure.’

Almost a million 16 to 24-year-olds – equivalent to one in eight – are not in education, employment or training, known as NEETs.

The Institute for Fiscal Studies (IFS) has reported that approximately 100,000 individuals out of work have been on Universal Credit for over a year.

Additionally, there is a quarter of a million young people who have remained on the benefit for a year and are not employed, as they are usually exempt from job-seeking obligations due to health issues or caregiving duties.

Imran Tahir, senior research economist at IFS, said: ‘The key test for this policy will be whether it helps young people move into sustained jobs, rather than simply providing temporary placements.

‘And for that to happen, the precise design of the policy – and its ability to encourage employers to sign up to offer these placements – will be critical.’

Yesterday Ms Reeves also spoke of her desire to secure the ‘maximum’ economic and cultural benefits from a youth mobility scheme with Europe, raising fears of an influx of young adults from the Continent.

Having started the year saying it had no plans for such a move, the Government is looking at introducing a ‘backpackers and baristas’ exchange-style scheme to allow tens of thousands of young Europeans to work, travel or study in the UK.

However, the Daily Mail understands it will not be a ‘one in, one out’ arrangement – meaning many more Europeans could come to Britain than vice versa. 

Ministers had been opposed to the idea amid fears it could add to net migration, but positive public polling encouraged them to go further.

There has also been little resistance from opposition parties to the idea, while the EU has made it a cornerstone of negotiations for Sir Keir Starmer’s big plan for a ‘reset’ of post-Brexit relations.

Yesterday Ms Reeves said she did not want young people to ‘miss out on the chance to enrich their lives through travel, experiencing other cultures, working and studying abroad’.

‘Those opportunities cannot, and must not, be the sole preserve of the wealthy and the fortunate,’ she said in her speech to the Labour Party conference in Liverpool.

‘I can tell you today that we are working with the European Union to secure for young people in Britain the maximum economic and cultural opportunities available through an ambitious agreement on youth mobility.’