Mr McFadden will reportedly announce that businesses taking on workers under 25 who have spent more than half a year claiming Universal Credit will receive £3,000 from the taxpayer, The Telegraph reports.

This intervention comes as joblessness among young people has climbed to 16.1 per cent, reaching its highest level in over a decade.

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Official data reveals that close to 600,000 individuals below the age of 25 have been receiving the country’s primary out-of-work benefit for longer than six months.

The growing number of young people outside employment, education, or training has prompted alarm among policymakers and economic experts alike.

This package extends beyond direct hiring subsidies, with smaller enterprises set to benefit from £2,000 payments when they recruit apprentices, a measure modelled on a Conservative scheme introduced following the pandemic lockdowns.

Mr McFadden will also broaden Labour’s flagship jobs guarantee programme to encompass all under-25s, offering up to 40,000 additional young people who have been neither working nor studying for 18 months a guaranteed paid work placement.

The Labour Government’s £4.5billion growth and skills levy faces significant restructuring to create more entry-level positions for younger workers. This includes expanding “foundation apprenticeships” that provide structured training opportunities at starter level.

Ministers have already begun restricting funding for master’s degree-equivalent level 7 apprenticeships to redirect resources toward these entry-level programmes.

Business leaders and economists have attributed the surge in youth worklessness to several government policies, including Rachel Reeves’s tax increases and above-inflation rises to the minimum wage.

The retail and hospitality sectors, which traditionally employ large numbers of young workers, have been particularly affected by Labour’s £25 billion increase in employer National Insurance contributions alongside changes to business rates.

Chancellor Rachel Reeves has maintained that much of the tax burden was “inherited” from the previous Conservative administration.

Angela Rayner, the former deputy prime minister, has acknowledged that excessive wage increases for younger workers have created barriers to employment.

Former health secretary Alan Milburn has been commissioned by Mr McFadden to conduct a comprehensive review of the issue, while Ms Reeves told MPs this week that rising youth joblessness was becoming a significant concern.

GB News has contacted the DWP for comment.