Could cash transfers help tackle Wales’ NEET challenges?

One of the most persistent social policy challenges facing Wales is the number of young people classified as NEET (not in education, employment or training).

The term describes young people who are disengaged from formal education, vocational training and the labour market, leaving them at greater risk of long-term unemployment, poverty and social exclusion.

As of December 2025, an estimated 57,000 young people aged 16–24 in Wales were not in education, employment or training. This represents around 17% of the age group, highlighting a significant challenge for policymakers and service providers.

For decades, policymakers have sought to reduce the number of NEETs through careers advice, training programmes, mentoring and employability initiatives. While many of these interventions have value, another tool may merit serious consideration: conditional cash transfers.

Cash transfers are direct payments to individuals or families. They have been used extensively around the world to reduce poverty and improve educational participation. Evidence from numerous international programmes suggests that they can be highly effective in encouraging school attendance and reducing dropout rates, particularly among disadvantaged groups.

The key question for Wales is whether cash could be used not only as an anti-poverty measure but also as a tool to improve attendance and reduce the pipeline that leads many young people into NEET status.

Too often, discussions about non-attendance focus solely on motivation, behaviour or parental responsibility. While these factors may matter, they overlook an important reality: many families face significant financial pressures.

The hidden costs of education, including travel, meals, equipment, clothing and digital access, can create barriers to regular attendance. International evidence suggests that direct financial support can help overcome these obstacles by providing families with the resources needed to keep young people engaged in education.

Importantly, not all cash transfers are the same. Research consistently shows that conditional cash transfers tend to have stronger effects on educational participation than unconditional payments. Under a conditional model, payments are made only when specified requirements are met, most commonly a minimum level of school attendance. Evidence suggests that these schemes significantly increase school entry and enrolment rates and can be particularly effective among traditionally marginalised groups.

A Welsh scheme could therefore be based on a simple principle: attendance equals payment.

For example, young people aged 14 to 19 who meet agreed attendance thresholds at school, college or approved training programmes could receive a regular payment. The payment might be made directly to the young person, to parents or split between them. Existing attendance monitoring systems could be used to verify eligibility.

Some will argue that young people should participate in education without being paid. In an ideal world, perhaps they would. But public policy should be judged by outcomes rather than sentiment.

Society already uses financial incentives to encourage behaviours that yield wider social benefits. We offer tax incentives for certain activities, provide grants to students and support apprenticeships through public funding. A conditional attendance payment would simply recognise that educational participation yields significant social and economic returns.

Poorer health

The costs of inaction are substantial. Young people who become NEET often face worse employment prospects, lower earnings and poorer health throughout their lives. The social and economic costs are ultimately borne by all of us through increased welfare expenditure, lost productivity and greater demand for public services.

Of course, cash transfers are not a silver bullet. Research shows that while they are effective at getting young people into classrooms, they do not automatically improve learning outcomes. Educational quality, teaching standards and broader support services remain critical. Nevertheless, attendance is a prerequisite for learning. Students cannot benefit from education if they are not there in the first place.

Wales has a proud tradition of social innovation, from free school meals to the Basic Income Pilot for care leavers. As concerns mount over persistent absence and disengagement from education, policymakers should be open to bold new approaches.

Modest investment

Conditional cash transfers will not solve every problem facing Welsh education. But if a relatively modest investment can increase attendance, keep young people connected to schools and colleges, and reduce the number falling into NEET status, it is an idea worthy of serious debate.

If the Welsh Government proceeds with its proposed Cynnal child payment, it should consider making regular attendance at school, college or recognised training a condition of eligibility. International evidence indicates that conditional cash transfers are particularly effective in increasing educational participation and reducing dropout rates, helping ensure that public investment not only reduces poverty but also tackles the root causes of young people becoming NEET.

At a time when Wales is seeking solutions to entrenched inequalities, paying young people to remain engaged in education may sound radical. Yet evidence from around the world suggests it might also be remarkably practical.

Sources

Young people not in education, employment or training (NEET): 2025

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