The youth unemployment crisis is costing Britain £125bn a year, a bombshell review has warned, as the number of young people not in work or education reached more than 1 million for the first time since 2013.
The eye-watering figure, which is more than the country spends on education and almost double the defence budget, is one of a number of stark revelations in the report by Alan Milburn, the former Labour health secretary, who warns that Britain is in danger of creating a “lost generation” unless it takes serious action to tackle the issue.
The growing NEET crisis – which refers to the number of 16- to 24-year-olds not in education, employment, or training – is the consequence of a “whole-system failure”, said Mr Milburn, that has resulted in a lack of entry-level jobs for young people.
Mr Milburn warned that without urgent action, the number of young people who are NEET will rise by 2031 from one in eight to one in six, affecting 1.25 million young people.
Speaking on Thursday as he launched his interim report, Mr Milburn said the characterisation of young people as not trying is “a myth”, adding: “The story of not trying, being soft, being a snowflake generation – I just don’t buy it.”
Instead, he said, the issue is that the system is “no longer working”: “The problem is that for too many young people, opportunities are not growing – they’re shrinking.”
Sir Keir Starmer described Mr Milburn’s report as “sobering”, and said he “will not allow a lost generation”.
Key findings from Mr Milburn’s landmark report include the following:
- One in six young people may not be in education, training or employment by 2031
- For every £25 spent on benefits, just £1 was spent on employment support
- Anxiety linked to social media is driving economic inactivity, with Mr Milburn saying that young people are living “a different life” today and that scrolling on their phones until the early hours of the morning is having an impact
- There is “no evidence” of a link between migration and joblessness among young people, but the expected fall in net migration in the near future could present an “opportunity” for young people to fill jobs
- Those who spend the whole period from 18 to 24 years of age outside of education and work, as about a quarter of 24-year-old NEETs have done, can forfeit around £300,000 across their lifetime
Speaking on Thursday, the one-time health secretary warned that the problem is “much worse” than he initially thought, and called for a cross-party effort to find a solution.
He said Britain faces “a generational fault line”, adding: “For decades in Britain, the foundation of our unwritten social contract has been that each generation would be able to do better than the last. That great British promise for this generation is being broken.”
Warning that the first rung of the career ladder has “thinned”, the review found that a first job or work experience is often now out of reach for many young people, keeping them in a “hopeless catch-22”.
“Six in 10 have never had a job. Twenty years ago, that figure was closer to four in 10. Detachment is no longer temporary. For too many young people it is becoming permanent. We are at risk of a lost generation,” Mr Milburn said.
But he also said the crisis has “no easy solutions”. Businesses have criticised the Labour government for making it more difficult to create new jobs for young people, with some blaming the increases in minimum wage and national insurance contributions for businesses.
Mr Milburn said on Thursday that the government must “minimise the risks for the employer” and “maximise their incentives” to bring more young people into the workforce.
But he said the rise in minimum wage “is not the root cause of the problem”, and warned the government not to go for the “easy solution”.
He said: “There are no easy solutions, guys – none. They’re all hard, and you’ve got to do the proper analysis, you’ve got to do the proper data, you’ve got to do the proper structural changes.”
The review found that 84 per cent of NEET young people want to be in work or training, but find that the system is failing to help them secure it.
It warned that Britain’s schools, health, system, welfare state and labour market are no longer fit for purpose, and said that layering new programmes on top of a broken system won’t work.
Pointing to the sharp decline in the number of entry-level jobs in the UK, the report said there are now 1.6 million fewer low- and medium-skilled jobs in the economy. It warned that vacancies in hospitality have halved in the past four years alone, and that Saturday jobs are also on the decline. Meanwhile, the number of people taking up apprenticeships has fallen by 35 per cent over the past decade.
“The first rung of the career ladder has thinned. For too many young people it is now simply out of reach. That places them in a hopeless catch-22, where employers ask for work experience but the opportunities for young people to gain it have narrowed or gone,” Mr Milburn said.
“This is not a failure of young people. It is a failure of a system stuck in the past. Whether it is education or health or welfare, that system fails to enable their participation in the labour market.
“Instead, all too often it ends up putting young people on a path to a life not in jobs, but on benefits. This should be the priority for the government. It should be the priority for all of us.”
Asked whether he thinks the government should do more to slash the benefits bill, Mr Milburn told the BBC: “For young people who’ve never been in work, the benefits system can’t just be a safety net. It’s got to be a springboard. It’s got to provide more opportunities for people to get work experience, to get a first taste of a job.”
Speaking about how to solve the crisis, Mr Milburn continued: “Whether it’s Labour or Tory or Reform, I’m not really bothered. Honestly, what we can’t do is put a whole generation at risk, and that means a whole-system effort.”
Work and pensions secretary Pat McFadden branded the latest NEET figures “stark” and said that they “underline the importance of Alan Milburn’s report, which I commissioned because we cannot afford to lose a generation of young people”.
