Labour is preparing to revisit welfare reform after a major government-backed report revealed that youth unemployment is costing the UK more than £125bn a year. The report, led by former Labour cabinet minister Alan Milburn, warns that the number of young people not in education, employment or training (Neet) could rise by 25% to 1.25 million within five years unless urgent action is taken.
Official figures show that the number of Neets has surpassed one million for the first time in over a decade. Milburn said the government has a responsibility to prevent a 'lost generation' and noted an appetite among cabinet ministers to overhaul the benefits system. Prime Minister Keir Starmer acknowledged the need for further steps, pointing to a 'youth guarantee' and increased funding for work experience and job placements.
The report highlights that the lifetime cost to the exchequer from a young person being Neet between ages 18 and 24 is £29,000 a year on average. An individual who is Neet during early adulthood could lose out on £52,000 over their working life for each year spent Neet. Milburn criticised the government's previous handling of welfare changes, urging a focus on reinvesting savings into employment support rather than arbitrary cuts.
The review shows that the government currently spends about £8.1bn a year on benefits for young people, with over half going to Neets, and £3.2bn on health and disability benefits. Milburn described the ratio of welfare spending to job support as 'shocking and shameful', with only £1 spent on employment support for every £25 on welfare.
