A major government-backed report has revealed that youth unemployment is costing Britain more than £125bn annually, as the number of young people not in work or education surpasses one million for the first time in over a decade. Former Labour cabinet minister Alan Milburn, who led the review, warned of a 'lost generation' unless urgent action is taken.
The report, launched on Thursday, highlights that the lost economic contribution and benefit costs create a multibillion-pound financial hole. It estimates that each young person not in education, employment or training (Neet) between ages 18 and 24 costs the exchequer £29,000 per year on average, with lifetime earnings losses of £52,000 for every year spent Neet.
Milburn urged the Labour government to overhaul the welfare system, noting that current spending on benefits for young people stands at £8.1bn annually, with over half going to Neets, and £3.2bn on health and disability benefits. He criticised the previous botched welfare changes and called for reinvesting savings into employment support, stating that for every £25 spent on welfare, only £1 goes to job support.
Prime Minister Keir Starmer acknowledged the 'sobering' findings and pledged to take action through a 'youth guarantee' and increased funding for work experience and job placements. However, Labour faces criticism from opposition and business groups who argue that tax increases and a rising minimum wage have exacerbated the crisis.
The report warns that without intervention, the number of Neets could rise by 25% to 1.25 million within five years. It also notes that six in ten young Neets are not seeking work, with a sharp rise in mental ill health among a 'bedroom generation' glued to smartphones. Milburn called for a 'whole system reset' involving schools, welfare, and employers.
