A major government-backed report has revealed that youth unemployment is costing the UK more than £125bn annually, prompting Labour to consider fresh welfare changes. The report, led by former Labour cabinet minister Alan Milburn, warns of a 'lost generation' as official figures show the number of young people not in work or education has surpassed one million for the first time in over a decade.
Milburn's landmark review highlights that the lost economic contribution and benefit costs are creating a multibillion-pound financial hole. It calls for a 'whole system reset' involving schools, welfare, and employers. The lifetime cost to the exchequer for a young person not in education, employment, or training (Neet) aged 18-24 averages £29,000 per year, while individuals lose £52,000 in lifetime earnings for each year spent Neet.
Prime Minister Keir Starmer acknowledged the need for further action, stating, 'Clearly we need to do more.' He pointed to existing measures such as a 'youth guarantee' and increased funding for work experience and job placements. However, Labour faces criticism from opposition leaders and business groups who argue that policies like tax increases and a rising minimum wage have worsened the crisis.
Milburn urged ministers to consider welfare reform, noting that the government spends £8.1bn annually on benefits for young people, with over half going to Neets. He criticised the previous botched handling of welfare changes and stressed that savings should be reinvested in employment support. 'For every £25 spent on welfare, the state spends £1 on job support – that is shocking and shameful,' he said.
The report warns that without urgent action, the number of Neets could rise by 25% to 1.25 million within five years. It also highlights that six out of ten young Neets are not seeking work, and a similar number have never worked, amid a sharp rise in mental ill health among a 'bedroom generation' glued to smartphones.
