Labour is preparing a fresh attempt to reform the welfare system after a major government-backed report revealed that youth unemployment is costing Britain more than £125bn annually. The report, led by former Labour cabinet minister Alan Milburn, warns that without urgent action, the number of young people not in education, employment or training (Neet) could rise by 25% to 1.25 million within five years, creating a 'lost generation'.
Official figures show that the number of Neets has surpassed one million for the first time in over a decade. Milburn's review highlights that Britain's youth jobs crisis far outstrips almost any other European country, with six out of ten young Neets not actively seeking work and a similar proportion having never held a job. The report also notes a sharp rise in mental ill health among a 'bedroom generation' glued to smartphones.
Prime Minister Keir Starmer acknowledged the need for further action, stating that the government is investing in a 'youth guarantee' and funding more work experience and job placements. However, Labour faces criticism from opposition leaders and business groups, who argue that tax increases and a rising minimum wage have exacerbated the crisis. Milburn urged ministers to consider welfare changes, noting that for every £25 spent on benefits, only £1 is spent on job support.
The report calculates that the lifetime cost to the exchequer of a Neet aged 18-24 is £29,000 per year on average, while individuals lose £52,000 in earnings over their working life for each year spent Neet. Milburn called for a 'whole system reset' involving schools, welfare and employers, and warned against framing reform solely as cost-cutting, which had led to a chaotic U-turn on previous welfare changes.
