A major government-backed report has revealed that youth unemployment is costing Britain more than £125bn annually, prompting Labour to consider fresh welfare reforms. The review, led by former Labour cabinet minister Alan Milburn, warns of a 'lost generation' as official figures show over a million young people are not in work or education for the first time in over a decade.
Milburn's report highlights that the number of Neets (not in education, employment or training) could rise by 25% to 1.25 million within five years without urgent action. It notes that six out of ten young Neets are not seeking work, and a similar proportion have never worked, citing a rise in mental health issues among a 'bedroom generation' glued to smartphones.
The economic impact is severe: each Neet aged 18-24 costs the exchequer £29,000 annually, while individuals lose an average of £52,000 in lifetime earnings for every year spent Neet. The government currently spends £8.1bn on benefits for young people, with over half going to Neets, and £3.2bn on health and disability benefits.
Prime Minister Keir Starmer acknowledged the need for more action, pointing to a 'youth guarantee' and increased funding for work experience. However, Labour faces criticism from opposition and business groups over tax rises and the minimum wage increase, which they say worsen the crisis.
Milburn urged a 'whole system reset' involving schools, welfare, and employers, and criticised the government's previous botched welfare changes. He argued that welfare reform should not focus solely on cutting costs but should reinvest savings into employment support, noting that for every £25 spent on welfare, only £1 goes to job support.
