Labour is preparing fresh welfare reforms after a government-backed report revealed youth unemployment costs Britain over £125bn annually. The report, led by former Labour minister Alan Milburn, warns of a 'lost generation' as official figures show more than one million young people are not in work or education for the first time in over a decade.
Milburn's review highlights that the number of young people not in education, employment, or training (Neet) is set to rise by 25% to 1.25 million within five years without urgent action. The lifetime cost to the exchequer for each Neet individual aged 18-24 averages £29,000 per year, while individuals lose £52,000 in earnings over their working life for each year spent Neet.
Prime Minister Keir Starmer acknowledged the need for further steps, announcing investment in a 'youth guarantee' and more work placements. However, Labour faces criticism from opposition and business groups over tax increases and a rising minimum wage, which they say exacerbate the crisis.
Milburn urged a 'whole system reset' involving schools, welfare, and employers, noting that the government spends £8.1bn annually on benefits for young people, with over half going to Neets. He criticised previous welfare reforms as focused on cost-cutting, calling for reinvestment in employment support instead.
