Alan Milburn’s landmark review has revealed that youth unemployment costs Britain over £125bn a year, prompting Labour to consider fresh welfare reforms. The former Labour cabinet minister warned of a potential ‘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.
Launching the first phase of his government-backed report, Milburn said the government had a responsibility to act and had shown a renewed appetite to overhaul the benefits system. “As I’ve spoken to cabinet ministers about it, my sense is that there is an appetite to go back into this, and to go back into it in the right way,” he said.
The review highlights that Britain faces annual losses of £125bn from the youth jobs crisis, outstripping almost any other European country. It found the lifetime cost to the exchequer for a young person not in education, employment or training (NEET) between 18 and 24 averages £29,000 per year, while individuals can lose out on £52,000 over their working life for each year spent NEET.
Prime Minister Sir Keir Starmer acknowledged further steps were needed after visiting a training facility in west London. “Clearly we need to do more,” he said, noting that measures like a ‘youth guarantee’ and more work placements are being introduced. However, Labour faces criticism from opposition and business groups over policy decisions, including tax increases and a rising minimum wage, which they say exacerbate the crisis.
Milburn urged Labour not to shy away from welfare reform, suggesting savings could be reinvested in employment support. He criticised a previous botched attempt, stating that framing reform as cost-cutting led to backlash. The report shows the government spends about £8.1bn annually on benefits for young people, with over half going to NEETs, and £3.2bn on health and disability benefits, while just £1 is spent on job support for every £25 on welfare.
Without urgent action, Milburn warned the number of NEETs could rise by 25% to 1.25 million within five years. He highlighted that six in ten young NEETs are not seeking work, with many never having worked amid rising mental health issues among a ‘bedroom generation’ glued to smartphones. The final recommendations are due this autumn.
