The number of young people neither working nor learning has reached more than one million for the first time since 2013, official figures have revealed, as a landmark review warns Britain faces a “lost generation” without serious action to tackle the crisis.
The stark figures come as Alan Milburn, the former Labour health secretary who is leading a review of the issue for the government, warns that the growing neet crisis – 16 to 24-year-olds not in education, employment, or training – is costing Britain £125bn, more than the country spends on education and almost double the defence budget.
Mr Milburn has warned the UK faces a “generational fault line”, blaming a lack of entry level jobs caused by a “failure of a system stuck in the past”.
In his interim report, Mr Milburn warns that without urgent action, the number of young people who are neet will rise from 1 in 8 to 1 in 6 young people by 2031, affecting 1.25 million young people.
Speaking on Thursday, he warned that the problem is “much worse” than he initially thought and called for a cross-party effort to find a solution.
Warning that the first rung of the career ladder has “thinned”, the review found first jobs or work experience is often now out of reach for many young people, keeping them in a “hopeless Catch-22”.
“Six in ten have never had a job. Twenty years ago, that figure was closer to four in ten. Detachment is no longer temporary. For too many young people it is becoming permanent. We are at risk of a lost generation,” Mr Milburn said.
Businesses have criticised the Labour government for making it more difficult to create new jobs for young people, with some blaming the increase in minimum wage and higher national insurance contributions.
Mr Milburn’s review is expected to review the rise in youth minimum wage. He previously told The Guardian the government must ensure policy is providing the “right incentives for employers to employ more young people, rather than less”.
The review found that 84 per cent of neet young people want to be in work or training, but find the system is failing to help them secure one.
It warns Britain’s schools, health, system, welfare state and labour market are no longer fit for purpose, and said that layering new programmes on top of a broken system won’t work.
Pointing to the sharp decline of entry level jobs in the UK, the report says there are 1.6 million fewer low and medium skilled jobs in the economy.
It warned vacancies in hospitality have halved in the past four years alone, and Saturday jobs are also on the decline. Meanwhile, the number of people taking up apprenticeship has fallen by 35 per cent over the past decade.
“The first rung of the career ladder has thinned. For too many young people it is now simply out of reach. That places them in a hopeless Catch-22 where employers ask for work experience but the opportunities for young people to gain it have narrowed or gone,” Mr Milburn said.
“This is not a failure of young people. It is a failure of a system stuck in the past. Whether it is education or health or welfare, that system fails to enable their participation in the labour market.
“Instead, all too often it ends up putting young people on a path to a life not in jobs but on benefits. This should be the priority for the government. It should be the priority for all of us.”
The report exposes a fundamental imbalance in how public money is spent. In 2024/25, for every £1 spent on employment support for young people, around £25 was spent on benefits.
It finds that neet rates is costing Britain £125 billion a year, with PIP expenditure for 16 to 24-year-olds having risen from £1.3 billion to £3.2 billion in five years.
The report states: “The gateway, once entered, becomes a one-way valve. The system is growing. Its purpose is not changing. It pays for the problem. It does not solve it.”
It’s conclusion says: “Nearly one million young people are outside education and work. They are not a statistic. They are the sons and daughters of this country. Some were identified as at risk before they could read. The system knew. It watched. It documented. It published reports. It commissioned evaluations. It launched pilots. It let the funding expire. And it moved on.”
Asked whether he thinks the government should do more to slash the benefits bill, Mr Milburn told the BBC: “The easiest thing in the world is to come on the radio and say what we need to do is cut the benefits bill. I think we should be paying out less in the benefits bill overall, but the way to do that is not by some arbitrary cut, the way to do it is to get young people into work.”
He added: “For young people who’ve never been in work, the benefits system can’t just be a safety net. It’s got to be a springboard. It’s got to provide more opportunities for people to get work experience, to get a first taste of a job.”
Speaking about how to solve the crisis, Mr Milburn continued: “Whether it’s Labour or Tory or Reform, I’m not really bothered. Honestly, what we can’t do is put a whole generation at risk, and that means a whole system effort.”
And speaking to LBC, he added: “It is much worse, and the data, sometimes honestly it’s horrifying when you look at it across the piece. As I say, six in 10 have never had a job, 70 per cent rise in young people saying they’ve got work-limited health condition, doubling in mental health conditions amongst this cohort.”
The former Labour health secretary also backed calls by Sir Tony Blair for the government to review policies which he said had made it harder for employers to hire younger people.
Asked whether he agreed that the government had created a “climate of difficulty” for business to create entry-level jobs with an increase to the minimum wage and workers rights bill, he told Times Radio: “Particularly in low-margin sectors of the economy, like retail and hospitality, there is no doubt that these changes have had an impact. So that is something the government really needs to think about.
“If the priority is to create young people’s jobs, then it’s got to create the right conditions for employers to do so.”
Stuart Machin, chief executive at Marks & Spencer, said the report’s findings are “shocking but not surprising”.
He said: “A Saturday job in retail changed my life, built my confidence and gave me the skills to build a fulfilling career. We have a chance to provide a similar path to every young person.”
Rain Newton-Smith, chief executive at Confederation of British Industry, said the report “exposes a tragic waste of potential” amongst young people.
She said: “Business has a central role in giving young people a better deal. Reducing the high cost of creating jobs in the UK would open up more opportunities, while growth would provide the resources needed to support those facing additional barriers to work, whether linked to skills, health or work-readiness.”
Brian Dow, chief executive at the charity Mental Health UK, praised the report for “calling out the lazy narratives often used to define an entire generation”, and said it should be a “turning point” to create change for young people.
