Britain faces the prospect of a “lost generation” of young people as spending on benefits for the under-25s vastly outstrips investment in employment support, a major review has warned.
Alan Milburn, the Blair-era health secretary, is set to publish his review into young Neets — people not in education, employment or training — on Thursday.
The review warns that the country faces a “generational fault line” unless it confronts what Milburn describes as a whole-system failure in tackling youth inactivity.
The number of Neets currently stands at 957,000 and could reach 1.25 million within five years if the crisis is left unaddressed, according to the review’s findings.
For every £1 the Department for Work and Pensions spends on employment support for young people, around £25 is spent on benefits, the review found.
Milburn said this ratio reflected a welfare state “exacerbating inactivity” rather than building the capability needed to get young people into work.
He called for a wholesale shift to what he described as a “working state,” arguing that new programmes layered on top of a broken system could not work.
“We are at risk of a lost generation,” he is expected to say at the launch of the report on Thursday.
“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.”
The review flatly rejected the idea that young people are unwilling to work, with 84 per cent of Neets surveyed saying they wanted a job or training.
The labour market has progressively closed off its entry points, with 1.6 million fewer low and medium-skilled jobs in the economy than in previous decades.
Apprenticeship starts among young people have also fallen 35 per cent over the last decade, while vacancy levels in the hospitality sector have declined alongside the disappearance of Saturday jobs.
Marks and Spencer chief executive Stuart Machin described the findings as “shocking but not surprising,” adding that a Saturday job in retail had changed his own life.
Machin said there remained “a chance” to provide a similar path to every young person currently locked out of the labour market.
Several business executives have recently blamed the Labour government directly for deepening the Neets crisis, pointing to tax rises and regulatory changes as key factors.
Next boss Lord Simon Wolfson said Chancellor Reeves’ tax rises had squeezed entry-level jobs, while Phones 4u founder John Caudwell warned that AI would hit the jobs market “like a tsunami.”
Caudwell added that increases to the minimum wage and new red tape had already made youth unemployment “dreadful,” intensifying pressure on the government to act.