Britain ‘at risk of a lost generation’ as 1.2m could be trapped in youth unemployment crisis

Britain “faces the risk of a lost generation” if ministers do not urgently tackle youth unemployment, with fears more than 1 million young people could be left out of work, education and training in the next five years.

Former Labor health minister Alan Milburn, who is leading a review of the issue on behalf of the government, will warn that the UK faces a “generational fault line” and blame the lack of entry-level jobs on the “failure of a system that is stuck in the past”.

In his interim report, Mr Milburn will warn that unless urgent action is taken, the number of newborns not in education, employment or training will rise from 1 in 8 young people to 1 in 6 young people by 2031, affecting 1.25 million young people.

Warning that the first rung of the career ladder is “weakening”, the review found that first jobs or work experience are now out of reach for most young people, keeping them in a “hopeless Clause-22”.

Mr Milburn will say: “Six in ten people have never had a job. Twenty years ago the figure was closer to four in ten. The separation is no longer temporary. For many young people it is becoming permanent. We risk a lost generation.”

Businesses have criticized the Labor government for making it harder to create new jobs for young people, with some blaming the increase in the minimum wage and higher national insurance contributions.

Mr Milburn’s review is expected to review the increase in the youth minimum wage, and he has previously told The Guardian that he was not sure the government’s policy provided “the right incentives for employers to employ more young people rather than fewer”.

The review found that 84 per cent of young people starting out wanted to work or study, but the system was failing to provide them with this opportunity.

He warns that England’s schools, healthcare system, welfare state and labor market are no longer fit for purpose and says layering new programs on top of a broken system will not work.

Noting that entry-level jobs have fallen sharply in the UK, the report states that there are 1.6 million fewer low- and medium-skilled jobs in the economy.

He warned that vacancies in the hotel sector had halved in the last four years alone and that Saturday jobs were also in decline. Meanwhile, the number of people starting apprenticeships has fallen by 35 percent in the last decade.

Mr Milburn will say: “The first rung of the career ladder has become thinner. For many young people it is now out of reach. This places them in a desperate Catch-22, where employers want work experience but young people’s opportunities to gain experience are narrowing or absent.”

“This is not the failure of young people. It is the failure of a system that is stuck in the past. Whether it is education, health or social assistance, this system cannot ensure their participation in the labor market.

“Instead, it often ends up putting young people on a path to a life based on benefits rather than work. This should be the government’s priority. “This should be the priority for all of us.”

The report reveals a fundamental imbalance in the way public money is spent. For every £1 spent on youth employment support in 2024/25, around £25 was spent on benefits.

Marks & Spencer chief executive Stuart Machin said the report’s findings were “shocking but not surprising”.

He said: “A Saturday job in retail changed my life, boosting my confidence and giving me the skills to build a fulfilling career. We have the chance to offer every young person a similar pathway.”

Rain Newton-Smith, chief executive of the Confederation of British Industry, said the report “reveals a tragic waste of potential” among young people.

He said: “Business has a central role in giving young people a better deal. Reducing the high cost of creating jobs in the UK will unlock more opportunities, while growth will provide the resources needed to support those who face additional barriers to work, whether linked to skills, health or work readiness.”

Brian Dow, chief executive of the charity Mental Health UK, praised the report for “highlighting the lazy narratives too often used to describe an entire generation” and said it should be a “turning point” in creating change for young people.