More than one million young people aren’t earning or learning as true cost of Britain’s Neet crisis laid bare

According to official figures, the number of young people who are neither working nor studying has exceeded one million for the first time since 2013; Britain faces a “lost generation” without serious action to tackle the crisis, a landmark review has warned.

The stark figures emerge as former Labor health secretary Alan Milburn, who is leading a review of the issue on behalf of the government, warns that the rising net crisis – 16 to 24-year-olds missing out on education, employment and training – is costing the UK £125bn; That’s more than the country spends on education and nearly twice the defense budget.

Mr Milburn warned that Britain faced a “generational fault line” and said the lack of entry-level jobs was due to the “failure of a system that is stuck in the past”.

In his interim report, Mr Milburn warns that unless urgent action is taken, the number of young newborns will rise from 1 in 8 to 1 in 6 young people by 2031, affecting 1.25 million young people.

In his speech on Thursday, he warned that the problem was “much worse” than he first thought and called for a cross-party effort to find a solution.

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”.

“Six in ten people have never had a job. Twenty years ago the figure was closer to four in ten. Leave is no longer temporary. It is becoming permanent for too many young people. We risk a lost generation,” Mr Milburn said.

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. He has previously told The Guardian that the government needs to make sure the policy provides “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.

“The first rung of the career ladder has become thinner. For many young people it is now out of reach, placing them in a desperate Clause 22 situation where employers want work experience but young people’s opportunities to gain experience are narrowing or non-existent,” Mr Milburn said.

“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.

It was revealed that NEET rates cost the UK £125bn a year, with PIP spending for 16 to 24-year-olds rising from £1.3bn to £3.2bn in five years.

The report states: “Once entered, the gate becomes a one-way valve. The system grows. Its purpose does not change. It pays for the problem. It does not solve it.”

The concluding text is as follows: “Nearly a million young people are out of education and work. These are not statistics. These are the sons and daughters of this country. Some were identified as at risk before they even studied. The system knew. It watched. It documented. It published reports. It commissioned evaluations. It launched pilots. It allowed the funds to expire. And it moved on.”

Asked whether the government should do more to cut the benefit bill, Mr Milburn told the BBC: “The easiest thing in the world is to get on the radio and say it’s to cut the welfare bill. I think we should be paying less in the welfare bill overall, but the way to do that is not by an arbitrary cut, the way to do that is to get young people into work.”

He added: “The welfare system cannot just be a safety net for young people who have never worked. It must be a springboard. It must provide more opportunities for people to gain work experience, to get their first taste of work.”

Speaking about how to resolve the crisis, Milburn continued: “Whether it’s Labor, whether it’s Conservative or Reform, I’m not too bothered. Frankly, 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’s much worse and the data, to be honest, when you look at it in its entirety it can sometimes be appalling. As I said, six in 10 people have never had a job, there’s a 70 per cent increase in the number of young people saying they have health problems that are limited to their work, and mental health problems in that group are doubling.”

The former Labor health secretary also backed Sir Tony Blair’s call for the government to review policies he said made it harder for employers to hire young people.

Asked whether the government accepted that the increase in the minimum wage and workers’ rights legislation had created a “difficulty environment” for businesses to create entry-level jobs, he told Times Radio: “There’s no doubt that those changes have had an impact, particularly in lower-margin sectors of the economy like retail and hospitality. So that’s something the government really needs to think about.”

“If the priority is to create jobs for young people, then employers need to create the right conditions for them to do so.”

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.