Reversing minimum wage changes is no ‘easy solution’ to end Britain’s Neet crisis, Milburn warns
Former minister Alan Milburn has laid out the state of Britain’s youth unemployment crisis in a shocking report; This report warned that young people in the country were frustrated at every level.
His report blames decades of “whole system failure” from health to education to social care, but that hasn’t stopped commentators and business across the country from blaming the Chancellor.
Rachel Reeves’ decision to increase the national minimum wage for young workers, with plans to eventually equalize it for all ages, is often accused of delaying employers from hiring less experienced young adults looking for their first job.
But amid calls for him to reverse the policy, former health secretary Mr Milburn warned against assuming a lower minimum wage would act as a silver bullet.
Opening his report on Thursday, he made clear that there were “no easy solutions” to fixing the crisis and warned that recent changes to economic policy “are not the root cause of the problem.”
Admitting this was a “really big concern” for employers and that the government needed to “minimise the risks to the employer” and “maximize their incentives”, Mr Milburn continued: “But many employers are not paying the minimum wage to young people, they are paying the minimum wage to adults, so the policy change has had minimal impact on them.”
Asked whether the government should listen hospitably to employers and reverse changes to the minimum wage, he noted the impact of the cost of living crisis on business.
“It is now perfectly reasonable to say that increasing national insurance contributions and increasing national minimum wages makes the situation worse or better, but let’s not pretend that this is the root cause of the problem,” he said.
“Seriously? Honestly, one thing that pisses me off so much about this is that everyone takes the damn easy solution. Let’s take the easy solution.”
“There are no easy solutions. None of them. They are all difficult.”
She added: “If we keep going, you know, if Rachel hadn’t done this and Rachel hadn’t done that, everything would have been great. Really? Come on.”
Instead, Mr. Millburn called on lawmakers to look at a holistic systems approach at a news conference on Thursday: “My basic diagnosis is that the system that was set up to support young people, from the world of education to the world of employment, is no longer working in too many places. Not only is it failing to solve the problem, it is reinforcing it.”
His review warned that Britain’s schools, health system, welfare state and labor market were no longer fit for purpose and said layering new programs on top of a broken system would not work.
Ms Reeves’s changes to national insurance contributions and the minimum wage have become the focus of government critics trying to pinpoint blame for the country’s youth unemployment crisis.
Employers are currently required to pay workers aged 18 to 20 at least £10.85 per hour; this is up from £10 in April.
Older workers aged 21 and over should receive at least £12.71, starting from £12.21.
Sir Tony Blair joined critics of the changes in a scathing attack on Labour’s policy agenda earlier this week, which highlighted measures such as new workers’ rights laws and an above-inflation increase in the minimum wage.
Mr Milburn also agreed with his former boss Sir Tony that “politics needs a plan” and said “there is no doubt these changes are having an impact” on sectors such as retail and hospitality.
New figures show the number of young people neither working nor studying has risen above one million for the first time since 2013, while its review found the youth unemployment crisis is costing the UK £125bn a year.
The eye-watering figure, which is more than the country spends on education and almost twice its defense budget, comes as Mr Milburn warns Britain faces a “lost generation” that is not taking serious action to tackle the crisis.
In his interim report, Mr Milburn warns that unless urgent action is taken the number of young people who are Neet will rise from 1 in 8 young people 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.
