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The UK’s youth unemployment crisis is costing the country around £125 billion a year, a review has estimated as its author warned of a ‘whole system failure’ amid an urgent call for change. The sum, said to take in losses in taxes alongside higher health and welfare spending, is more than annual education spending in England and could rise if the situation worsens, the interim report by an ex-Labour health secretary suggested. The government-commissioned report came as new figures published on Thursday showed the number of young people neither working nor learning has topped one million for the first time since 2013. The Office for National Statistics said the number of people aged between 16 and 24 and not in employment, education or training, so-called Neets, rose to 1.01 million in the three months from January to March. Alan Milburn’s review has estimated this number could rise to one in six young people by 2031, representing 1.25 million young people. The former Labour cabinet minister, who is leading the review of the Neets crisis for the government, warned of the ‘risk of a lost generation’ and said Britain ‘faces a generational fault line’, as he published his interim report. He wrote: ‘At the very point when they should be starting adult life, gaining confidence, building skills, learning the habits of work and taking their first steps towards independence, too many are becoming detached from education and employment altogether. ‘We are at risk of a lost generation.’ Milburn said there is not one cause alone, with factors including the pandemic, smartphones and the jobs market. He said: ‘The evidence does not support a single explanation. It supports something harder to accept: that the institutions we built to support young people into adulthood are no longer fit for that purpose, and that the country has known this for some time.’ Milburn had already spoken at the weekend of a ‘bedroom generation’, saying anxiety linked to social media is driving economic inactivity among young people. And while his report warned against apportioning blame to young people, it added that ‘effort matters’, ‘habits matter’ and that young people and their parents have ‘agency and obligations’. He added: ‘But it is dishonest to pretend that individual effort alone can overcome systems that are badly designed, poorly connected and, too often, indifferent to whether young people actually make it into sustained participation.’ As well as there being fewer jobs around for young people, the report stated that routes into work have narrowed, with the ‘death of the Saturday job’ and a decline in apprenticeship starts. The report estimated ‘the cumulative cost to our country of almost one million Neet young people at £125 billion a year’, including financial impacts of lost economic potential, as well as losses in tax revenue, increased health and benefits spending. It added: ‘This is more than we spend on education every year in England. The question is no longer whether the current position is affordable. It is whether it is sustainable.’ Milburn’s report concluded that ‘what should have been treated as an urgent national crisis has been absorbed into the background noise of public life’ as he argued ‘tolerance [of the status quo] is no longer acceptable’. Work & Pensions Secretary Pat McFadden branded the latest Neet figures ‘stark’ and said they ‘underline the importance of Alan Milburn’s report which I commissioned because we cannot afford to lose a generation of young people’. He added: ‘This vital work lays bare the scale of the challenge and the root causes of youth unemployment we now need to confront. ‘We are already taking action by bringing forward the biggest youth employment reforms in a generation to create 500,000 opportunities for young people, including a Youth Jobs Grant for businesses starting next month, more apprenticeships, and subsidised employment to help young people get a foot on the ladder.’ While this report focused on setting out why the system is seen to be failing young people and what the situation will lead to if nothing changes, recommendations for fundamental reform are not expected until later this year. Scott Compton, senior policy adviser at Action for Children, said: ‘This report takes an unflinching view of the deep-rooted disadvantages many young people face to entering employment, education and training. ‘It is right to recognise too many young people are shut out of the labour market by systemic barriers, not individual failings or a lack of ambition.’ The Resolution Foundation think tank’s research director Lindsay Judge said: ‘There are real fiscal and structural challenges ahead. ‘There is no single system currently in place to solve this crisis, so the government will need to develop a new approach that spans government departments as well as regional and local authorities, plus find the funding to truly turn the Neets crisis around.’ By Aine Fox and Henry Saker-Clark, Press Association Press Association: News source: PA Copyright 2026 Alliance News Ltd. All Rights Reserved.
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