The crisis of nearly a million young people who are out of education, employment or training – known as ‘Neets’ – costs the UK economy up to £125bn a year, the Alan Milburn review has found, as both the government and the private sector were blamed for failing to address youth unemployment.
An extensive report on the huge numbers of young people out of work by former Blair-era health secretary Alan Milburn has urged the Labour government to fix the “current broken system”.
Milburn warned that the number of Neets could rise to 1.25m within five years.
Figures on Thursday showed that more than 1m young people aged between 16 and 24 were already out of work, education or training as of March 2026. This was an increase from a previous figure of 957,000 in December 2025.
At a launch event for the report on Thursday, the Labour veteran is set to criticise the UK’s welfare state for “exacerbating inactivity” and creating a system which “all too often ends up putting young people on a path to a life not in jobs but on benefits”.
The Milburn review found the Neets crisis cost the UK around £125bn a year in lost economic output and tax revenues, as well as increased benefit and health spending.
Neets crisis caused by ‘broken’ welfare system
The report called on the government to introduce reforms across the education sector and the NHS to put an emphasis on employment, and to overhaul Universal Credit to force young people to search for work and take on part-time jobs without fear of losing their benefits.
It also said there had been an epidemic of ill health, particularly around anxiety, depression and forms of distress that became “defining features” of the Neets crisis.
He attributed some of the causes to the rise of social media and smartphones as well as the “long effects” of Covid as school shutdowns stunted young people’s development. Housing affordability was also an issue that “came up again and again”.
Analysis found that for every £1 the Department of Works and Pensions spent on employment support for young people, around £25 was spent on benefits for young people.
The report said disability payments for young people, which could rise from around £3.2bn to £6.5bn by 2031, was failing to help deliver improved participation in the labour market, with the wider welfare system failing to prioritise early intervention
Rachel Reeves’ £25bn tax hike through raising employers’ national insurance contributions and decision to raise the national minimum wage, as well as Labour’s Employment Rights Bill legislation, had added costs to employers. However, it added that the rise in youth inactivity “long precedes” recent changes.
Milburn slams employers’ recruitment practices
Milburn also hit out at employers for recruitment practices that were “unproductive and demoralising” for applicants.
He criticised the proliferation of entry-level roles requiring past experience, employers picking the “easy street” of recruiting foreign workers and putting applicants through automated recruitment processes.
Milburn wrote: “The young person who once might have walked into a shop, spoken to a manager and been given a chance in the past is now screened by a portal, a test, a recorded interview or an algorithm before anyone has looked them in the eye.
“In other words, the first rungs on the old career ladder have weakened.”
Businesses were described as “passive recipients” of the education system rather than actively being “co-responsible” for employment levels along with the DWP.
Rain Newton-Smith, the chief executive of the Confederation of British Industry, said that businesses had a “central role” in solving the Neets crisis as she urged the government to reduce the cost of creating jobs in the UK.
Marks and Spencers chief Stuart Machin said there remained a “chance” of reviving the Saturday job and giving young people more job opportunities.
Several business executives have recently blamed the Labour government directly for deepening the Neets crisis. Next boss Lord Simon Wolfson said Reeves’ tax rises had squeezed entry-level jobs.
Phones 4u founder John Caudwell said AI would hit the jobs market “like a tsunami” while increases to the minimum wage and new red tape had already made youth unemployment “dreadful”.
