UK faces £125bn annual cost from youth worklessness, report warns

The Story

A government-backed report by former Labour minister Alan Milburn warns that Britain risks a financial hit of £125bn a year due to rising youth worklessness, with over 1 million 16- to 24-year-olds now not in education, employment or training (Neet). The report estimates the lost contribution to the economy and cost to the state from supporting these young people leaves a multibillion-pound financial hole, and warns of long-term scarring effects on individuals.

Key Facts

• More than 1 million 16- to 24-year-olds in the UK were Neet in the three months to March, according to Office for National Statistics figures – the first time above 1 million since 2013.
• The Milburn review estimates the cumulative annual cost to the country of nearly 1 million Neet young people at £125bn.
• The report found that if every Neet 18- to 24-year-old had been in work last year, it would have added £38bn to UK GDP and reduced the benefits bill.
• The average lifetime loss in earnings from a period of being Neet between ages 18 and 24 is equivalent to £52,000 a year.
• The lifetime public finance impact per Neet young person is equivalent to £29,000 a year on average.
• The government spends about £8.1bn a year on benefits directly for young people, with £4.4bn allocated to Neets.
• About £3.2bn is spent on disability benefits via personal independence payment (PIP), available to people in and out of work.
• Milburn estimated £3.2bn of the benefits bill could have been avoided if Neet young people were in work earning above thresholds.
• For every £25 spent on welfare, the government spends £1 on employment support; only one in five Neet young people get meaningful help to find work.
• Overall UK unemployment is at its highest since the start of the Covid pandemic, with young people bearing the brunt amid business warnings over tax increases and the economic downturn from the Iran war.
• Work and Pensions Secretary Pat McFadden said the government had made a “major and important start” via its jobs guarantee but acknowledged further action is needed.

Conflicting Reports

No conflicting reports identified in the source article.

Still Unclear

• The report is the first part of Milburn’s findings; final recommendations to the government are expected in autumn.
• How the government will respond to calls for welfare reform, given past controversy over benefits changes.

Misconceptions

No widespread misconceptions addressed in the source article.

Key Figures

• Alan Milburn – former Labour cabinet minister, author of the report
• Pat McFadden – work and pensions secretary

Sources

• The Guardian — Primary Source (single-source story)