The number of young people out of work or out of training in the UK could reach 1.25 million by the early 2030s | work and career

Britain risks the number of young people out of work or out of education rising 25% to 1.25 million by the early 2030s without urgent government action to avoid a ‘lost generation’, a report has warned.

Alan Milburn, who led a review into why so many young people are economically inactive, said Britain risked opening a ‘generational fault line’ between young and old without urgent action to overhaul schools, health services, welfare systems and the jobs market.

In a highly anticipated report to be published on Thursday, the former Labor and Health Secretary will argue for Keir Starmer’s government to launch a new push to reform health and disability benefits while significantly improving access to employment support.

Calling for a system reset, Milburn describes the welfare state as “worsening inaction” and argues that new work programs alone will fail to address much deeper-rooted problems.

He said, “This is not a failure of young people. It is a failure of a system stuck in the past. Whether it is education, health, or welfare, the system does not enable young people to participate in the labor market.”

“Instead, too often young people are pushed down a path of life on benefits rather than jobs. This should be a priority for the government. It should be a priority for all of us.”

But new attempts at welfare reform could prove divisive amid concerns that cuts to welfare after Starmer’s chaotic benefits U-turn last year risk deepening poverty amid a cost-of-living crisis.

With mental illness on the rise, concerns about social media and AI shaking up the jobs market, there is growing awareness in the UK about the prospects of the next generation.

Unemployment in the UK has soared to its highest level since the COVID-19 pandemic in recent months, and young people are bearing the brunt of the economic downturn in the aftermath of the war with Iran.

As Starmer fights for his political career, the Prime Minister insisted his government was tackling the cost-of-living crisis with more financial support for struggling households and a long-term plan for jobs and growth.

But Labor is facing an increasingly bitter internal conflict over how to use its time in power, with the threat of a leadership challenge from Andy Burnham if the Greater Manchester mayor wins next month’s Makerfield by-election.

In his report, Milburn will say that whoever leads the party into the general election in opposition to Nigel Farage’s Reform UK must make reducing youth unemployment a top priority, and repairing Britain’s increasingly broken social contract is a key task.

Former first minister Tony Blair will warn at the launch of an interim report that the promise that each generation should do better than the previous has been broken and parents and grandparents are gripped by fears about what the future holds for today’s young people.

Experts have warned of a youth jobs crisis, with official figures on Thursday showing the number of young people not in education, employment or training (Neet) is expected to move closer to surpassing 1 million. This is the highest level in the last 10 years.

Milburn will warn that without urgent action, the number could continue to rise from one in eight young people classified as NEET to one in six within five years – representing 1.25 million young lives.

However, the government has received strong criticism from the business community, saying that labor’s policies have triggered a youth employment crisis. Employers have warned that entry-level jobs have been hit by Chancellor Rachel Reeves’s push to add £25 billion to employers’ national insurance contributions, her push to equalize the minimum wage between younger and older workers, and her party’s push to strengthen employment rights.

Tina McKenzie, policy chair at the Federation of Small Businesses, said: “Ministers cannot ignore the impact on employment of soaring employment costs. [They] This is a major factor in knit count. This is a shame because small businesses want to support the next generation.”

The report says young people are being failed by employers and governments, with entry-level jobs and opportunities in the hospitality, leisure and retail sectors falling sharply, according to extracts released ahead of publication.

“Saturday jobs” have been in decline for a long time, the number of jobs in hospitality has halved over the past four years and young people starting apprenticeships have fallen by 35% over the past decade.

Analysis shows that among wealthy European countries, the UK has the third highest proportion of 16-24 year olds not earning or learning. Milburn’s report found that six in 10 young NEETs have never worked, up from the figure of four in 10 20 years ago.

“We’re going in the wrong direction,” Milburn told the Guardian earlier this week. “Looking at those pictures, our conclusion seems to be that this was a catastrophic system error.”

The review, commissioned by Work and Pensions Secretary Pat McFadden to examine rising unemployment and inactivity among 16 to 24-year-olds, is expected to argue that an overhaul of health and disability benefits for young people is a vital part of the solution.

McFadden welcomed Milburn’s report and said the government was taking steps to support young people.

“But we know there is more to do. I will work with government, employers, charities and young people to drive real change so that more young people can earn or learn rather than being left out. I look forward to working with Alan when he sets out his final recommendations later this year.”

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