Britain is facing the prospect of a “lost generation” unless ministers urgently confront the collapse in youth employment, a government-backed review has warned, amid fears more than one million young people could become trapped outside work, education or training within the next five years.
Alan Milburn, the former Labour health secretary leading the review, will warn that the country faces a deepening “generational fault line” caused by a shrinking pool of entry-level jobs and a system increasingly failing young people at the start of their working lives.
In his interim findings, Mr Milburn warns that the number of young people classed as NEET — not in education, employment or training — could rise from around one in eight today to one in six by 2031, equivalent to approximately 1.25 million people.
Speaking ahead of the report’s publication, he described the scale of the crisis as “much worse” than he had initially anticipated.
“We are at risk of a lost generation,” he will say.
The review paints a bleak picture of a labour market in which first jobs, apprenticeships and work experience opportunities have steadily disappeared, leaving many young people locked in what Mr Milburn describes as a “hopeless Catch-22”.
“Six in ten have never had a job,” he says. “Twenty years ago, that figure was closer to four in ten. Detachment is no longer temporary. For too many young people it is becoming permanent.”
The report argues that Britain’s education system, welfare state, healthcare structures and labour market are no longer properly aligned to help younger people into employment, warning that simply layering new programmes onto an already failing system will not solve the problem.
It points to the disappearance of around 1.6 million low and medium-skilled jobs across the economy, alongside a sharp decline in traditional entry points into work. Vacancies in hospitality have reportedly halved over the past four years, while apprenticeship uptake has fallen by 35 per cent over the past decade.
Saturday jobs, once viewed as a key stepping stone into the workforce for teenagers, are also becoming increasingly rare.
Mr Milburn argues that the result is a growing cohort of young people who are effectively disconnected from the labour market before their careers have even begun.
“This is not a failure of young people,” he says in the report. “It is a failure of a system stuck in the past.”
The findings are likely to intensify pressure on Sir Keir Starmer’s government amid mounting concerns from businesses that rising employment costs are discouraging firms from hiring younger workers.
Several employers and industry groups have criticised recent increases to the minimum wage and higher National Insurance contributions, warning they risk making entry-level recruitment more expensive at precisely the moment opportunities are already shrinking.
Mr Milburn himself suggested ministers may need to reconsider whether current policy settings are providing the “right incentives” for businesses to hire younger workers.
Speaking to Times Radio, he acknowledged that changes affecting employers had created additional pressure, particularly in low-margin sectors such as retail and hospitality.
“If the priority is to create young people’s jobs, then it’s got to create the right conditions for employers to do so,” he said.
The review also exposes what it describes as a major imbalance in public spending priorities. For every £1 spent supporting young people into work, roughly £25 is spent on welfare benefits, according to the report.
Mr Milburn argued that the solution was not simply to reduce welfare spending arbitrarily, but to focus on helping young people gain access to employment and work experience earlier.
“For young people who’ve never been in work, the benefits system can’t just be a safety net,” he said. “It’s got to be a springboard.”
Business leaders have backed the report’s warnings. Stuart Machin described the findings as “shocking but not surprising”, reflecting on how a Saturday job in retail had helped launch his own career.
Meanwhile Rain Newton-Smith said the report highlighted a “tragic waste of potential” among younger people.
The warning comes against a backdrop of wider concern about Britain’s economic productivity, long-term workforce participation and rising welfare dependency.
For ministers, the report presents a politically difficult challenge: balancing employment protections and wage growth with the need to preserve accessible first-step jobs that traditionally allowed younger workers to enter the labour market.
Mr Milburn warned that solving the problem would require cooperation across political parties and institutions alike.
“Whether it’s Labour or Tory or Reform, I’m not really bothered,” he said. “What we can’t do is put a whole generation at risk.”
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