For the first time in more than a decade, more than one million young people in Britain are now not in education, employment or training (NEET). Alan Milburn’s landmark review, published this week, is unsparing about what this means: a “catastrophic” system failure and a generational fault line that, without urgent action, could see one in six young people NEET by the end of the decade.
The causes, as Milburn makes clear, are complex and deeply rooted. His findings point to a confluence of factors: a health system geared towards treating the symptoms of illness rather than maintaining people’s connection to work and education; a welfare state that replaces income but builds no pathway out; and a jobs market that has shed the entry-level roles that once gave young people their first foothold. No single explanation accounts for the scale of the problem, and there is little reason to expect the trend to reverse without concerted action across several fronts.
Within this broader picture, though, one trend Milburn identifies is particularly striking: 44 per cent of NEET young people now report having a work-limiting health condition, with the proportion inactive due to sickness or disability more than doubling since 2005. These findings point to a broader shift, one where record numbers of young people are claiming health and disability benefits – a group that has grown by more than 50 per cent since the pandemic – with seven in ten still stuck in the system a decade after entering it.
Britain is not unique in experiencing rising rates of ill health. For mental health in particular, other countries have seen similar upward trends since the pandemic. What is distinctive, however, is how sharply this has translated into higher welfare spending – not because the system has become more generous, but because of more claimants. The contrast with comparable countries is stark: while UK spending on health and disability benefits as a share of GDP rose by 20 per cent between 2019 and 2023, in Ireland, Australia and Canada it fell by 14, 10 and 11 per cent respectively.
But Britain is not just an outlier on welfare spending.
Its NEET rates are more than three times that of the Netherlands, and twice that of both Japan and Ireland. In fact, despite being broadly in line with European peers a decade ago, the only EU country where youth NEET rates eclipse those of Britain is now Romania.
This divergence points to what Milburn identifies as Britain’s defining peculiarity: it is not that the ill health among British young people is uniquely severe, but that conditions are translating into economic inactivity on a scale that is markedly different from other countries – funnelling growing numbers onto long-term benefits rather than into work or education.
The Case for Reform
This is not just an economic issue but a profoundly moral one. We are wasting a generation’s talent, skill and potential – a generation that, as Milburn’s findings make clear, overwhelmingly wants to work.
The benefits of work are well established. Good work is associated with better mental and physical health, improved life satisfaction, and lower long-term mortality. It provides routine, structure, confidence and social connection – all of which are protective factors against anxiety, depression and social isolation.
At the same time, prolonged worklessness has well-documented scarring effects. Extended detachment from the labour market is associated with worsening mental health, increased risk of chronic disease and sharply declining chances of re-entry into work. For young people claiming disability benefits this rings painfully true: by the age of 24, only one in four recipients of PIP remain in work.
And it is this group – young people – for whom the consequences of labour-market detachment are most severe. The Keep Britain Working Review estimated that a person leaving the workforce in their 20s loses more than £1 million in lifetime earnings – with the cost to the state on a similar scale.
It is not right that one in eight young people have been set on this pathway. Behind that statistic lies a generation facing more headwinds than arguably any before it – a pandemic that fractured their formative years, a labour market that has raised its entry requirements while shrinking its entry points, and a mental-health crisis that the surrounding systems were never designed to absorb. To then be failed by a welfare system that takes a diagnosis and automatically writes you off – potentially consigning you to a lifetime on benefits – is a particular injustice.
The Path Forward
The near-term objective should be to return the number of working-age people claiming benefits due to ill health or disability from 4.5 million today towards its pre-pandemic level of 2.8 million. Milburn’s full recommendations will come later this year, but there is a lever government can pull now. As we argued recently in An Emergency Handbrake for UK Welfare: Stabilising Spending, Supporting People, one immediate step would be to introduce a clearer distinction between severe, enduring incapacity and conditions that are typically compatible with work. The current system has blurred that boundary. Common, fluctuating and frequently treatable conditions – particularly mild to moderate mental-health conditions and some musculoskeletal disorders – are increasingly treated as grounds for long-term economic inactivity, despite growing evidence that remaining in or returning to good work is beneficial for most people’s long-term mental and physical health.
That means moving towards a system that recognises some conditions as “non-work-limiting”: those where the default assumption would be that, with the right support and adjustments, work remains possible.
This would not remove support from those with severe or complex needs, nor would it prevent people demonstrating genuine functional incapacity. But it would begin to reset the underlying assumption embedded in the current system: away from automatic long-term detachment from the labour market and back towards recovery, capability and participation. That principle should run consistently through the system, from GP certification to Department for Work and Pensions assessment and reassessment.
Crucially, this cannot simply be about restricting access to benefits. If government wants more young people in work, it has to invest seriously in helping them get there. As things stand, the balance is badly skewed: Milburn’s review found that Britain spends 25 times more on benefits for young people than it does on supporting them back into work. When the government’s own analysis suggests that each person who moves from health-related unemployment into employment saves the Treasury around £18,000 per year, that imbalance becomes increasingly difficult to defend.
Instead, young people with conditions compatible with work should be offered a twin-track package of support to expedite their pathway back into work: targeted employment and skills support alongside rapid access to mental-health treatment, physiotherapy and other evidence-based interventions. Health and employment services should operate together, not separately, with the assumption that many young people are capable of recovery and participation if properly supported. Indeed, research indicates that around half of young people on health and disability benefits believe they could work with the right support. This sentiment is shared by the wider public: our own polling with YouGov found more than three-quarters of respondents favour structured treatment and employment support for those out of work with anxiety or depression over expanded long-term cash payments alone.
The Youth Guarantee – which the government should be commended for introducing – is one obvious vehicle for this shift. But in its current form it intervenes too late for many of the young people Milburn identifies as most at risk of long-term detachment. Take the new £3,000 Youth Jobs Grant: to trigger the incentive for employers, the young person hired must have been actively seeking work on Universal Credit (UC) for six months. While in principle this is open to all young UC claimants who have been on the benefit for six months or more, regardless of conditionality regime, those on UC health – who are not required to look for work – may risk being excluded from the outset. Current rules for the separate Jobs Guarantee require an 18-month waiting period before eligibility begins, often meaning intervention comes only after unemployment has already become entrenched.
The guarantee should therefore be extended and adapted for young people on UC health, with earlier access and explicit eligibility for provisions including the Youth Jobs Grant and the Jobs Guarantee – with those with conditions deemed non-work-limiting prioritised as a first step. Participation should remain voluntary and non-conditional, with no impact on benefit entitlement. The aim should be early engagement: rapid access to treatment, skills, work placements and tailored employment support before the welfare system becomes a one-way escalator out of work.
This is, as Milburn makes clear, a multi-faceted crisis that will require reform across welfare, health and education. Britain’s NEET problem, of course, extends far beyond the benefits system alone. Of the more than one million young people in this group, three-fifths are economically inactive – not even looking for work – and some 44 per cent have no contact with the benefits system at all. This points to a substantial cohort falling through the gaps entirely – one that joined-up, tech-enabled support would be uniquely placed to identify and reach.
Of equal concern is the changing shape of the labour market itself. For the 84 per cent of NEETs who say they do want a job or training, traditional routes into work have steadily eroded, with 1.6 million fewer low- and medium-skilled jobs in the economy, and more than a third fewer apprenticeship starts among young people than there were a decade ago. This is fundamentally an economic growth challenge and should transcend politics as a top priority for government.
Milburn is right to warn of a lost generation. The challenge is real, and demands the long-term, wholesale reform the review calls for. This will take time. But the complexity and scale of the problem cannot be allowed to justify inertia.
A system that consigns a substantial portion of young people to long-term benefit dependency – often before their working lives have even begun – can and must be reformed. The handbrake measures set out by TBI offer a place to start – and set Britain on the right path for the deeper reform that must follow.