A new report led by former Labour minister Alan Milburn warns that the UK is facing a "moral crisis" as the number of young people not in education, employment, or training (NEETs) has surpassed one million. This systemic failure is estimated to cost the British state £125 billion annually, a figure that exceeds the country's total yearly expenditure on education.

The £125 billion annual drain of one million NEETs

The scale of the youth disengagement crisis in the United Kingdom has reached a tipping point, according to the report led by Alan Milburn. With over one million young people classified as NEETs, the financial burden on the state has ballooned to £125 billion per year . This cost represents not only lost tax revenue but a massive increase in benefit dependency that threatens long-term economic stability.

Alan Milburn described the situation as a systemic failure, noting that the current trajectory could see one in six youths aged 16 to 25 relying on out-of-work benefits by 2030. The report suggests that the UK is failing to provide a viable bridge from adolescence to adulthood, effectively locking a significant portion of the next generation out of the economy.

A 70 percent surge in health-related inactivity

A critical shift has occurred in why young people are leaving the workforce. As the report highlights, the proportion of NEETs with a health condition preventing them from working has surged by 70 percent over the last decade. Mental health issues, specifically anxiety and depression, have replaced serious mental illness as the primary driver of this trend, with mental health conditions affecting nearly half of disabled young NEETs in 2025, up from 25 percent in 2011.

This health crisis has fundamentally altered the profile of the jobless youth. According to the report, 57 percent of NEETs are now classified as economically inactive rather than unemployed (43 percent), a complete reversal of the trend seen ten years ago. To combat this, Alan Milburn is calling for a total reform of the "fit note" system, arguing that medical certifications should focus on what a young person can do rather than simply signing them off from work entirely.

Why the UK trails every EU nation except Romania

The United Kingdom is currently an outlier in Europe regarding youth disengagement. The report notes that within the European Union, only Romania records a higher rate of NEETs than the UK. This suggests that the British crisis is not merely a result of global economic headwinds but is rooted in domestic structural failures.

The labor market's appetite for young workers has also diminished. While overall employment has risen, the share of young people in the workforce has dropped from one in seven to approximately one in nine. The report observes that the traditional "Saturday job," which once served as a primary entry point for youth employment, has largely vanished, leaving entry-level roles more scarce and more demanding.

The tension between National Insurance hikes and entry-level hiring

There is a growing conflict between government fiscal policy and the ability of businesses to hire. Alan Milburn reported that employers in low-margin sectors, such as retail and hospitality, are struggling to offer entry-level positions due to recent increases in the minimum wage and hikes in employers' National Insurance contributions.

While Conservative politicians have argued that Labour's policies on workers' rights and taxes are the primary culprits, the report asserts that these issues predate recent tax changes. However,the report acknowledges that the government must establish the right conditions for employers to take a chance on inexperienced staff, suggesting that without incentives, the "door to opportunity" will remain closed for many.

Who is accounting for the 15 percent of degree-holding NEETs?

One of the most perplexing findings in the report is the presence of highly qualified individuals among the NEET population. Nearly 30 percent of these young people hold good GCSEs , and 15 percent possess a university degree, yet they remain outside of work and education. This raises a critical unanswered question: why is the UK labor market unable to absorb graduates, and is there a misalignment between higher education degrees and actual employer needs?

The report focuses heavily on the supply side—health and education—but provides less detail on the specific industries where these degree-holders are failing to find a foothold. furthermore, while the report mentions a large employer hiring a full-time social worker to support anxious staff, it remains unclear if such corporate interventions are scalable or merely isolated examples of best practice.