A report by former Labour minister Alan Milburn warns that the UK faces a £125 billion annual bill due to its growing number of jobless youths. This demographic, known as NEETs (those not in education, employment, or training), is increasingly defined by health struggles rather than simple unemployment.

The £125 billion annual drain on the UK state

The scale of youth disengagement in the United Kingdom has reached a critical threshold , with the number of NEETs now exceeding one million individuals. According to the report by Alan Milburn, the fiscal impact of this "lost generation" is estimated at £125 billion per year, a figure that exceeds the total amount the British government spends on education annually.

This economic burden is compounded by a shrinking presence of young people in the workforce. While overall employment in the UK has increased , the proportion of young workers has dropped from one in seven to just one in nine. The report suggests that traditional entry-level roles have become both less plentiful and more demanding, making the transition from school to the labor market significantly more difficult than in previous decades.

A 70% surge in health-related disengagement

A defining characteristic of this crisis is the intersection of youth unemployment and declining mental health. The report finds that over the last ten years, the proportion of NEETs suffering from a health condition that prevents them from working has increased by 70 percent. This shift has fundamentally altered the profile of the jobless youth population.

Specifically, the rise is driven by anxiety and depression rather than severe mental illness. As Milburn noted, the proportion of disabled young people citing mental health as their primary condition has climbed from 25 percent in 2011 to nearly 50 percent in 2025. This has led to a reversal in economic trends: 57 percent of NEETs are now classified as economically inactive, compared to only 43 percent a decade ago.

The £25-to-£1 welfare spending imbalance

The report offers a sharp critique of how the Department for Work and Pensions (DWP) manages its resources for young people. Currently, the UK spends approximately £8.1 billion on key benefits for this demographic, yet less than half of that funding is tied to any requirement to actively seek work.

The efficiency of employment support is also under scrutiny. The report states that for every £1 the DWP spends on direct employment support for young people, roughly £25 is spent on providing benefits. This massive disparity suggests that the current welfare system may be functioning more as a safety net for inactivity rather than a springboard back into the labor market.

The 1-in-20 incapacity risk for today's five-year-olds

If current trends persist, the long-term social consequences could be catastrophic. The report warns that one in 20 children currently aged five could find themselves on incapacity benefits by the time they reach 22. This would mean more than one child in every school classroom is effectively sidelined from participating in society.

However, several critical questions remain unanswered by the current data.. While the Conservative Party has blamed Labour's proposed National Insurance increases and new workers' rights laws for making hiring too expensive, Milburn's findings suggest these issues pre-date recent tax changes. It remains unclear whether the solution lies in reforming the "fit note" medical system or if employers must be mandated to provide the higher levels of support that Milburn claims the modern workforce requires.