Report Warns Britain Faces a “Lost Generation”

A growing number of young people disconnected from work and education is placing increasing pressure on the UK economy, according to a major new government-backed report.

The study, led by former Labour minister Alan Milburn, warns that Britain could face an annual economic and fiscal cost of £125 billion as the number of young people aged 16 to 24 who are not in employment, education, or training (NEET) climbs above one million.

Official figures released by the Office for National Statistics showed that 1,012,000 young people fell into the NEET category during the three months to March, marking the first time the total has exceeded one million since 2013.

Milburn described the trend as one of the country’s most serious social and economic challenges, warning of the emergence of a “lost generation.” Speaking at the launch of the report, he said too many young adults are entering adulthood only to find opportunities increasingly out of reach.

The rise comes as unemployment across Britain reaches its highest point since the Covid-19 pandemic. Young people have been particularly affected, with businesses citing tax increases and economic uncertainty as factors weakening hiring.

The report argues that youth disengagement carries consequences far beyond unemployment statistics. While the state faces higher welfare spending and reduced tax revenues, Milburn stressed that the greatest burden falls on young people themselves. Periods spent outside work or education can damage confidence, mental and physical health, and long-term earning potential.

According to the review, a young person who spends time as NEET between ages 18 and 24 may face an average lifetime earnings loss equivalent to £52,000 annually. The impact on public finances is also significant, estimated at roughly £29,000 per person each year.

Researchers found that if all NEET young adults aged 18–24 had been employed last year, the UK economy could have generated an additional £38 billion in GDP while also reducing pressure on welfare spending.

The report estimates that Britain spends approximately £8.1 billion annually on welfare support directed at young people, with more than half—about £4.4 billion—going to those who are NEET. Around £3.2 billion is spent on disability-related benefits, including Personal Independence Payments.

Milburn argued that much of this cost could be reduced through stronger employment support and reforms to education and labour market policies. He criticised the imbalance between welfare spending and job assistance, noting that for every £25 spent on welfare, only £1 goes toward helping people find work. As a result, he said, many young people remain trapped in the benefits system without meaningful support.

While emphasising that welfare protection must remain available for those unable to work, Milburn argued that the system should do more to help those who are capable of employment re-enter work or training.

The report represents the first stage of Milburn’s review, with final policy recommendations expected later this year.

Government ministers acknowledged the seriousness of the issue. Work and pensions secretary Pat McFadden said existing programmes, including the government’s jobs guarantee, represented an important beginning but accepted that broader action would be needed. He stressed that addressing youth worklessness would require coordination across multiple government departments rather than relying on a single ministry.