Can Milburn rise to the scale of Britain’s NEETs challenge?

After months of speculation, Alan Milburn’s Review into Young People and Work looks set to be published next week. It will be easy to get lost in the size of the Review and the scale of the crisis it’s trying to address. So, we’re setting out a five-point guide to help assess whether it has risen to the challenge at hand.

But first, let’s remember that the one million 18–24-year-olds across Britain who are neither in employment, education or training (NEET) are not a homogenous group. Some are actively looking for work; others aren’t. Some claim benefits; others don’t. Some are in good health; others grapple with health conditions and disability. Some will be NEET only briefly; others face longer-term challenges. And yes, some have gone to university, but most left education at a much younger age. Solutions will need to be bold, broad, and tailored to individual need. With that, let’s start with the Cinderella of the NEETs debate…

1. Address the lack of education, not just the lack of jobs. The Netherlands is the go-to destination to find NEET solutions, and with good reason too. Their NEET rate of 6.1 per cent, is two-thirds lower than the UK (15.6 per cent). Ireland (8.6 per cent) and Germany (10.6 per cent) also have considerably lower rates. So why does the UK perform so poorly compared to other similar economies? Our research shows that it’s the lack of education, rather than low employment, that stands out. Indeed, among the 23 OECD countries which have a lower NEET rate than us, all but two (the United States and New Zealand) achieved this entirely by having more young people participating in education or combining education and work. And yet this huge gap barely features in the public debate. Milburn should change that by easing post-16 pathways for those not seeking university education and demand more funding for Further Education (real-terms funding per 16-18-year student fell by 8 per cent between 2010-11 and 2025-26).
2. Make sure apprenticeship funding goes to young people. Expanding high-quality FE provision will help to address one of the Es in NEET. But what about the T? Apprenticeships hold the key, with the recently renamed Growth and Skills Levy (GSL) providing the main funding source. But far too little of it reaches young people as employers often choose instead to use it to fund high-cost, high-level courses for older (and often incumbent) employees. To address this, the Milburn Review should recommend ringfencing GSL funding for under-25s, which would provide a £1.5 billion funding boost to the kinds of courses that NEETs need. Removing degree apprenticeships from GSL funding would add another £240 million to the pot and reposition the levy as a key source of support for young people’s transition from education to work.
3. Use public money wisely. Targeted job schemes are better than broad tax breaks. Employers can solve the other ‘E’ by taking on more young workers. They would like to be incentivised with tax breaks, and have called for employer National Insurance to be cut for under 25s. But efficiency is key and our research shows this would be a waste of limited fiscal firepower – costing £5.1 billion (based on 2026 data) or more pointedly, £132,000 for every additional young person helped into work. Instead, the existing Youth Jobs Grants and Jobs Guarantee are targeted at young people who will likely struggle to enter the labour market without help, making them much more cost effective at around £36,000 for every additional young person employed. Doubling funding for both programmes would cost around £300 million a year and help an additional 40,000 young people into work.
   
4. High-quality employment support should be widely available, and young people required to engage with it. Much of the attention on the final report will be on whether benefit support for young people is cut (more on that below). But in our view the first thing to solve is the ‘left alone’ approach of the current benefit system. The 260,000 young people currently receiving Universal Credit Health (UCH) have no requirements to engage with support to help them move closer to work, education or training. This must be fixed, but not through more ‘work first’ conditionality that pushes unemployed recipients to take any available job as quickly as possible. Instead, we need a ‘career start’ approach – permanent, positive and personalised employment support that young benefit claimants are required to engage with. Interventions should meet each young person where they are, provide genuinely helpful support to enable them to progress towards work, training or education. This is the Dutch way that we should replicate.
5. Show us the money. New investment will be needed to make a radical dent into our NEET rate. We estimate restoring FE funding for 16-18-year-olds to its 2010-11 level would cost around £1 billion. If we want triple AAA Dutch employment support, we will need to more than double what we currently spend on work coaches, training schemes, and wage subsidies. Even matching average OECD spending on those types of schemes would mean spending at least £5bn more. Can this be funded by a ‘tough love’ approach of lower benefit entitlement? Well, the total benefits bill for young people is £8.1 billion, so there is clearly a limit to any such hope at least in the short term (the fiscal benefits could be much bigger in the long run as upstream investment means the caseload falls). Added to this, receipt of UCH and/or Personal Independence Payment (PIP) currently protects 120,000 young people from poverty. But that doesn’t mean that savings are impossible. Recent RF research found that around one-in-five young people currently receiving PIP did not experience additional costs. Savings can be found here, though that’s more of a question for the upcoming Timms Review.
   

These solutions are neither quick, nor cheap. Significant investment will be needed at a time when the public finances are strained. More engagement is needed from young people, firms and the state. Welfare reforms can strengthen work incentives but also inflict income losses on already vulnerable young people. Balancing these trade-offs without losing the necessary ambition to tackle Britain’s NEETs crisis will determine whether the Milburn Review can truly be transformative.

This blog was originally published on the Resolution Foundation’s Substack. 

Alex Clegg is a Senior Economist at the Resolution Foundation. He is on Bluesky.

Nye Cominetti is a Principal Economist at the Resolution Foundation. He is on Bluesky.