You’ve got mail (finally): your Milburn cram sheet inside

Afternoon all,

If you’re reading this then we have survived not only doomsday but also an email free Friday – hope you enjoyed it.

And avoiding the end of the world is not the only forecast to be improved upon this week. GDP grew 0.7 per cent in Q3, putting our year-to-date growth second in the G7, behind only the US. Sadly, household incomes aren’t following – while real GDP per person has grown by 2.6% over the past two years, real household disposable income per person has been essentially flat.

Next week, there’ll be only one story in town as the Milburn review’s final report drops. Our mini-Milburn special has reads on young people’s experiences of work, a cheat sheet to help you cram, and a Chart of the Week showing how the UK’s balance between benefits and employment support stacks up against our OECD neighbours.

Plus – know an audio-visual whizz looking for a public policy role? We’re hiring a maternity cover Communications Manager who would (among other things) have the joy of working with me on our High Resolution podcast. Do share if you know a good candidate.

Have a great weekend,

Ruth

Chief Executive
Resolution Foundation

Catch-22-year-olds. In the last year, more than half of young jobseekers heard nothing back from any of their job applications. Have employers given up on the young? Not according to this Reed survey of 2,000 UK firms: 73 per cent say hiring early-career talent is a high priority. Nonetheless, there’s concern there about the skills and qualities they think young people are lacking: understanding the working environment (34 per cent), communication (33 per cent) and reliability (32 per cent). This brings us back to the age old ‘experience paradox’, where young people need experience to get a job, but a job to get experience. Employers’ preferred fix is (record scratch, freeze frame) a tax cut. 72 per cent say scrapping employer NICs for under-25s would boost hiring. Scroll to Something for the weekend to find out what a more cost-effective measure would look like.

Mental maths. Economics research on mental health has ballooned, and this sweeping review takes stock. The costs are large: stress, depression and anxiety accounted for 55 per cent of UK working days lost to work-related ill health in 2024-25, and research from Denmark found that people diagnosed with depression, bipolar disorder or schizophrenia earn 31 to 73 per cent less than their siblings. But the authors argue rising caseloads don’t necessarily mean worsening mental health: UK survey data show distress among 16-19 year olds edging up only modestly since 2008 (from 9 to 11 out of 36 for boys), far less than diagnoses suggest. But that view is contested. Peter Fonagy’s review for the Government found the rise in common mental disorders among English adults (from 16 to 23 per cent since 1993) “cannot be explained by greater awareness alone”. Either way, economic shocks take a real toll. In Brazil, parental job loss raised children’s chances of mental health diagnosis by 6 percentage points. Support helps: in New York, guaranteeing legal representation to families facing eviction cut new mental health diagnoses among children by 7 per cent.

Parent trap? Making people spend time applying for jobs is a huge part of the Universal Credit system – but does work search conditionality actually get people into work? New research from our friends at the IFS assesses the Lone Parent Obligation in search of an answer. Between 2008 and 2012, the age of youngest child at which single parents had to look for work was cut from 16 to five. Employment rose by 4.4 percentage points – although the typical job paid just £8,000 a year, yielding little tax. Meanwhile, disability benefit claims rose, and among children already struggling at school, GCSE results fell and absence rose. Almost 90 per cent of the gross saving disappeared, as the cuts incurred other fiscal costs in the form of alternative benefits and lower future tax payments. So conditionality got some additional parents into work, but the savings were much smaller than expected and there were downsides for the kids.

Remote control. Next week’s focus may be young people, but remote working could be part of the answer to boosting employment for other groups. Treating the pandemic jump in UK home working as a natural experiment, this blog compares occupations where it took off with those where it didn’t, and finds a boost to the employment rates of older and physically disabled workers. Each one-point rise in home working lifted full-time employment by nearly 1 per cent for disabled workers and 0.4 per cent for 50-64-year-olds. Home working explained roughly three-quarters of the rise in full-time disabled employment. Given we need to boost the employment rates of old and young, we should be cautious about rowing back from all of the pandemic flexibilities. Might need outlook to work though…

Something for the weekend | Mil-burning questions

The long-awaited Milburn review lands next week – here’s key facts for you ahead of the publication (more on our Substack):

1. We’re an international laggard on education participation, not employment. Of the 23 OECD countries beating our NEET rate, all but two did so purely through more young people in education.
2. Since 2019/20, more than half (57 per cent) of apprenticeship starts supported by levy funding in England have been for adults aged 25 and above, with this group accounting for all the growth in levy-funded starts since 2022/23.
3. Removing National Insurance for under 25s and boosting employment subsidy schemes would both support jobs – but the first would cost £132,000 for every additional young person in work while the second £36,000.
4. 260,000 young people currently receive Universal Credit Health and have no requirements or support to help them move closer to work, education or training.
5. For 120,000 young people receipt of Universal Credit Health and/or Personal Independence Payments is the difference between being in poverty and not.

Chart of the week

Alan Milburn wants you to know that for every £1 spent on employment support (training, job search help, wage subsidies) for young people, £25 is spent on their benefits. His review will aim to shift that balance and it looks like he’ll suggest doing so by both cutting benefits and increasing employment support. But how do other countries compare? For Chart of the week, we’ve plotted benefit spending (the x axis) against spending on employment support (the y axis) as a proportion of GDP across OECD countries. Important caveat: to get internationally comparable data we look at all ages here, not just young people. If you’re in the bottom left quadrant, you’re not spending a lot (hello America), but anyone in the top right quadrant is a big spender on both fronts (hello Denmark). The coloured lines show you where different ratios sit: if you’re on the green line (and only a handful of countries – including Sweden, Denmark and Korea – exceed it) then you’re spending five times as much on benefits as on employment support. The latest available UK data puts us comfortably on the red line meaning we spend twenty times as much on benefits as we do on employment support. It is low employment support spending, rather than high benefit spending, that is causing our high ratio. Hopefully the balance of Alan’s recommendations will reflect that.