The prime minister says benefits should be a “backstop” for the 981,000 young people outside work and education. Three in five of them are not job-hunting, and the schemes costed so far reach thousands a year.
Andy Burnham has made the near-million young people who are neither working nor studying the centrepiece of his welfare overhaul. Writing in The Times on 19 October, the prime minister called the situation “an economic catastrophe and a moral failure” and promised that “benefits will become the backstop, not the starting point”.8 The same day Stonegate, Fuller’s and Mitchells & Butlers joined a government-backed pledge of 100,000 paid hospitality jobs for 18- to 24-year-olds over three years.9
The people at issue are known as NEETs. The Office for National Statistics (ONS) counted 981,000 of them aged 16 to 24 in April to June, 13.0% of the age group and 30,000 more than a year earlier.1 The count had passed a million in January to March for the first time in over a decade, so the latest quarter is a dip from a peak.46
No single cause is on the record, and the sources weigh them differently. Burnham pointed to the pandemic years, social media, a schooling system focused on the “university route” and too few opportunities.8 The Resolution Foundation, an independent think tank, names four drivers: rising ill health, weak vocational education, a hands-off benefits system and a weak labour market. It ties the recent rise to the last and to worsening mental health, and says the UK’s gap with other countries is mostly about education. Only Romania has a higher NEET rate among the EU’s 27 members.4
The government’s review by Alan Milburn, a former health secretary, reached a similar diagnosis in an interim report on 28 May. It found that six in ten NEETs have never had a job, against four in ten in 2005, that work-limiting health conditions are a growing factor, and that without action the number could reach 1.25 million within five years.567 It also found that 84% of the NEETs surveyed want a job or training, which Milburn used to rebut a “workshy” reading of the problem.7 Labour demand is weak at the entry level: vacancies across the economy fell to 702,000 in the three months to August, and youth unemployment of 16.4% is the joint-highest in more than a decade, by Indeed’s reading of ONS data.210
Of the 981,000, 393,000 are unemployed, meaning they are looking and available for work. The other 588,000, about 60%, are economically inactive: not looking for work, a group Milburn’s review links heavily to ill health.61 Young men account for most of the rise over the year, and for 252,000 of the unemployed.1
That split matters for how far a jobs drive can reach. A wage subsidy or a placement works on someone who is searching; for the inactive majority, Milburn’s review and the Resolution Foundation both put health and the benefits system at the centre, which the plan’s mental health support and shift away from benefits are meant to address.469 The scale gap is wide. The hospitality pledge works out at about 33,000 jobs a year, roughly 3% of the NEET population, and not all will go to people who are currently NEET. The Resolution Foundation estimates the Youth Jobs Grant adds about 2,800 jobs a year and the Jobs Guarantee, which offers six months of paid work to long-term Universal Credit claimants, about 17,500.3
Julia Lopez, the Conservatives’ shadow business secretary, called the government’s youth jobs record a “disaster” and blamed tax rises and red tape for limiting hiring.8 UKHospitality says the sector lost 100,000 jobs in two years and wants the employer National Insurance threshold for hospitality raised to £10,000 by the end of the parliament; it warns that youth hiring is at risk without help in the Budget.9 Industry bodies Make UK and the Recruitment and Employment Confederation also link youth hiring to National Insurance and wage costs.7
The Resolution Foundation tested that case and rejected it for the young. Restoring the under-25 employer National Insurance threshold to its 2024 level would add just over 7,000 jobs a year at about £137,000 each, it estimates; the grant costs about a quarter as much per job. “Cutting employer NICs is not the answer,” said its research director, Lindsay Judge.3 The same report found that holding back increases in the youth minimum wage might add about 15,000 jobs but cost young workers £379m in pay, and recommended a pause anyway.3 This is an empirical dispute, but the foundation’s figures are modelled estimates, not outcomes.
The government’s position, from Work and Pensions Secretary Pat McFadden after the Milburn interim report, is that it is already acting through the Youth Jobs Grant and 500,000 opportunities.7
The cost, eligibility and start date of the new schemes have not been published, so none of the Resolution Foundation’s figures can be applied to them. It is not known how many of the 100,000 hospitality jobs will go to people who are currently NEET. Milburn’s final recommendations are still to come.
Chancellor John Healey delivers his Budget on 28 October, where UKHospitality is seeking employment-cost relief and where any new money for youth schemes would be announced.9 Ministers were due to detail further youth apprenticeship and placement plans this week.8 Milburn’s full review is due in November, and Burnham has said he will take its recommendations seriously.8 The ONS updates its labour market figures today, 20 October, and its next quarterly NEET estimate, covering July to September, will show whether April–June’s dip was the start of a turn.2