The next leader of the Labour Party is expected to face an urgent challenge posed by the rising number of young people in Britain classified as “Neets” — those not in employment, education, or training. This issue, outlined in an interim report by former Labour health secretary Alan Milburn, highlights the increasing scale of disengagement among youth and its potential long-term impact on the country’s economy and social fabric.

According to the report, nearly one million young individuals aged 16 to 24 fall into the Neet category, representing approximately 12.8 percent of this age group. This figure has surged by around 200,000 since 2022, reaching levels seen during major crises such as the COVID-19 pandemic and the 2008 financial collapse. Of particular concern is that 60 percent of these young people have never held paid employment, setting the stage for persistent “scarring” effects on their future job prospects and earnings, as analyzed by the Institute for Fiscal Studies (IFS).

The report also notes a significant increase in health-related barriers among Neets, with a 70 percent rise over the past decade in those citing “work limiting” health conditions, primarily attributed to a surge in mental health diagnoses. This trend further complicates efforts to reintegrate these young people into the workforce or education systems.

Milburn’s findings emphasize the complexity of factors contributing to this issue, including changes in employment regulations that discourage entry-level hiring, a decline in part-time work opportunities for students, and an education system heavily focused on university degrees rather than technical skills. This imbalance leaves many employers struggling to fill positions requiring vocational expertise. Despite growing interest among young people in pursuing trades, the report criticizes the government’s longstanding restrictions on the number of vocational training placements, calling for the removal of these caps, particularly in light of the evolving job market impacted by automation and artificial intelligence.

A further complication is the so-called “welfare trap.” The report highlights a stark contrast in government spending: in the financial year 2024-25, only £1 was allocated to early-career employment support for young people compared with £25 spent on benefits, creating disincentives for work.

Andy Burnham, widely regarded as a frontrunner to succeed Sir Keir Starmer, has been consulting with Milburn ahead of the report’s final release scheduled for September. Burnham’s approach may include devolving greater responsibility for addressing the Neets crisis to regional leaders, such as elected mayors, aiming to streamline services currently divided among multiple agencies. The interim report details how this fragmentation often results in inconsistent or absent support for young people.

Burnham’s vision, which involves integrating adult skills development with earlier education oversight at a regional level, reflects an effort to better connect young people with local employers, schools, and public services—a model seen as more effective in tackling youth unemployment.

The estimated annual cost of supporting Britain’s one million Neets is £125 billion, underscoring the fiscal as well as social imperative of addressing the issue. Without decisive policy action, the costs and consequences are expected to intensify, exerting sustained pressure on public finances and limiting opportunities for a significant segment of the nation’s youth.