Britain's 'Lost Generation': The Milburn Review Puts a £125bn Price on Youth Worklessness

Job and career opportunities for young people in the United Kingdom are "not growing, they're shrinking", with one in six set to be out of work, education or training within five years unless action is taken, a major review has found. Its author, the former minister Alan Milburn (Alan Milburn), warned that the country risks a "lost generation" facing a "perfect storm" of challenges — and put the cumulative cost of almost one million NEET young people at an estimated £125bn a year, the BBC reported on May 28, 2026.

What the review found

The interim report, released on Thursday, is the first output of the investigation Milburn was tasked with: why so many young people in Britain are not in employment, education or training — known by the acronym NEET. It does not yet contain solutions; those will come later in a final report. What it does contain is a verdict on the system itself: the education, health and welfare systems are no longer fit for purpose in preparing young people for adult life.

The review landed alongside official figures showing more than one million young people were NEET — the highest level in more than 12 years. Milburn described the national mood as "a visceral feeling... it's bordering on a fear in the country among parents and grandparents that this generation is going to be a lost generation."

His framing of the broken promise is blunt: "The old contract in society was always: you put in effort and got a reward, each generation would do better than the last — this contract has been broken for this generation." Effort, in the evidence he gathered, no longer converts into opportunity at the rate it once did; applications measured in the dozens or hundreds end in silence.

The £125bn bill

The review's central economic finding is a price tag. The cumulative cost of almost one million NEET young people to the UK economy is estimated at £125bn per year. The composition of that figure matters, because it separates today's lost output from tomorrow's:

£38bn a year in lost economic potential — the output the economy does not get from a million idle young workers.
£63bn a year lost due to economic "scarring" — these young people are less likely to work in the future, so the damage persists long after any individual spell of joblessness ends.
The remainder in lost tax revenue and increased health and benefits spending.

The total is more than annual education spending in England. That comparison is the review's sharpest rhetorical device: the country spends less educating its young people each year than it loses each year by failing to put them to work. Scarring is the mechanism that turns a cyclical problem into a generational one — early joblessness lowers lifetime earnings, employability and health, which is why the £63bn component exceeds the £38bn of lost current output.

No single culprit — but institutions that no longer work

Diverging paths of a generation: work, training or NEET after school in the United Kingdom

Milburn was explicit that the crisis has no single cause. The Covid pandemic, smartphones and the current jobs market have all had an impact. "The evidence does not support a single explanation," he said, and he specifically noted there was "no evidence" of a link between migration and joblessness among young people — a finding that cuts against one of the most common political narratives around youth worklessness.

What the evidence does support, in his words, is "something harder to accept: that the institutions we built to support young people into adulthood are no longer fit for that purpose, and that the country has known this for some time." The failure is distributed across education, health and welfare rather than concentrated in any one policy — which is also why the interim report holds back its remedies for the final version.

Mental health and the "bedroom generation"

One channel the review singles out is mental health. Changes in mental health have reduced the supply chain of young labour, with a sharp increase in the number of NEETs reporting anxiety and ADHD as a key factor in why they are not in work or training. Systemic problems, Milburn claimed, are also producing a "bedroom generation" who doomscroll and do not leave their rooms.

This is the quietest and possibly the most structural part of the picture. A labour-market story about vacancies and wages cannot fix a cohort whose barrier to entry is clinical rather than economic — and the health system the review judges "not fit for purpose" is the same one that would have to absorb the fix.

The pandemic's long shadow

The report featured one young person's account of the lockdown years' lasting effect on basic social capability: "We weren't really seeing people in person, so we didn't get used to the social aspect of connecting with people. Maintaining eye contact, hand gestures and all sorts. We were just sitting behind screens. There were skills that people were struggling to develop."

That testimony matters because it describes a deficit in precisely the skills that entry-level work has always implicitly taught. If the first rung of the ladder — the shop floor, the cafe, the warehouse — is where young people historically learned punctuality, teamwork and customer contact, a cohort that missed both the rung and the classroom years behind it starts from further back than any before.

Rejection as the normal state

Milburn challenged the characterisation that young people are not trying, or are "work-shy, snowflakes, soft". Rejection after submitting dozens, sometimes hundreds of applications has become the norm, he said. "You put in an application, dozens at a time, you hear nothing back, you just get rejected."

Luke, 23, who studied product design at university, is the review's clearest illustration: he applied for more than 400 positions and secured a single interview — for a cleaning job he did not get. "It's humiliating," he said. "You think 'okay I've got all the knowledge, I've got all the skills, all I'm waiting for is a job to put it in practice'. It makes you depressed, especially the amount of rejections." A degree, in his case, did not convert into even one relevant offer; the only interview his 400 applications produced was below his qualification level.

The route that still works

The counter-case in the same report is Rocky, who was out of work for a year before joining the Nando's restaurant chain as a waiter. Three years on, he is an assistant manager. "I'm 23 years old and I'm a manager at Nando's," he says. "I feel happy with myself. I can look back and tell my doubters that I made it."

The contrast between Luke and Rocky is not about effort or talent; it is about which door each found open. Rocky entered through hospitality — the sector that has historically functioned as the labour market's front door for young people. The review's structural worry is that this door is narrowing, which makes the difference between the two trajectories less a matter of individual agency and more a matter of how many entry points remain.

Worse than the neighbours

Milburn said the problem in the UK is worse than in other countries: the number of young people out of work, training or education is three times higher than in the Netherlands and twice that of Ireland. The comparison is awkward for British policy because the Netherlands and Ireland face the same post-pandemic labour markets, the same technology shifts and the same wage pressures — yet their NEET rates sit at a fraction of Britain's.

That gap shifts the explanation away from global forces and toward domestic institutions: how the school-to-work transition is organised, how further education is funded, how employers are brought into training. It also suggests the problem is reversible, since the comparator countries demonstrate outcomes the UK system once achieved.

The first rung of the ladder

High street retailers and hospitality businesses — restaurants, cafes and pubs — have often offered the first experience of work for many young people. Those sectors are now at the centre of the argument about why the rung is breaking. Some employers contend it has become more difficult to hire young people because of higher minimum wages and increased taxes, such as employer National Insurance contributions.

The Institute for Fiscal Studies (IFS), however, found no clear evidence that higher minimum wages have been a "major driver" of young people becoming NEET, and pointed out that most young adults aged 18-20 are largely exempt from employer National Insurance. The employer accounts are concrete, though. The boss of Next, Lord Simon Wolfson (Simon Wolfson), told the BBC that two years ago the retailer typically received 10 applications for every shop vacancy; that number has since risen to 19. David Fox (David Fox), founder of the Tampopo restaurant chain, said inflation and the costs of employing workers — National Insurance contribution increases and higher minimum wages — were preventing him from hiring more young people.

Read together, the two positions describe a market that is thinning at the bottom from both sides: applicants per vacancy are rising even as some employers say their capacity to take on inexperienced staff is falling. Whether the binding constraint is the wage floor or demand itself, the entry-level tier where a first job used to be found is contracting — and the IFS exemption for 18-20-year-olds means the tax argument does not explain the whole squeeze.

The political reaction

Prime Minister Keir Starmer (Keir Starmer) called the report "sobering" and said he would work with Milburn "on what more needs to be done". Work and Pensions Secretary Pat McFadden (Pat McFadden) said the review laid "bare the scale of the challenge and the root causes of youth unemployment we now need to confront", and listed the government's response: the biggest youth employment reforms in a generation, intended to create 500,000 opportunities for young people, including a Youth Jobs Grant for businesses starting next month, more apprenticeships, and subsidised employment to help young people get a foot on the ladder.

The opposition read the same report as an indictment of policy to date. Shadow work and pensions secretary Helen Whately (Helen Whately) claimed Labour had "made it harder for a young person to take their first step into work". Liberal Democrat Treasury spokesperson Daisy Cooper (Daisy Cooper) said her party had "repeatedly warned that Labour's jobs tax would hammer job opportunities for young people and that their business rates hikes would kill off high street job opportunities".

The numbers that define the crisis

More than one million young people NEET — the highest in over 12 years.
One in six young people set to be out of work, education or training in five years without action.
£125bn a year: the estimated cumulative cost, including £38bn of lost potential and £63bn of scarring.
Three times the NEET level of the Netherlands; twice that of Ireland.
400 applications, one interview: the experience of one 23-year-old graduate featured in the report.
10 to 19: the rise in applications per shop vacancy at Next over two years.
500,000 opportunities: the scale of the government's announced youth employment package.

What happens next

The interim report deliberately withholds solutions; the final report will carry them. Three things will determine whether the diagnosis converts into policy traction. First, whether the 500,000-opportunity package — the Youth Jobs Grant, expanded apprenticeships and subsidised employment — reaches the cohort the review describes: not merely the job-ready, but the anxious, the "bedroom generation" and the long-rejected graduates like Luke. Second, whether the health and welfare systems the review found unfit are given a role proportionate to the problem, since a large share of NEETs cite anxiety and ADHD rather than absent vacancies. Third, whether the entry-level tier stabilises: the contraction in hospitality and high-street hiring is the mechanism through which the crisis reproduces itself year after year.

Milburn's phrase "a social catastrophe, an economic catastrophe and a political catastrophe" — his earlier characterisation of the problem — maps onto those three tests. The economic catastrophe is the £125bn; the social catastrophe is the scarring that follows a generation into middle age; the political catastrophe is the broken contract, the sense that effort no longer earns reward. The interim report's contribution is to show that the three are one mechanism, not three coincidences: institutions stopped converting effort into opportunity, and the bill arrives annually.

Until the final report and the government's reforms prove otherwise, the defining fact of Britain's youth labour market in 2026 is the one Luke's 400 applications illustrate: the ladder's first rungs have thinned, and a generation is discovering that a degree, a portfolio and relentless applying are no longer, by themselves, a contract with an employer. The review's warning is that if the rungs are not rebuilt within five years, one in six young people will be standing where Luke stood — outside the door, holding everything the system told them to bring.