Young People and Work: Interim report
Foreword
One million lives.
Nearly one million young people aged 16 to 24 in the United Kingdom are not in education, employment or training. One in 8 young people. And rising. Behind the statistics lie individual lives: aspirations thwarted, opportunities lost, futures placed on hold.
Numbers on that scale should command national attention in their own right. Too often they haven’t. The NEET rate has barely crept below 10% in 25 years. What should have been treated as an urgent national crisis has been absorbed into the background noise of public life.
That tolerance is no longer acceptable.
This Review exists because today Britain faces a generational fault line. Britain not only has a chronic problem. It is one that is getting worse not better. It is no longer simply a question of temporary youth unemployment. Today the deeper problem is youth detachment from the labour market. Nearly 60% of young people who are NEET now are economically inactive. They are not just out of work. They are not looking for work.
Shockingly, 6 in 10 young people who are NEET today have never had a job, up from 4 in 10 in 2005. At the very point when they should be starting adult life, gaining confidence, building skills, learning the habits of work and taking their first steps towards independence, too many are becoming detached from education and employment altogether. We are at risk of a lost generation.
That is a moral crisis. It has economic consequences. Every month a young person spends detached from education or work adds cost. Cost to them, above all else. To their confidence. Their health. Cost to their future income. Of today’s 24-year-old NEETs, 45% have never had a job. We estimate that even if they re-enter the labour market, they will lose up to £300,000 in earnings over their lifetime as a result. There is a long-term scarring effect which being NEET exacts on a young life.
And then there is the cost to the taxpayer and to the economy. The longer a young person is outside work or learning, the harder and more expensive it becomes to help them back. In this Review, we estimate the cumulative annual cost to our country of almost 1 million NEET young people at £125 billion. That is more than we spend on education each year. The question is no longer whether the current position is affordable. It is whether it is sustainable.
Youth disengagement is fast becoming a strategic economic risk for Britain. We cannot complain about labour shortages, low growth, rising welfare costs and pressure on public services while allowing the talent of nearly one million young people to go to waste. As an ageing population becomes increasingly reliant on the next generation to sustain it, every young person has to have more opportunities to learn or earn.
This review unashamedly extols the virtues of work. Not any work, at any price, under any conditions. But good work. Work that gives structure to the day, purpose to the week, confidence to the person and contribution to the country. Work is not only about income, although income matters. It is about connection. It is about self-respect. It is about independence. For young people especially, the first steps into work are often the first steps into adult life.
I start from a simple proposition. Every young person has something to give: a skill, an aptitude, a potential. No young person should be written off because of where they start in life: the family they are born into, the school they attend, the health condition they have, or the barriers they face. The NEET problem is grounded in social disadvantage. The people and places that suffer most are too often those with the least. The risk factors for becoming NEET as a young person are well-known. We document them in this report. But risks can be overcome. Becoming NEET does not have to be inevitable.
Other countries prove what is possible. A decade ago, our NEET rate was closer to the average of European Union countries. Today, Britain is an outlier. By 2025, only Romania recorded a higher youth NEET rate. While we have tumbled down the league table, other countries have improved. That should also tell us that this problem can be solved. But only if we change course.
To do so we have to understand what is causing the UK’s chronic NEET problem to worsen in the first place. That is what this diagnostic report seeks to do. There is no singular explanation. But there is one stand-out change. Over the past decade, the proportion who say they are NEET due to a work-limiting health condition has increased by 70%. The proportion of disabled NEETs citing mental health as their primary condition has almost doubled to more than four in ten. Among disabled NEET young people, anxiety, depression, neurodevelopmental conditions and other forms of distress are no longer peripheral factors. They are among its defining features.
Once health-related inactivity takes hold, it sticks. That’s what makes the problem different and worse than before. Of those who fell into health-related economic inactivity between 2017 and 2019, almost eight in ten were still NEET more than two years later. Successive cohorts of young people are doing worse than their predecessors. A young person first claiming health and disability benefits in 2019 is a third more likely to be NEET 5 years later than those who first claimed in 2010. Today, around seven in 10 young people claiming a health and disability benefit are still claiming a decade later. The damage done to the life chances of these young people is almost incalculable.
This is now an interlocked health, disability and participation issue. The sharp rise in young people suffering ill health has coincided with another shift in the labour market, creating a perfect storm and a national crisis of opportunity. The youth share of the labour market has decreased even as employment overall has increased. Entry-level roles have become less plentiful and more demanding. Recruitment has become more remote, more automated and less human. The young person who once might have walked into a shop, spoken to a manager and been given a chance in the past is now screened by a portal, a test, a recorded interview or an algorithm before anyone has looked them in the eye. Apprenticeship starts for young people have declined by over 40%. In other words, the first rungs on the old career ladder have weakened.
For too long, public policy has treated youth disengagement mainly as a supply-side problem. The answer has been to make young people more employable: more skills, more CV support, more job search, more benefits conditionality. Those things matter. But they are not enough if the labour market itself is no longer reliably bringing young people in. Better-prepared young people arriving at a labour market that has thinned its entry routes will still be left outside. It is striking that, of the NEET population, nearly 30% are now getting good GCSEs or equivalent, over 21% have a Level 3 qualification, and 15% have a degree. Yet the labour market is not absorbing them. There is evidence of a structural weakening of the transition into work.
Part of the reason this has not had enough focus is that the labour market doing less has been, in part, compensated for by the education system doing more. But over recent years the education ‘shock absorber’ has weakened. Overall, by age 18, a lower proportion of young people were in education or apprenticeships in 2024 than 10 years earlier. Of those who were, more were in higher education and fewer in further education or apprenticeships, even though the latter two routes are the ones that are most accessible to the potentially NEET cohort. More young people are being exposed to the risk of becoming NEET as a result.
In other words, the demand side matters as much as the supply side. That is why it is a core focus of this Report. When I have engaged with employers over these last few months, I encountered an overwhelming enthusiasm to do more to address the NEET crisis. But willingness was tempered with concern. Employers described a growing pastoral burden. They talk of a generation that is less work-ready. Many young people arrive in the workplace with anxiety, low confidence and, in some cases, health needs employers do not feel equipped to support. A large employer may be able to absorb that. A small firm often cannot. The result is caution. The safer hire is the older worker with experience. The young person with potential but no track record loses out.
If employers are being asked to take on more of the work of induction, confidence-building and support, they need a system around them that makes doing so easier, not harder. Taking on a young person is always a risk for an employer, precisely because they are unproven. If public policy aims to increase youth participation, it has to minimise risks and maximise incentives. Policies have to be judged through a participation lens.
Running through every conversation conducted by this Review - whether with employers, mayors or charities – and in every part of the country, was the same diagnosis. There is neither a system nor a plan to increase youth participation. Worse than that: the institutions that were designed for a different era, a different cohort and a different set of problems, are now escalating rather than defusing the NEET crisis.
Time and again, the system from education through health to welfare fails to enable labour market participation. Instead, all too often it ends up putting young people on a path to a life on benefits. These fault lines are limiting the opportunities for too many young people to learn or earn.
Education should be the bridge between childhood and the world of work. For many young people, it is. There are excellent schools, colleges and teachers doing remarkable work. Good qualifications are still one of the best defences against a young person becoming NEET. But for too many of those most at risk, the system does not provide the foundations they need. It knows early who is likely to struggle. Becoming NEET does not start at age 16. Children who are not school-ready at ages 4 to 5 are nearly 3 times as likely to be NEET at ages 16 to 17. It sees absence, poor attainment, SEND, family adversity and disengagement. But too often it acts too late, or not at all. Schools - like colleges - are measured overwhelmingly on attainment, not on outcomes. Ensuring fewer young people leave school at risk of becoming NEET depends on getting the right balance in the school curriculum and the right exposure to work experience and careers guidance. That balance is still not right. Careers guidance has improved, but remains too unequal. Work experience is too often an afterthought. The young people who most need exposure to work are the least likely to receive it.
If the school and college system does not have labour market participation as a sufficiently core objective, the same is true in spades for the health system. Ill-health is now a primary driver of who becomes NEET and who stays NEET. For the first time in perhaps two centuries, changes in health, especially mental health, are impeding economic growth and causing a contraction in the supply of labour. All too often the way the NHS works inhibits rather than enables participation. The NHS treats symptoms. But for too many young people, diagnosis, treatment and discharge do not lead back to education, training or work. They are being categorised as unfit to work, not least through the fit note process, when, with help, support and earlier intervention, they would be able to do so. As thousands of disabled people prove every day, it is entirely possible to have a diagnosis and a disability and still be able to participate with the right support. All too often a diagnosis becomes a gateway into the health and welfare system and to a life outside the labour market. Instead of assuming that people with a diagnosis cannot participate, the first question the system should be asking is what can they do and how can it enable that to happen.
The welfare system must always protect those who cannot work and provide proper financial security for people with severe or enduring disabilities. That is non-negotiable. But for young people who could participate with the right support, the welfare system should be more than a safety net. It should be a springboard. Today it is not. It is focused more on income replacement than enabling people to participate. The benefits system is founded on a deficit model of disability, one that pays for what a young person cannot do rather than investing in what they could become. Analysis for this Review has revealed that of the young people who are NEET in England, only around one in five are getting meaningful employment support from the welfare system. Less than half of the total £8.1 billion currently spent on key benefits for young people aged 16 to 24 years old has any participation support or requirements attached to it. For a young person with a health condition who is unemployed and potentially seeking work, taking a pathway to inactivity can offer higher income, less hassle and lower risk. This is a perverse incentive. It is the polar opposite of what a participation-first welfare system should be providing and means more and more people are being trapped on benefits. Perhaps unsurprisingly, their employment prospects are deteriorating as a result. Today, of those who first claimed a health and disability benefit aged 16 to 24 almost half are not in work or education fifteen years later. This is a catastrophic failure.
It is obvious from this assessment that reform is long overdue. In education, skills, health, and welfare. There is much focus on the latter, but welfare reform without wider state reform will not deliver the goods for this generation. The same is true for labour market reform. A whole system reset is needed.
The conclusion I have reached is stark. Britain has institutions for young people, but it does not have a participation system that is capable of taking young people from the world of education into the world of work. The labour market does not provide enough early entry opportunities. The education system produces qualifications but does not guarantee transitions. The health system is configured for treatment, not participation. The welfare system replaces income but does not build pathways.
Responsibility is dispersed across many organisations. But there is no shared accountability and no clear governing philosophy. Confusion reigns between what happens nationally and what is owned locally. Data is not shared. No amount of reform to individual policy areas or institutions alone will fix this. The architecture itself is the problem.
The incentive structure reinforces the problem. A school is recognised, regulated and rewarded for examination results, not on where the student ends up. The same is true of a college. The money it attracts is dependent on student numbers, retention and completion, rather than sustained outcomes beyond it. Health services are rewarded for activity but not outcomes. The welfare system compounds this. It measures incapacity. It does not plan for capability.
Young people fall through these structural fault lines. One of the most troubling findings of this Review is how many are hidden from the very systems meant to help them. In England alone in 2023/24, around 314,000 18 to 24-year-olds were neither in work nor in education and were not themselves receiving benefits. They are out of work and out of sight. No institution is responsible for finding them or helping them. A system serious about participation would know who these young people are. Ours does not.
What I find hardest to accept is that we often know enough to act earlier. Risk is identified early. Poor school readiness, persistent absence, low attainment, SEND, family adversity, poor mental health and weak exposure to work are not mysteries. These are signals that are seen. They are recorded. Often, they are measured. But they are not acted on. No one is accountable for what happens next. And to compound the felony, prevention has been cut at every level: early years, public health, youth services, further education. What has grown is crisis spending: late intervention and income replacement. The tragedy is that we are paying more to manage the consequences of disengagement than to be prepared to invest in preventing it. We end up spending more to achieve less.
This is a whole system failure. And the price is paid by a generation of young people. Overwhelmingly, they want to work. In a survey carried out for this review, 84% of NEET young people said they want to find a job, education or training. I do not accept the caricature of a generation that is not interested in employment. I do not accept that mental health is simply an excuse. Nor do I accept that the answer is to tell young people who are struggling simply to try harder. These are myths. Sometimes cruel ones. Young people are not to blame. Institutions that should have provided opportunities to them are the ones that have failed.
During this review, I have spent months with the evidence. But I did not find the truth of this issue only in data tables or research papers. I found it in communities. I sat with young people in youth hubs, colleges, voluntary sector drop-ins and community organisations. Their voices are not an appendix to this Review. They are part of the evidence. I heard young people describe applying for dozens, sometimes hundreds, of jobs and hearing nothing back. I heard about interviews followed by silence, automated rejections months later, and entry-level jobs that somehow required previous experience. What I heard, more often than not, was effort matched with frustration. Young people were trying. They were tired of being ignored, tired of being rejected, and tired of being judged by people who had not listened to them.
It is hard not to be pessimistic when you examine the data. But the reason to be optimistic is young people themselves. In almost every conversation I had, there was an interest, a passion, a talent just under the surface. A young person who wanted to work with children. Another who wanted to care for older people. Another who had taught herself how to build a business online. Another who wanted to make things, fix things, design things, help people. Too often those strengths had gone unnoticed and overshadowed by the labels attached to them: absent, anxious, difficult, behind, disabled, care-experienced, NEET.
The question is not whether young people are different today. They are. Not worse. Not less intelligent or less capable. But different because they have grown up in different conditions. A new digital world in which they live so much of their lives. And a pandemic that hit them hard and amplified the greater anxiety they were already feeling. But the NEETs crisis is just the tip of a far bigger iceberg. Wherever I have been and whoever I have talked to about this issue over these last months, I have encountered a concern, bordering on a fear, across our country about what the future holds for the next generation as a whole. Parents are more worried than ever. Grandparents too. About their youngsters’ prospects for a job, a home, a decent future. For decades in Britain, the foundation of our unwritten social contract has been that each generation would be able to do better than the last. That great British promise for this generation is being broken.
Our job is to fix it. The question is whether we are willing to embrace what is different about today’s generation and meet them where they are, rather than where we wish they were. Every previous generation was different from the one before it. The systems that existed to transport them from the world of education into the world of work had to adapt. This time, they have not. That is not a failure of young people, but a failure of a system stuck in the past.
It would be easier to blame one thing: COVID, smartphones, benefits, schools, employers, parents or young people themselves. The evidence does not support a single explanation. It supports 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.
None of this is to argue that personal responsibility does not matter. Effort matters. Habits matter. Families matter. Families are not a peripheral influence but are central. The roots of youth disengagement are formed well before the end of the school years. The state and the market cannot do all the heavy lifting to give young people the best chance in life. Nor should they be expected to do so. Parents have responsibilities too. Young people have the same. Aspiration is not something that can be gifted to them. Governments and employers can do more to help young people succeed. But young people and their parents have to contribute too. They have agency and obligations. But it is dishonest to pretend that individual effort alone can overcome systems that are badly designed, poorly connected and, too often, indifferent to whether young people actually make it into sustained participation.
If we go on as we have been doing, the NEET problem will only deepen and grow. Forecasting conducted for this Report suggests that the NEET rate could increase to over 16%, or more than 1.25 million young people not fully able to participate in society, within 5 years. That is not a price we can ask those young people to pay.
This interim report does not pretend to contain the final answer. It is a diagnosis. It sets out who young people who are NEET are, what they face, why the systems around them fail, and what the consequences are. It follows the journey from risk to detachment: through family and early years, school and skills, the labour market, health, welfare and the architecture that is meant to join them together. Too much past policy has leapt to programmes before facing the deeper design failure beneath them. The final report will set out what a coherent participation system for early adulthood should look like.
Britain has had no shortage of initiatives. Many have helped the individuals they reached. Some have been excellent. But none has altered the architecture that produces sustained disengagement. Another short-term programme layered on top of fragmentation will not be enough. We need to change the way the system works.
The old Welfare State was built for a different age. It was designed to protect people against the risks of unemployment, sickness and poverty. That mission remains vital. But for this generation it is not sufficient. The task now is to build a Working State: one that protects those who cannot work but actively enables every young person who can participate to do so. One that does not wait for young people to fail before it intervenes. It must ask less often, “what can’t you do?” and far more often “what would help you take the next step?”
Government cannot solve this crisis alone. Employers, schools, colleges, health services, councils, mayors, charities, families and young people themselves all have a role to. But only government can set the architecture, incentives and accountability that allow those efforts to add up to a system. One that increases opportunities for every young person to be able to learn or earn.
This is a generational challenge. Our country’s future rests on the next generation. We all have a responsibility to ensure they are set up to succeed. Young people have not given up on work. We must not give up on them.