Youth employment crisis is 'most significant challenge facing' the UK, landmark report finds

The sum, said to take in losses in taxes alongside higher health and welfare spending, is more than annual education spending in England and could rise if the situation worsens, the interim report by an ex-Labour health secretary suggested.

The Government-commissioned report came as new figures published this morning showed the number of young people neither working nor learning has topped one million for the first time since 2013.

The Office for National Statistics said the number of people aged between 16 and 24 and not in employment, education or training, so-called Neets, rose to 1.01m in the three months from January to March.

Alan Milburn’s review has estimated this number could rise to one in six young people by 2031, representing 1.25m young people.

At a press conference in London, including The Yorkshire Post, Mr Milburn warned that the issue is “more than an economic crisis, it is a moral one”.

He said: “The question today is no longer whether the current position is somehow unfortunate, it is whether it is sustainable. My answer is no, it is not.

“As a growing older generation becomes increasingly reliant on the next generation to sustain it, every young person has to have more opportunities to learn or earn and to get a job.

“The problem is that for too many young people, opportunities are not growing, they’re shrinking.”

The former Labour cabinet minister, who is leading the review of the Neets crisis for the Government, warned of the “risk of a lost generation” and said Britain “faces a generational fault line”, as he published his interim report.

Mr Milburn, who previously carried out the Pathways to Work Commission in Barnsley, said that it is “probably the most significant challenge facing our country today”.

“I can genuinely say I've never come across an issue as visceral as this with the public,” he explained.

“Wherever I've been, whoever I've spoken to, I've come across a deep concern bordering on a fear about the future facing young people.

“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.”

As well as there being fewer jobs around for young people, the report stated that routes into work have narrowed, with the “death of the Saturday job” and a decline in apprenticeship starts.

Mr Milburn will publish his diagnosis of the problem later in the year, however he questioned whether the Labour Government should have increased business taxes like employer’s national insurance contributions.

“Talk to any employer, particularly low margin sectors of the economy, someone running a pub or a restaurant, of course they would say at the margins it has made it more difficult,” he said.

“That is probably right. What we’ve got to do if we want to have more young people in work is to minimise the risks for the employer, we’ve got to maximise their incentives, but no one should pretend the Neet problem today … was created two years ago.”

Work and Pensions Secretary Pat McFadden, who commissioned the report, branded the latest Neet figures “stark” and said they “underline the importance of Alan Milburn’s report which I commissioned because we cannot afford to lose a generation of young people”.

He added the Government is “already taking action by bringing forward the biggest youth employment reforms in a generation 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”.