UK risks ‘lost generation’ of young people out of work; first-time buyers face toughest time since financial crisis – business live | Business - United Kingdom News Beep

Introduction: UK risks ‘lost generation’ without more jobs for young people

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Younger people in the UK are facing a double whammy of economic pain – with rising numbers no longer in education, employment or training, and an increasingly tough battle to get onto the housing ladder.

Alan Milburn, the former health secretary, is publishing an important review into why so many young people in Britain are economically inactive – it warns that one in six young people (or 1.25 million) could not be in education, employment or training within five years unless “urgent” action is taken.

Milburn, who has been looking at the problem for months, will pin the blame firmly on the system rather than young people themselves.

He’s expected to say:

double quotation mark“This is not a failure of young people. It is a failure of a system stuck in the past. Whether it is education or health or welfare, that system fails to enable their participation in the labour market.

“Instead, all too often it ends up putting young people on a path to a life not in jobs but on benefits. This should be the priority for the government. It should be the priority for all of us.”

To tackle the risk of a “lost generation”, Milburn is pushing for employers to be given more incentives to take on young people. That would give them a leg-up into the world of work, dodging the “Catch-22” situation where employers ask for work experience before giving someone a job.

The Milburn review will also make the case for reforming health and disability benefits, arguing that the welfare state is “exacerbating inactivity”.

Another factor is the decline of the “Saturday job”, following a drop in entry-level jobs and opportunities in hospitality, leisure and retail, and a fall in apprenticeship starts over the last 10 years.

New data this morning will show if the Neets crisis is getting worse, as my colleague Richard Partington explains:

double quotation markExperts have warned of a crisis in youth jobs, with official figures due on Thursday expected to show the number of young people not in education, employment or training (Neet) is close to breaking through a million – the highest level for more than a decade.

Milburn will warn that without urgent action the number could continue rising from one in eight young people who are classified as Neet to one in six within five years – representing 1.25 million young lives.

Young people who manage to overcome the barriers of unemployment still find it very hard to buy a house.

David Thomas, the outgoing chief executive of Barratt Redrow, has warned that first-time buyers are facing one of the most difficult times to purchase a home, due to affordability challenges (more on this shortly….).

The agenda

9.30am BST: Latest quarterly estimates for young people (aged 16 to 24 years) who are not in education, employment or training (Neet) in the UK

10.30am BST: Former Health Minister Alan Milburn to hold press conference on his review of the Neets crisis

1.30pm US PCE inflation report for April

Updated at 02.57 EDT

Key events

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Work and Pensions Committee chair: Neets crisis is not due to ‘snowflake’ generation

Work and Pensions Committee chair Debbie Abrahams MP has responded to the publication of Alan Milburn’s interim findings from his review on youth inactivity and unemployment in the UK.

Abrahams says:

double quotation mark“Many of Alan Milburn’s findings reflect the evidence received in our own inquiry on Youth Employment, Education and Training. We await Mr Milburn’s conclusions and recommendations, but when giving evidence to the Select Committee, he referred to the causes of the current youth employment crisis being as broad as they are deep. It’s clear that whatever his recommendations, it will require systemic change, needing a whole government approach to fix this.

“We agree that this is not the so-called ‘snowflake’ generation that too many have referred to. But the urgency must be recognised. We cannot see the lives of so many young people be blighted in this way.

“The young people my committee has spoken to as part of our inquiry have shown a real desire to work, to succeed. But too often they have experienced barriers that aren’t properly understood by the DWP. Having the right support in place to enable these young people to thrive will be essential.

“Reforming the social security system that recognises these barriers and provides the support that is needed is essential. We’re concerned by the signals sent in the latest supplementary estimates that include an apparent £78m cut to Connect to Work, designed to reduce barriers for disabled people, including young disabled people, who want to get into work. Our research also shows that every extra pound spent on employment support will pay for itself 6 times over and give people their independence.

However, we’d urge against unhelpful comparisons between money spent on benefits and that on employment support. It introduces the notion that merely shifting financial support from one to the other will solve the problem. Without careful navigation this could potentially undermine youth employability by driving up child poverty or exacerbating underlying health conditions.

“We must not allow people’s futures to be determined by anything other than their talent.”

ShareVape shops but no jobs: one young man’s search for work in Grimsby

This video, from my Guardian colleagues, shows how the Neets crisis is playing out in Grimsby, where 19-year old Cohen is desperate to find a permanent job while running a mascot hire company and chasing his dream of becoming a professional wrestler:

Vape shops but no jobs: one young man’s search for work in Grimsby

For the past year, Cohen, who has a learning disability, has been applying for roles in holiday parks, retail, charity shops and even the local football club Grimsby Town FC, which was recruiting for a new mascot.

He is volunteering at a local Scope charity shop once or twice a week and is starting a placement through college working at Morrisons. He has yet to find paid work, though not for want of trying.

Cohen says:

double quotation mark“Retail was a big thing for a lot of people [here in Grimsby] at one point.

But a lot of its closing down now. It’s now made up of vape shops and barbers and not ones where you can get a job.

Updated at 04.02 EDT

Employers’ biggest complaint about young people is their ‘work readiness’, Milburn continues, emphasising the importance of work experience.

He tells Radio 4:

double quotation markJust a few days ago, we were talking to Marks and Spencers, to John Lewis, to all of these employers. And the biggest complaint that people have is about what work readiness.

They know that the young people have got qualifications. What they worry more about is whether schools have gifted them the attributes that are needed for the workplace. And that is all about communication, collaboration, agility, adaptability, skills.

We do badly internationally when it comes to work experience. We’ve got to change it.

Milburn is due to release recommendations to fix the Neets crisis in the autumn. That could potentially include compulsary work experience for young people, as the boss of Amazon UK called for this week.

ShareMilburn: UK’s ‘chronic’ Neets problem is worse than other countries

Q: Is the Neets problem worse in the UK than in other countries?

Yes it is, Alan Milburn replies.

The UK’s Neets rate is three times as high as in Holland, and twice as high as Ireland, he says. Britain has moved down the international league table in recent times.

He calls it a “chronic problem” that is getting worse not better, with no plan to deal with it.

Young people are caught in a “perfect storm”, he continues, where the first rung on the career ladder is further out of reach for them.

The number of jobs in low and medium-skilled occupations have declined by over a million over the last 20 years. Apprenticeship starts are down by about a third in the last ten years, and the Saturday job has disappeared, Milburn points out.

That’s compounded by a welfare system created to deal with “yesterday’s problem” of cyclical youth unemployment. Today, the challenge is “youth detachment”, he adds.

As Milburn puts it:

double quotation markPeople always talk about welfare and they’re right to do so. But this is a problem in the labour market, in the welfare system, in the school system, in the skills system and in the health system.

It’s not reforms that you need. It’s a radical reset.

ShareMilburn: the silence kills hopes for Neets

Alan Milburn is discussing his new report into the Neet crisis now, on Radio 4’s Today Programme.

Milburn emphasisis that the UK risks a “lost generation” of young people out of work, training or education, with many being rebuffed when they apply for work, or never even hear back.

Milburn says:

double quotation markIt’s the silence that kills, it dents confidence. But more importantly, it kills hope.

He adds that 84% of the Neets his team surveyed actually want to be in work or training :

double quotation markThere’s no shortage of effort on their part. Now the shortage is of opportunity and of support.

Updated at 03.24 EDT

New data from Zoopla this morning highlights the affortability challenges facing first-time buyers, showing:

First-time buyers are targeting homes worth £10,000 more than a year ago, with average prices up 4.3% to £254,750 — nearly 3x the rate of UK house price growth

There are 6% fewer first time buyers in the market than this time last year.

ShareMilburn correct to reject “lazy tropes” around youth unemployment

Economists have been welcoming Alan Milburn’s report into the UK’s Neets crisis, even before its official launch later today.

George Bangham, head of social policy at the New Economics Foundation (NEF), has said Milburn is correct to reject the “lazy tropes” about this problem somehow being young people’s own responsibility, adding:

double quotation mark“Most young people want to work, but too few jobs are available to them in many local areas, as NEF research has shown. Job vacancies are at their lowest level in 12 years, outside of the pandemic lockdowns – and young people are struggling more than others to land the few jobs available.

The Resolution Foundation thinktank says Milburn is correct to identify “rising ill health, limited vocational education, a hands-off benefits system, and a weak labour market” as key drivers of the UK’s NEET rate.

Lindsay Judge, research director at the Resolution Foundation said:

double quotation mark“It is encouraging to see how strongly the Milburn Review’s interim report recognises the gravity of the UK’s Neets crisis. Our ambition should be that the UK becomes one of Europe’s lowest Neet countries rather than one of its highest.

“The report has grasped the key drivers of the UK’s high Neet rate, and the steps needed to tackle these: more engaged employment support, early intervention on mental health, and a greater focus on further education.

“But there are real fiscal and structural challenges ahead. There is no single system currently in place to solve this crisis, so the Government will need to develop a new approach that spans government departments as well as regional and local authorities, plus find the funding to truly turn the Neets crisis around.”

ShareFirst-time buyers facing toughest challenge since financial crisis

UK home ownership is increasingly out of reach for young people, David Thomas, the outgoing chief executive of Barratt Redrow is warning today.

In an interview with the BBC, Thomas says that now is one of the most difficult times to get on to the housing ladder, comparable only with the aftermath of the financial crisis in 2008.

Thomas blamed rising interest rates, student loan deductions and the squeeze on real wages for making it harder to buy a new home in 2026, saying:

double quotation markCertainly it’s going to be close to where we were [after] the great financial crisis.

That was probably more to do with lending, but I think it’s very, very comparable for first-time buyers. We’re now facing challenges around affordability with no government support scheme in place.

Updated at 03.07 EDT