Led by former Labour cabinet minister Alan Milburn and commissioned by prime minister Keir Starmer, the study warned that the country is at risk of creating a "lost generation".
"We are at risk of a lost generation," Milburn said. "This is not a failure of young people. It is a failure of a system stuck in the past."
The review found that 84 per cent of NEETs (not in employment, education or training) want to be in work or training, but are struggling to reach what Milburn described as "the first rung of the career ladder" — with a sharp decline in entry-level roles such as hospitality jobs, weekend work and apprenticeships among the main causes.
Milburn said young people are caught in a "perfect storm", facing not a shortage of effort but a "shortage of opportunity". He revealed that some young people are sending out dozens, sometimes hundreds, of job applications and not even receiving a reply.
"I've never known anything like this," he said, adding that a basic social "contract", where effort leads to reward, is being broken.
Meanwhile, the Office for National Statistics confirmed on Thursday that 1,012,000 people aged 16 to 24 were classed as NEET in the first three months of 2026, up 89,000 on the same period last year.
FILE PHOTO: Workers walk through the Canary Wharf financial district, ahead of a Bank of England decision on interest rate changes, in London, Britain, August 3, 2023. REUTERS/Toby Melville
Elise Rohan, the ONS's head of labour market output, said the rise was "driven by greater numbers of young people no longer looking for work".
Young men are at higher risk
The rise in NEETs was largely concentrated among young men, whose numbers grew by 55,000 over the year to 553,000. Among young women, the figure rose by 34,000 to 459,000.
Without action, the report warned that the total could climb to 1.25 million, or one in six young people, by 2031.
Milburn also highlighted a striking spending imbalance: the government currently spends 25 times more on benefits for young people than it does on supporting them into work. He said the solution is not "arbitrary cuts" to benefits but getting young people into jobs.
The review pointed to a gap between what schools focus on and what employers actually want. While qualifications remain important, Milburn said the biggest complaint from businesses is about "work readiness" — whether young people have the communication and adaptability skills needed for the workplace.
"Too often in our country, work experience is an afterthought," he was quoted as saying.
Shevaun Haviland, director general of the British Chambers of Commerce, said the issues raised in the report had "long been reported by businesses" and called it a "wake-up call for policymakers".
Work and pensions secretary Pat McFadden said the UK "cannot afford to lose a generation of young people" and pledged to work with employers, charities and young people to drive change.
Shadow work and pensions secretary Helen Whately said she was "very concerned" by the figures, and argued that the Conservative approach would focus on reducing red tape in the Employment Rights Bill and backing businesses to create jobs.
(with inputs from AFP)
