Milburn Review: Interim Report

(Urgent Question): To ask the Secretary of State for Work and Pensions to make a statement on the publication of the Milburn report on young people and work.

Last week, Alan Milburn produced a powerful report on the crisis of opportunity facing young people. The Secretary of State asked him to lead this work because it is a crisis that has been ignored for far too long. Far too many young people are leaving education and not getting the chance to work. The human and financial impact on individuals can last a lifetime, and the economic costs are significant. It is clear that this is not a feature of the last year or two but a deep-seated and long-term issue. Unlike the Conservatives, we will not stand back and abandon young people in the face of this crisis. During their last few years in power, the number of young people not in education, employment or training rose by a quarter of a million—a shameful legacy. Rather than holding young people in contempt, we believe in them. We are making opportunity for young people a national cause. We have begun with the youth guarantee, more work experience, workplace training and apprenticeships, hiring bonuses for employers who take on young people in regular or apprenticeship roles, and subsidised employment for young people who remain out of work for 18 months. That means, in total, half a million opportunities for young people to work, train or undertake apprenticeships. We have undertaken welfare reform to remove barriers in the benefits system that trap young people. We have changed the law so that claimants on sickness and disability benefits have the right to try work without the fear of automatically triggering a benefit reassessment. We have narrowed the gap between the health element and the standard allowance—a perverse incentive of the last Government’s making—and we are investing in genuinely personalised employment support. We have made a good start, but last week’s interim report is a call to action. That is why this Government are putting work and opportunity at the heart of everything we do, and we will go even further as Alan Milburn comes forward with his final report and recommendations.

I am grateful to you, Mr Speaker, for granting the urgent question. It is a shame that the Minister had to be dragged here. Last week, the Secretary of State was only too eager to talk about this report on the telly. Where is he today? Why so quiet now? I think we all know. The Secretary of State has been caught out telling the devastating truth about Labour MPs: “who can we tax in order to pay benefits to others”? That is what Labour MPs really think, and that is what the Government have done. They have put up people’s taxes, spent more on benefits and left hard-working people with less to live off. Once again, Labour’s shenanigans are getting in the way of something we really should be talking about. Every morning, a million young people wake up in Britain with nothing to do and nowhere to go. This is a disaster for our country, our economy and, worst of all, for all those young people: Labour’s lost generation. The Minister said that it started under us—yes, the numbers did start going up from the pandemic, so this was not a surprise for Ministers—yet here we are after almost two years of Labour in office and it still has no plan. All it has done is make the situation worse, and of course commission this big report. I welcome Alan Milburn’s contribution—it is a serious analysis—but Milburn himself says it is just a diagnosis; there are no solutions, actual answers or policies. In fact, he even tells us that the things the Government have been doing—their “piecemeal” programmes—are not going to work. He also says that after six months of inactivity, young people are far less likely ever to work. This is urgent, but where is Labour’s urgency? This is not the first time Labour has let down young people: the number of NEETs soared to 17% after Labour’s last stint in government. The Conservatives turned that around to less than 10% in 2019. Of course, covid undermined that progress, but the Labour Government have turned a post-pandemic problem into a crisis by taxing jobs, tying up businesses in red tape, making it riskier and more expensive to hire a young person, and destroying hundreds of thousands of jobs in retail and hospitality. Like many young people, one of my first jobs was working in a local pub, but Labour has pulled the plug on that opportunity for this generation. Whenever we do get to hear Labour’s plans, we know what they will be: spending more money and taxing people more to pay for it. That is the wrong answer. The answer is jobs, to back businesses, to cut taxes, to get rid of red tape, to get government out of the way and to reform welfare—

Order. You get two minutes. [Interruption.] Yes, it is two minutes, and it has always been two minutes. I have not changed the rules. When I grant an urgent question, please stick within the rules. That helps me, because we have said that we will try to adhere to that.

That was a predictable set of questions from the hon. Lady, who has the audacity to label the NEETs of this country “Labour’s lost generation” when the number of NEETs increased by 250,000 in the Conservatives’ last few years in office. She tells us that there were no solutions in this report—that is hardly a surprise for anybody paying attention, given that it is an interim report, with further recommendations to follow. The hon. Lady mentioned national insurance contributions. What does Alan Milburn actually say in his report? Let me direct the House’s attention to paragraph 268, which says “the UK’s NEET crisis is much more long-term and deep-seated than any decisions taken in the last few years.” Specifically on NICs, paragraph 266 says, “it is worth remembering that those under 21 remain exempt from employer NICs and, as the review has already highlighted, the increase in youth inactivity long precedes any recent changes”. [Interruption.] The hon. Lady chirps that I am in denial—this is the Conservatives’ record, their problem, and a mess that we will solve. On that very point, there was no explanation—[Interruption.]

Order. Please, the urgent question has been granted, and I do not need Opposition Front Benchers thinking that they can shout the Minister down.

Thank you, Mr Speaker. Of course, there was no explanation or apology from the hon. Lady for the fact that her party left almost 1 million young people not in education, employment or training. That was a predictable omission, but an unacceptable one none the less, because discussing the rise in NEETs in recent years without discussing the actions of the past Conservative Government is rather like staging “Hamlet” without the Prince of Denmark. On the Secretary of State’s comments, what he has said has been the same ever since he was appointed. He has said that we have to change the question and the system from “What benefits are you entitled to?” to “How do we help you change your life?” That is what matters and it is exactly what this Government are doing: fixing the broken welfare system that we inherited from the Conservative party, rebalancing universal credit, implementing right to try, tackling the Conservatives’ backlog on access to work, and, of course, providing our £2.5 billion investment in the youth guarantee. That is the welfare reform that this Government are delivering, with opportunity and work, especially for young people, at its heart, and the guarantee of a safety net for those who need it.

I call the Chair of the Work and Pensions Committee.

I welcome Alan Milburn’s report. The Select Committee is in the concluding stages of its own youth employment, education and training inquiry. We take account particularly of the drivers, and the Minister is right. As the millennium cohort study has shown, more than half of NEETs have experienced adverse and persistent child poverty and family adversity over the last 15 years, which has contributed to the current level. I really think that the shadow Secretary of State, the hon. Member for Faversham and Mid Kent (Helen Whately), should recognise that and apologise. Is the Minister as concerned as me that we must not forget that, in addition to young people, hundreds of thousands of disabled people have had a lack of opportunity, and they have not had the profile that our young people are getting? They also need to be considered alongside young people, particularly in relation to employment support.

I thank my hon. Friend not just for her question but for the work that the Select Committee has done on its inquiry. Indeed, I know that Alan Milburn was before her Committee recently, speaking to the work that he is doing. She is absolutely right to call for a focus on disabled people too. Our Connect to Work agenda provides significant support. There is, of course, always more that we can do, but on this—as with those not in employment, education or training aged 16 to 24—we are determined to act, we have a programme to do so, and we take this extremely seriously.

I call the Liberal Democrat spokesperson.

It is a pleasure to follow the hon. Member for Oldham East and Saddleworth (Debbie Abrahams), who always has something of value to bring to the Chamber. There are 1 million youngsters not in employment, education or training; this has been brewing for many years, but sadly has been exacerbated by the new Labour Government. We have seen the sad decline of our high streets over the last 20 years, a quarter of a million jobs lost in retail in the last five years and, since the last Budget, 100,000 jobs lost in hospitality. The dual impact of the national insurance change—the jobs tax—and business rates has hit hard. Whitbread has cut 3,800 jobs across the United Kingdom, with the closure of two restaurants in my constituency—one in Torquay and one in Paignton. I welcome most findings of the Alan Milburn review; the Liberal Democrats welcome the sense of direction. However, I have some key questions. Does the Minister have some clear economic plans to grow jobs for young people, and how can we develop greater connections with our European partners in order to grow our economy?

The Liberal Democrat spokesperson will have heard the Prime Minister’s recent intent to work more closely with European colleagues, because of the economic benefits that working in partnership can yield. Further, the hon. Gentleman is right to recognise that this is a problem many years in the making. I welcome the broad support from Liberal Democrat colleagues for the interim review and I hope that will be the same when the final review comes forward with recommendations. On plans to bring forward jobs for young people, I point the hon. Gentleman to recently announced interventions by the Secretary of State to provide £3,000 to small and medium-sized enterprises that hire apprentices and £2,000 to any employer who hires a young person who has been on universal credit for more than six months. This will make a significant difference and it is the right thing to do.

Too often, young people are written off as lacking ambition, when the reality is that they are lacking the opportunities for good work. More than 40% of young people not in education, employment or training have said that finding fulfilling work is their top priority. Despite that, in my area under the Scottish National party-run Renfrewshire council and the SNP-run Holyrood Government, employability services are being cut by 30%, failing too many of our young people. Can my hon. Friend set out what steps the Government are taking to work with the Scottish Government to protect vital employability services and ensure apprenticeship opportunities for young people in my area?

My hon. Friend knows that I met an employment support provider in her constituency recently, and I was grateful for her welcome. She is absolutely right to say that young people do not lack the ambition to find work. This is a failure of the state’s making, not a failure of young people. If she has specific concerns about cuts to employment support in her area, I would very much welcome a letter from her setting out those challenges, and I will raise those issues on her behalf.

As the report highlights, the number of NEETs is set to rise to 1.25 million over the next five years unless something is done. The Government need to listen to the wealth creators that create the jobs that so many of our young people need. Alan Milburn’s report says that 84% of young people really do want to get a job, education or training, but the policies of this Government are making that even harder. Given that the Government are looking for a reset moment, perhaps over the summer, will the Minister ask his Cabinet colleagues to look again at the increases in national insurance and business rates, and at repealing the most damaging aspects of the Employment Rights Act, which are doing so much damage to the life prospects of our young people?

The hon. Gentleman has elevated me to Cabinet level—something that is at least premature, if not unlikely ever to happen, I suspect. I refer him to the Milburn report, because it sounds as if he has not read it. It states that “the UK’s NEET crisis is much more long-term and deep-seated than any decisions taken in the last few years.” Making particular reference to national insurance, it states that “it is worth remembering that those under 21 remain exempt from employer NICs and, as the review has already highlighted, the increase in youth inactivity long precedes any recent changes to NICs.”

I welcome the interim report. My question is about work experience. When I was at school, this was typically organised by teachers and gave children a peek into worlds that otherwise would be unimaginable, but today children in my Bristol constituency are being asked to find their own placements, which obviously disadvantages children from families that are less well connected. Will we be likely to see more organised work experience placements for schoolchildren as a result of this review?

My hon. Friend is entirely right to highlight the value of work experience, in particular for children from disadvantaged backgrounds who perhaps do not have the connections that others benefit from. He will be pleased to know that the Government are committed to reforming work experience to break down barriers to opportunity, so that every pupil will have access to two weeks-worth of multiple, meaningful and varied workplace experiences throughout key stages 3 and 4, progressively increasing their work-readiness as they move through secondary education.

I welcome the Government’s youth guarantee scheme; something similar operates in a number of European countries. However, under the proposals, it will not kick in for 18 months. If someone is unemployed for 18 months, the damage is already done. Will the Government consider acting earlier?

I can understand the hon. Gentleman’s trepidation, but I fear that he has not been made aware of the full range of activity before the 18-month intervention kicks in. This includes the addition of a reframed employment and skills review at two weeks and the maintenance of weekly appointments from weeks 3 to 12, with increased focus on personal support to address barriers to work. After three months, the specialist youth guarantee gateway kicks in, whereby young people are referred to one of six options, including sector-based work academy programmes, training, work experience and apprenticeships. At six months, the £3,000 youth jobs grant for employers recruiting young people kicks in. This is one part of a range of holistic interventions that we consider will make a significant difference to the challenge we face.

Is it not the truth that Governments just do not respect working-class jobs, like apprenticeships? Since the apprenticeship levy was brought in, the number of starts has dropped by 35% and the number of level 2 starts has dropped by 68%. Of those that did take place, only 16% were advertised in the two months when young people were finishing their exams, creating the gap that young people fall through. The Milburn review is welcome and absolutely needed, and I am appreciative of the Government for starting this process, but can I ask two question? First, why can we not close the gap today by saying that every public sector employer, whether it is the Government, a council, the police service or the NHS, must advertise at the point that young people are leaving school? Secondly, does my hon. Friend agree that devolution has to be part of the solution, because we cannot command and control from the centre when so much of this is about localised economies?

I certainly agree with my hon. Friend about the power of devolution—it is something that he and I know only too well from our roles as leaders within the Greater Manchester combined authority—but I hope he will recognise that this Government are taking a very different approach on apprenticeships and technical education. That is underpinned by the Prime Minister’s revised target, not of 50% of young people going to university, but of having two thirds of young people in either an apprenticeship or higher education.

Many young people take time to adapt to new jobs and simply have not proved themselves after six months, but with the coming into force of the Government’s Employment Rights Act 2025, the period for dismissal without fault will be reduced from two years to six months. Many employers have told me that this will make them much less likely to employ young people, because they fear that they will not prove themselves in that time period, and that it will be much harder to get rid of them after six months. This provision is not due to come into force until the beginning of next year, so at this very late stage, can I urge the Minister to look at it again? It will make a bad situation so much worse for young people.

I understand the right hon. Gentleman’s point, but I have to say that I have rather more faith in young people in the workforce than he seems to. The Employment Rights Act is an important, once-in-a-generation opportunity to level up rights in the workplace, and this Government remain committed to it.

I very much welcome this report by Alan Milburn, who highlights the need to work cross-sectorally to support young people. I wonder if the Minister could take away the thought that he could test and learn by doing a pilot with Choice in Hackney, which works with disabled people, and with my local Mind, which has very good employment training schemes to help people into work. Their success rate is phenomenally higher than the DWP success rates, and we would be very keen to work with the Government on this matter.

My hon. Friend makes the important observation that, for us to make successful change in this space, we need to work with a range of partners and providers. I am very happy to propose, on the terms that she has outlined, that Hackney be put forward to test some of the initiatives that we are looking towards in this space. We need to work not only with charities and employment support providers, but to work more holistically across Government, with Health, Education and other Departments, and we are determined to do that work.

Alan Milburn, in his excellent but devastating report, makes it clear that the young people most at risk of ending up out of education or employment are likely to go to a further education college, and he identifies that 32,000 of those FE places are currently unfunded. Just last year, in her skills White Paper, the Education Secretary promised “increased funding to…16 to 19 providers to provide real terms per-pupil funding in the next academic year”, yet I know from talking to my local college that per-head funding this year is going up by only 0.55%. That is a real-terms cut and a broken promise. Coupled with the lag in funding of up to a year for new students, this is disincentivising colleges to take on these pupils. How does the Minister explain that?

The 0.55% increase in 16-to-19 funding rates is only one aspect of 16-to-19 funding. In the academic year 2026-27, we will provide nearly £9 billion in 16-to-19 funding, and overall funding per student will rise by 1.66%, meeting the White Paper commitment by reflecting inflation at the time that the spending review was settled.

This excellent report makes it clear that exams can lead to early disengagement from school, particularly for children who are neurodiverse. The son of my constituent Danielle repeatedly failed his GCSEs, which left him stressed and undermined his self-confidence. She felt that his opportunities would be limited and doors would be closed for him, but thankfully he was encouraged to get functional skills and has now secured a place at Leeds College of Building to learn bricklaying. Does the Minister agree that early information on and awareness of alternative qualifications and pathways, such as functional skills, can help young people to fulfil their potential?

I absolutely agree with my hon. Friend. If she has any ideas about how we can extend the knowledge and availability of such information, I would be happy to hear them.

The Minister must understand that to create the jobs that we need, we must encourage the private sector to invest. In my constituency, every single hospitality venue has halved the number of staff it employs. When I ask why, the answers are national insurance, non-domestic rates and the new Employment Rights Act. Extending the national insurance holiday, as it were, from age 21 to 24 would enable people who leave school to get a job, enable those who leave university to get a job, and de-risk taking on young people for employers.

The hon. Gentleman is right to highlight that incentives are needed to encourage employers to hire young people. That is why my right hon. Friend the Secretary of State recently announced the incentives that I have already laid out: supporting young people who have been on universal credit for six months by financially incentivising employers to hire them, and incentivising small and medium-sized enterprises to hire apprentices under the age of 25 earning less than £50,000.

I have just had a group of year 8 pupils visit me in Parliament, and many of their questions were about the increasing numbers of young people on benefits, AI sweeping away jobs, and new opportunities and training for young people. The red wall MPs recognise that issues surrounding youth unemployment are not new, but I am hugely concerned that young people now see that as their future. I welcome the Government’s initiative for a youth hub in Worksop, and I am already working on that with partners, but does the Minister agree that we need to work with other partners beyond the DWP to resolve this problem?

I do agree. I hope that my hon. Friend heard what I said in response to my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier) earlier about the need to work holistically, across Government and outside Government, with partners in the charitable sector, employment support companies and so on, to ensure that a range of interventions are available so that young people do not—exactly as she outlines—see a life not in education, employment or training as their future. That is something we must stop.

Some 70% of graduates say that university just was not worth it—and is it any wonder, when we have seen an increase in low-quality degrees, people coming out with crippling debt, and lower job prospects for graduates? I welcome many elements in the Milburn review, but if we are to fix this crisis of youth unemployment, we need not tweaks, but an overhaul of vocational training and a correction to the Blairite obsession with university, so that fewer young people are scammed by the great university con.

I would not put it quite in the terms used by the right hon. Lady, but jingoistic rhetoric is a feature of her new place in this House. As I said in response to my hon. Friend the Member for Oldham West, Chadderton and Royton (Jim McMahon), this Government recognise that it should no longer be a target of any Government to send 50% of young people to university. That is why we have revised the target, so that this Government’s aspiration is for 66% of young people to be either in higher education or undertaking an apprenticeship.

In York, 410 young people are not in education, training or employment, and we know from Alan Milburn’s report the causes of that. I particularly want to focus on mental health, and the fact that we do not have the right support in place for young people much earlier than the point at which they seek employment. Will the Minister work with the Department of Health and Social Care to ensure that we have systems in place to identify young people who experience mental health challenges, in particular children with adverse childhood experiences, so that they can be set on a stronger path and build more resilience throughout their childhood, enabling them to be prepared for work?

My hon. Friend is absolutely right to recognise that many of the challenges faced by young people not in education, employment or training start at school or even preschool. We need to ensure that there is early intervention in schools, with more mental health practitioners available to children and young people, and that they can receive the support needed at the first possible opportunity, because mental ill health blights and affects their future, not just in academic terms with exams, but often for many years beyond that. I absolutely agree with her. That point underpins many of the proposals put forward in the Department for Education’s special educational needs reforms. We need early intervention and greater mental health support for children.

This is an important piece of work from Alan Milburn, but what principles will underpin the Government’s approach? Does the Minister think that, other things being equal, if we increase the cost of employing people, then that will come at the expense of jobs? Does he think that, with slack in the labour market, if we do things such as reducing probation periods at a time when the cost of employing younger people without experience is going up anyway, that will mean that those young people are less likely to be given the opportunities and the vacancies that exist?

I agree with the right hon. Gentleman that, in the current climate, incentives are required to encourage employers to hire young people, and I have set out the measures that we have taken to do that. However, he is one of a number of Conservative Members today who have raised the Employment Rights Act, which is the biggest upgrade to workers’ rights in a generation. This Government are steadfast in continuing to support working people and ensuring that the Act is fully implemented.

This generation of NEETs grew up under Tory austerity, suffered the closure of Sure Start centres and finished their education with per pupil funding lower than it was in 2010, and then many of them grew up in poverty. Does my hon. Friend agree that we need a root-and-branch change from what we had under the Conservatives if we are to end the conveyor belt of young people finishing school and going into unemployment?

My hon. Friend is absolutely correct about the damage caused by the previous Government to a range of services on which children and young people rely. Child and adolescent mental health services—pertinent to the question from my hon. Friend the Member for York Central (Rachael Maskell)—are one example, but there are a range of others. A recent report highlighted the difference that Sure Start, which was ravaged by the Conservative party, had made to young people. He is absolutely right that we need root-and-branch reform, and this Government are committed to delivering it.

The only country in the whole of Europe that has a NEETs crisis worse than the UK’s is Romania. That is quite shocking. For me, the issue is funding for further education. Mike Taylor owns Bond’s Barbershops and runs an award-winning academy, and he has far more students than he can give places to. Other local providers tell me that they are taking on students with no funding because they need to get them in place for next year, with no funding at all for this year. The youth guarantee is a great idea, but surely it is better to get ahead of it, provide the places for our young people and stop them becoming NEETs, rather than waiting until they have been out of work for 18 months.

The sweeping range of this Government’s interventions means that we will deliver more than 500,000 opportunities for young people. The hon. Lady asked specifically about training for younger people. This Government have pivoted funding from older apprentices—level 7 and above—to younger ones, and introduced foundation apprenticeships so that we can better support people aged 16 to 24.

I welcome the report, which dismisses the long-held stereotypes that young people are lazy or do not want to work. This situation is not a failure of young people; it is a failure of the system. In the survey, 84% of NEET young people said they want to find a job, education or training. Will my hon. Friend set out how the Government believe that we can move to a system that recognises that fact and adopts a participation approach, and how employers can play their part?

My hon. Friend asks an important question and underpins it with an extremely important statement: this is not the fault of young people. They are not lazy. They have been let down for years by a system that does not serve their needs. The Government are putting in place £2.5 billion for the youth guarantee. We continue to work with employers and employment support providers to talk about how we can tailor support to the specific needs of young people to get the number of young people not in education, employment or training down.

Returning to the important points about mental health made by the hon. Member for York Central (Rachael Maskell), I draw the Minister’s attention to paragraphs 424 and 425 of the report, which states: “It is mental health conditions that are now the most commonly reported health condition among NEET young people…This explosion has primarily been in mental health issues such as anxiety and depression, rather than in serious mental illnesses”. We can all have our different ideas as to what might be causing this upsurge—I think there has clearly been a loss of mental resilience among young people—but does the Minister agree that, given that this is such a large part of the problem, further detailed research and analysis need to be done on why so many young people are so much more anxious and feel that they cannot cope?

The right hon. Member is absolutely right to highlight the importance of that point, and the Department of Health and Social Care is undertaking a review of mental health provision, the causes of poor mental health and so on. I agree that 40% of young people citing mental health conditions as a driver for their not being in employment, education or training is a concerning increase—it has almost doubled in recent years. That is clearly unacceptable. That is why some of the interventions being led by the Department for Education are so important: more mental health support in schools, getting those CAMHS waiting lists down and ensuring that children and young people get early intervention when they need help, because, as we see in those numbers and this report, poor mental health blights them not just at school, but in later life.

This report powerfully illustrates the benefits of investing in our young people, as well as the costs and consequences of not doing so. It shows that children who are not school-ready at the age of 4 or 5 are nearly three times more likely to be a NEET at 16 or 17, and those young people who have the bank of Mum and Dad to support them financially to take risks are more likely to succeed, even if they are less talented. What discussions has my colleague had across Government about how we can ensure that every child can access early years education, and what thought has he given to restoring child trust funds so that every child can have a nest egg for their future?

If it is okay with my hon. Friend, I will write to her specifically on the point about child trust funds, because it is not specifically in my domain. She is absolutely correct, though, to highlight the issue of school readiness and the link that that has to the likelihood of a child becoming a NEET when they turn 16. That is why, as I said in an earlier answer, the loss of Sure Start is such a tragedy, and that is why I am so pleased that this Government are reintroducing family hubs. On the bank of Mum and Dad, I hope that she heard the question that I answered earlier from my hon. Friend the Member for Bristol North East (Damien Egan) about our intention to revolutionise work experience to ensure that it is not the opportunities that someone’s parents can provide them, but the opportunities that we can arrange that make a real and tangible difference and level the playing field.

It is the system that is broken, not the young people. Alan Milburn seems to have actually listened to young people when he wrote this, but too many people do not hear and value those voices. Nobody seems to be talking yet about co-production and the value of asking young people and working with them to make these changes. What will the Minister do to ensure that young people are involved in writing the policy, so that we know that they will work for this generation and not just for what we think this generation might want?

I spend a great deal of time talking to young people about what they need to support them into work. Clearly, at the moment, we are waiting for the recommendations of the Milburn review, but she will have seen the intent on co-production from the Timms review. I do not know what will be recommended in the Milburn review as yet but, if co-production is in there, I am sure that it is something the Secretary of State will look at.