Challenges for the Milburn Review

The Milburn Review of young people and work is due to be published this month. This comment summarises the background to the review and lays out the essential facts about recent trends in youth education, employment and benefit claims. We suggest five key questions for evaluating the review’s policy proposals.

Background

After falling for most of the 2010s, the share of 16- to 24-year-olds not in education, employment or training (NEET) has increased from 11.5% in 2019 Q2 to 13.0% in 2026 Q2 – the highest rate since 2014 and equivalent to 981,000 young people (Office for National Statistics, 2026). The recent rise in NEET rates reflects falling youth employment alongside little change in education participation. Historically, relatively high youth employment in the UK had compensated for lower education participation. Now, the UK has one of the highest NEET rates among 15- to 24-year-olds internationally, ranking seventh-highest among OECD countries in 2025, with only Turkey and Portugal having a higher rate in Europe (OECD, 2026). A falling employment rate for young people has coincided with rising out-of-work benefit and disability benefit claims. 

There are many factors that contribute to whether a young person is not in education, employment or training, including poor health, insufficient skills, weak incentives, low employer demand for young workers and difficulties finding and applying for jobs that are available. The Milburn Review was tasked with investigating the role of different factors in driving the recent rise in NEET rates, with a particular focus on young people with mental health conditions or disabilities (Department for Work and Pensions, 2025). The review is expected to recommend system-wide reforms spanning the benefit, health, skills and employment systems, with a view to increasing participation in employment and education. 

The Milburn Review will make its recommendations against a backdrop of constrained public finances. This means the government will face difficult trade-offs in how to fund any potential recommendations for additional spending. It could reprioritise spending on young people – for example, by reducing young people’s benefit entitlements while increasing employment and mental health support. It could cut back other areas of benefit or public service spending to free up resources – although there are already significant pressures on existing public service spending plans (Boileau, 2026). It could raise additional tax – although revenues are already set to rise to a historically high share of national income. Each option would come with its own difficulties. Additional borrowing to fund permanent increases in day-to-day spending would be difficult to justify given that the levels of both borrowing and debt are high and that borrowing costs are also high (Stockton, 2026).  

Key questions for evaluating the Milburn Review

We propose five key questions for evaluating the Milburn Review’s proposals.

First, do the proposals recognise the diversity of young people’s circumstances and needs? NEETs range from graduates looking for their first job to those with severe disabilities. One-size-fits-all solutions are unlikely to work well.

Second, how does the review balance resources between increasing support for young people and providing incentives for firms to hire them? Youth employment has fallen both because some young people have retreated from the labour market and because firms are offering fewer opportunities to them. Reforms aimed at both sides of the market are more likely to be successful.

Third, how much will the reforms bring down the NEET rate, and over what timescale? Returning to the 2019 rate would mean around 100,000 more young people in education, employment or training; matching the Netherlands would mean around 500,000 more. Existing employment schemes are small by comparison, and not all the jobs they create will be additional. Reforms to education, skills and healthcare could have bigger effects, but will take time to implement and take effect.

Fourth, who is likely to gain and lose out from the reforms? Reforms that rebalance how support is provided are likely to leave some better off and some worse off than existing arrangements. For example, cutting benefit entitlements would reduce claimants’ incomes immediately. Other reforms – for example, expanding employment support – may more than make up for a fall in benefits income eventually, but only for those who are able to move into work as a result of these reforms.

Fifth, do the proposed reforms offer value for money? Given the tight fiscal situation, are they likely to sufficiently improve outcomes for young people to justify their cost to the exchequer? 

In the rest of this comment, we highlight the key facts about the recent rise in NEETs and the government’s interventions so far.  

Education

There are fewer 18- to 24-year-olds in education in the UK than in most other developed countries. Youth training opportunities have declined in recent years. 

• The UK has one of the lowest shares of young adults in education in the OECD. In 2025, 44% of 18- to 24-year-olds in the UK were in education, compared with the OECD average of 53%. The UK was the seventh-lowest among OECD countries, and lower than any other European country except Turkey (OECD, 2026). The gap is not in university education, which is high by international standards, but in vocational education (more details in Michael, Waters and Xu (2026)).
• Apprenticeships – traditionally an important route into employment for young people and those with lower prior qualifications – have increasingly shifted towards older and more qualified learners. The number of apprenticeship starts by under-25s declined by 35% between 2016–17 and 2024–25 (Department for Education, 2026a). Even among under-25s, the mix of apprenticeships has shifted towards better-qualified young people. The share of starts by under-25s on higher-level apprenticeships (equivalent to qualifications from higher education) rose from 4% to almost a quarter between 2016–17 and 2024–25 (Department for Education, 2026b).
• The apprenticeship levy is a 0.5% charge on larger employers’ pay bills introduced in April 2017. Funds from the levy are used to subsidise training costs for apprentices. Initial funding arrangements did relatively little to prioritise younger apprentices, with government support broadly similar across age groups (more details in Tahir (2023)). More recently, the government has introduced age-specific funding rules, with more generous rates for under-25s. Since August, small- and medium-sized enterprises no longer have to contribute towards training costs for apprentices aged under 25.

Youth employment

Falling employment rates have been the single biggest factor contributing to rising NEET rates, but the cause of that fall is not fully understood.

• The share of 16- to 24-year-olds in payrolled employment fell by 4.3 percentage points in the three years to December 2025, from 54.9% to 50.6%. This is close to the 5.4 percentage point fall seen over the financial crisis. Part of this reduction is due to lower demand from employers, which disproportionately affects young people entering the job market. The number of vacancies advertised by firms has fallen since 2022, with a particularly big drop in the hospitality sector, which is a big employer of young people. 
• However, the fall in youth employment cannot be fully explained by the business cycle. NEET rates are 1–2 percentage points higher than we would expect given adult employment levels. Moreover, changes in youth and adult employment rates across regions are not strongly correlated, contrary to what we would expect for a purely cyclical decline. 
• Minimum wage rates facing young people have increased sharply in recent years, leading some commentators to draw a link to falling youth employment. However, the areas most affected by minimum wage changes were not those that saw the biggest falls in employment. While the data are too noisy to rule out negative employment effects, our central estimate suggests that minimum wages are unlikely to be the main cause of rising NEET rates. 

More details on employment trends for young people can be found in Michael, Waters and Xu (2026).

Employment support schemes

There is already a wide range of employment support for young people, but evidence on what works is mixed.

• Young people can already access a wide range of employment support schemes run by the Department for Work and Pensions, the Department for Education and local government, each with differing eligibility criteria. These include Jobcentre-based support, Youth Hubs and sector-based work academies; wage subsidies such as the fully subsidised Jobs Guarantee and the £3,000 Youth Jobs Grant; subsidies for employers taking on apprentices; and employment support for people with health conditions through Connect to Work. Much of this support is short-lived. Schemes are often launched and wound down before anyone knows whether they have worked, which makes it hard for young people to navigate the support available and harder for government to learn what works. 
• The government has recently introduced the Youth Guarantee, which gives young people access to training, apprenticeships and support to find work and subsidises employers to hire some young people on benefits. The government expects the wage subsidies to create around 50,000 additional jobs for young people each year. Whether these jobs will materialise is an open question. The Kickstart scheme, a similar programme to the Jobs Guarantee that ran from 2020 to 2022, provided just 163,000 placements against an ambition of 250,000. For more details on the Youth Guarantee, see Tahir and Xu (2026). 
• A meta-analysis of over 200 employment support programmes, mostly in Europe, finds that some do help participants into sustained employment, but others do not (Card, Kluve and Weber, 2018). On average, employment support schemes have small effects on employment in the first year after taking part (a median effect of around 1 percentage point) but these effects grow over time, to a median of around 5 percentage points two or more years later. Importantly, the design of the programme matters. In general, programmes that include training and private sector employment programmes have larger long-run effects. Programmes for young people have effects around 3 percentage points lower than programmes available to all ages, which underlines the difficulty of designing programmes for NEETs.

Health and benefits

Since the pandemic, the numbers of young people reporting mental health problems, claiming out-of-work benefits and claiming disability benefits have all risen, but worsening mental health is unlikely to be the sole driver of rising NEET rates.1 

• There has been a sustained decline in mental health among young people since the mid 2010s. This trend has been exacerbated by COVID-19, but – unlike the fall in employment – far precedes the pandemic (Blanchflower, Bryson and Xu, 2025). Further, youth mental health has deteriorated since 2020 in most countries, but NEET rates have not risen in most countries. This suggests that mental health is unlikely to be the sole driver of rising NEET rates.
• The share of 18- to 24-year-olds claiming any out-of-work benefit2 increased from 9.5% in 2022 to 10.9% in 2025 (a 1.4 percentage point increase). Around three-fifths of this group are not required to look for work due to a health condition, caring responsibilities or parental responsibilities. Most of the increase in out-of-work benefits claims is due to a rising share of 18–24s claiming incapacity benefits – up from 3.3% to 4.2% (a 0.9 percentage point increase) (Michael, Waters and Xu, 2026). Spending on incapacity benefits for 18- to 24-year-olds has increased from £1.3 billion in 2022 to £2.0 billion in 2025.3
• The share of 18–24s claiming personal independence payment (PIP) or other disability benefits has also risen – up from 4.5% in 2022 to 6.5% in 2025. For most young adults claiming PIP, their main condition is a mental health condition (21% of claimants) or a neurodevelopmental condition (57% of claimants), although most PIP claimants have more than one condition. Spending on PIP or equivalent disability benefits for 18- to 24-year-olds in England and Wales has increased from £1.7 billion in 2022 to £2.7 billion in 2025 (in today’s prices). 
• Only 21% of 18- to 24-year-olds claiming PIP were in work in 2024 (Department for Work and Pensions, 2025a). One key reason for low employment rates amongst PIP claimants is that many have a disability that limits their ability to work. Another potential reason is that some PIP claimants perceive that moving into work would cause them to lose their PIP (Department for Work and Pensions, 2025b). This is despite the fact that eligibility for PIP is not directly related to work status. 
• Some young people claiming health-related benefits have much more severe disabilities than others. 13% of claimants aged 18–24 receive £4,000 a year or less in support. Someone who needs assistance to make simple budgeting decisions and needs social support to be able to engage with other people but has no further disability-related needs would qualify for this level of support. 54% of PIP claimants aged 18–24 get the highest award in both components of PIP (worth around £10,000 a year). Even within this category, there is variation among claimants. Someone who cannot wash themselves or dress themselves and cannot follow the route of a familiar journey without assistance would qualify. So too would someone who, additionally, cannot talk, cannot read and cannot stand unaided. For more details on PIP and options for reforming it, see Latimer, Oulton and Waters (2026).
• Around a third of NEETs aged 18–24 (300,000 people) do not claim benefits. Contrary to popular narratives, these ‘hidden NEETs’ are much closer to the labour market than NEETs claiming benefits. Around 80% of hidden NEETs in their early 20s are looking for work or volunteering; only 2% are out of work because of sickness; and around half have a degree. This suggests that the current benefit system is supporting those in the greatest need. For more information on ‘hidden NEETs’, see Michael and Xu (2026).