Tackling the UK's escalating youth unemployment crisis could cost over £6 billion (approximately $7.5 billion USD), according to recommendations being prepared for Andy Burnham. Former Labour Health Minister Alan Milburn is finalizing a report that examines successful youth employment models in countries like Germany and Denmark.
The report is expected to advocate for significant investment in job schemes and support for young people, rather than benefit cuts. Milburn's investigation into the UK's youth unemployment rate, which stands at 15.6 percent, has led him to study European approaches.
Germany, with a youth unemployment rate of 7.5 percent, spends 0.3 percent of its GDP on job support, including wage subsidies for workers under 29. Denmark invests even more, at 0.4 percent of GDP, and offers subsidized 'flexi jobs' for young people with disabilities. If the UK were to match Germany's spending rate, it would represent an outlay of over £6 billion.
Burnham has indicated that the measures proposed by Milburn would require upfront investment, with savings anticipated in the long term. He stated that the costs would not directly increase the welfare bill but acknowledged the need for 'investment in the support that teenagers need and the guarantees that I want to put in place for them.'
The UK has the third-highest rate of young people not in employment, education, or training (NEETs) among major European economies. The Resolution Foundation has described this situation as a "crisis," with the number of 16- to 24-year-old NEETs nearing one million, a level not seen in over a decade. This comes as the UK's overall welfare bill is projected to rise from £353 billion this year to £431 billion by 2032, according to the Office for Budget Responsibility (OBR).
Ministers are reportedly concerned about how the OBR will score the impact of any new job support measures, given past experiences where similar programs did not meet their stated employment targets. The Department for Work and Pensions stated that the Milburn and Timms Reviews will "lay the foundation for sustainable reform" and that they are already implementing the Youth Guarantee, which includes £2.5 billion in youth employment investment over the next three years.