Milburn’s Young People and Work Interim Report: Reflections from the Skills Commission

May 2026 saw three significant contributions to the debate on youth economic inactivity. On 28 May, the Rt Hon Alan Milburn published the interim report of his independent review into why growing numbers of young people are not in education, employment or training (NEET). Milburn’s interim report diagnoses the current NEET problem, mapping out who NEET young people are, why the systems around them are failing, and what the consequences are. The interim document is a diagnostic report, and the final report containing Milburn’s recommendations for the Government is not expected until later in 2026.  

On the same day, the ONS released its latest NEET figures confirming that the number of NEETs reached 1,012,000 in the first quarter of 2026 – surpassing 1 million for the first time since 2013. The week before, our Skills Commission published its report, Earning or Learning: A New Agenda for Youth NEET Reduction, drawing on evidence from over 200 stakeholders and 75 written submissions. 

So, what does Milburn’s interim report say, where are the gaps, and where can Earning or Learning help fill them?  

What does Milburn’s Report Argue? 

The interim report provides a comprehensive picture of the current NEET landscape across the labour market, health, education, and welfare sectors. The report doesn’t offer a simple explanation for rising NEET rates. However, it’s central argument is that the institutions responsible for supporting young people into employment are not designed to work together. The resulting gaps between them is where youth economic inactivity is most likely to occur.  

The report presents the NEET crisis as broad and deeply entrenched. Six in ten NEET young people (16-24-year-olds) have never had a job, and nearly 60% are economically inactive, meaning they are neither employed nor actively seeking employment. Milburn’s analysis also estimates the annual cost of NEET levels at £125 billion, more than the entirety of annual public spending in education (approx. £122 billion). Without fundamental change, the report warns the NEET rate could exceed 16% within five years, equivalent to more than 1.25 million young people not earning or learning.  

The interim report highlights five key areas driving this: 

• The health and mental health crisis: the proportion of NEETs citing work-limiting health conditions has risen by 70% in the last decade – mental health conditions, anxiety, depression and neurodevelopmental disorders are now key NEET risk drivers for young people.  
• The weakening of labour market entry routes: the youth share of the labour market has decreased even as employment rates have gone up. Apprenticeship starts for young people have fallen by over 40%, and entry-level roles have become scarcer, and recruitment has become automated e.g. online tests, recorded video interviews, and algorithmic filtering of applications. 
• The lack of support when transitioning from education to employment: Milburn highlights how education institutions are currently measured, recognised and rewarded on student qualification and attainment outcomes rather than work readiness, employment outcomes or labour market participation. Milburn cites an Institute for Public Policy Research study in which only 47% of those aged 18 to 24, and just 36% of those who are NEET, agreed that they felt ready for work when they left education.  
• The challenges accessing appropriate welfare support: only around one in five NEET young people in England are receiving active support from the welfare system to find work or training. Of the £8.1 billions spent annually on benefits for 16-24-year-olds, less than half has participation requirements. For some young people, the practical costs of entering work or training, including transport and childcare, can mean that engaging with the labour market leaves them with less money in-hand than remaining on benefits. Yet benefits themselves may not provide financial security.  
• The “hidden NEET” population: an estimated 314,000 18-24-year-olds in England are not in education or work and are not claiming benefits, and are therefore not visible to institutions offering support, for example the Department for Education, the Department for Work and Pensions, and the Department for Health and Social Care. Milburn argues that data fragmentation across education, welfare and employment systems prevent effective identification and support for these young people.  

Unsurprisingly, much of Milburn’s analysis echoes the findings of our Earning or Learning report. Our report also identified systemic fragmentation as a central driver of youth economic activity and reached similar conclusions about the scale and entrenchment of the problem across health, education, welfare and employment systems.  

Remaining Gaps and Lessons from Earning or Learning 

Although much of the findings from the Milburn report reflect our own evidence, there are areas that remain underrepresented.  

On school accountability reforms, Milburn notes that schools are measured on qualifications rather than employment outcomes, and that careers and vocational provision is too limited. But the report stops short of naming the current accountability framework as a structural cause of rising NEET rates. In Earning or Learning, we go further, identifying Progress 8 and the EBacc as specific mechanisms that increase NEET risk. We recommend that the Department for Education amend Progress 8 guidance so that approved technical and vocational qualifications count on an equivalent footing to academic subjects, and that Ofsted inspection frameworks are updated to require every secondary school to offer or partner with at least one applied learning route reflecting local labour market demand.  

On financial barriers to participation, Milburn discusses how the welfare system can create financial disincentives to move into work but doesn’t examine the costs that make participation in education and training itself financially difficult for many young people. Our research highlights that the 16 to 19 Bursary Fund is now worth around one quarter of the Education Maintenance Allowance it replaced, once overall funding levels are compared. We also show that transport costs, childcare, and Universal Credit rules can leave young people materially worse off for choosing to study rather than remain on benefits. The key distinction here is that these are not incentives to stay out of work: they are structural costs that make education and training financially inaccessible for young people from low-income households. Earning or Learning recommends increasing the Bursary Fund from £160 million to £400 million annually and introducing a national 16 to 18 free bus entitlement. It also calls for a Participation Protection rule, ensuring that 16 to 24-year-olds from low-income households are not made worse off in cash terms when they take up education, training, or apprenticeship routes. 

On youth services, Milburn identifies cuts to youth services as part of a wider structural failure of prevention, explicitly listing them alongside early years, public health, and further education as areas where investment has been replaced by crisis spending, but his report does not highlight any specific funding mechanisms. Earning or Learning makes a more substantial argument: that cuts to local authority youth services have not just reduced provision but have removed the outreach and early-identification infrastructure that the Youth Guarantee depends on. Without funded youth workers operating in communities, the young people furthest from formal services, including many in the “hidden NEET” population, may not be reached by new national schemes. Consequently, Earning or Learning recommends that the Government restore youth services as a statutory responsibility by updating Section 507B of the Education Act 1996 to include NEET prevention as a core statutory duty alongside leisure provision, and that a multi-year Youth Opportunity Fund be devolved to local authorities to tackle system fragmentation.  

On employer engagement, Milburn acknowledges that employers, despite widespread enthusiasm for addressing the NEET crisis, are structurally deterred from hiring young people, but doesn’t discuss how procurement or commissioning frameworks could be used to generate youth employment opportunities. Earning or Learning argues that public spending power is an underused lever for creating youth employment, and that local authorities are well placed to use it. We therefore propose a “Local Jobs First” rule requiring any company winning a council contract over £1 million to sign a Hiring Guarantee committing to create new, dedicated apprenticeships for local NEET young people. This model is drawn from the County Durham Pound, an approach in which Durham County Council uses its procurement decisions to anchor economic benefit in the local community. By attaching employment conditions to contracts, councils can generate entry-level opportunities without additional grant funding, embedding youth employment as a condition of doing business with the public sector rather than treating it as a voluntary commitment from employers. 

Finally, on devolved nations, Milburn acknowledges that some relevant policy levers sit with devolved governments but treats this primarily as a boundary rather than a source of learning. Earning or Learning draws substantively on devolved nation models as working examples for England. Scotland’s Developing the Young Workforce strategy has supported over 25,500 Modern Apprentices annually and integrates career education from early years. Wales’s Young Person’s Guarantee has supported over 48,500 young people through employability and skills programmes since 2021 and has set a target of 90% of 16 to 24-year-olds in education, employment or training by 2050. These are existing programmes which England could draw from directly in designing a more comprehensive system of labour market participation for young people. 

Looking Ahead   

The Milburn interim report makes a compelling and well-evidenced case for whole-system reform. The conclusions he draws align closely with our Earning or Learning report, and we welcome this convergence. When his final report arrives later this year, we hope to see recommendations that match the scale of his diagnosis, spanning governance, employer behaviour, financial support, and early intervention. We hope the evidence gathered through our own inquiry, and the practical recommendations in Earning or Learning, can help inform what comes next.  

In the meantime, following the publishing of Earning or Learning, the Skills Commission is preparing to launch our next inquiry into apprenticeships. For more information on this, please contact max.bishop@policyconnect.org.uk.