● Matching the Dutch would see 670,000 fewer young people out of a job or education
● One million young people not in work or training – rising to one in five in the North East
● New plan published to reverse “tragedy of wasted potential”
Britain is squandering over £15 billion a year by leaving hundreds of thousands of young people shut out of work and education, new analysis reveals.
Official figures published this week show that over 980,000 16- to 24-year-olds are now not in education, employment or training.
Analysis by the Centre for Social Justice (CSJ) found that matching the Netherlands’ success in helping young people to earn or learn would see over 670,000 fewer NEETs – strengthening the public finances by up to £15 billion a year.
The report, 16–24: Going Under, draws on new evidence from more than 120 charities, employers and community groups in the North East, where almost one in five young people are NEET – the highest rate in Britain.
The research, produced in partnership with Fenwick, found that “perverse incentives” in the welfare system, an education system too focused on university destinations, and rising costs to employers are all fuelling the crisis.
Over half of the 16- to 24-year-olds claiming Universal Credit while out of work in the North East are in the ‘no work requirements’ group – the highest rate in the UK – amid soaring mental health related benefit claims.
The Milburn Review estimated that each NEET costs £22,571 per year in lost tax revenue and higher government spending. Reducing the UK-wide NEET rate to Dutch levels would result in 671,608 fewer NEETs and net the taxpayer £15.2 billion in benefit savings and added tax revenue.
To achieve this, the CSJ has called on the government to “go Dutch” by:
● Rebalancing the welfare system to target mental health benefits to more severe cases and investing savings in a major expansion of frontline mental health and employment support for young people.
● Strengthening technical pathways in the education system with a new Technical Baccalaureate (TBacc) to recognise students sitting technical GCSEs such as computer science, design and technology, and construction.
● Introducing a new Future Workforce Credit paying employers 30 per cent of a NEET’s salary to expand the labour market for the young people.
To tackle the concentrated crisis in the North East, the CSJ has also urged the Government and North East Mayor to:
● Designate the North East as the pathfinder for an improved, work-based V-Level that combines three days at college with two days in a paid work placement, funded by an extension of the Youth Guarantee.
● Bolster regional growth by establishing a pipeline of Mayoral Development Corporations to quicken development throughout the region.
● Bring youth and NEET funding into the North East’s Integrated Settlement to give the region greater flexibility to invest in frontline employment support over the long-term.
In the Netherlands, pupils are able to pursue technical learning linked to local employers from aged 14, mental health support is routinely provided in-kind rather than through cash, and the costs for employers hiring young people are kept low.
Leo Fenwick, Strategic Partnerships Director at Fenwick, said:
Wherever I go, I hear stories from people whose first job was at Fenwick and how that experience shaped what came next in their lives. Whether those careers were made in retail or took a different path, that first opportunity mattered. Yet those first steps are disappearing across the economy.
“The challenge is not a lack of ability, but of ensuring that opportunity is forthcoming. The future success of our region depends on the success of the next generation. At Fenwick, we are determined to do our bit to unlock it.
Ben Gregg, Head of Welfare at the CSJ said:
The North East shows how bad Britain’s NEETs crisis could get. Whole communities have been abandoned to worklessness and deprivation.
“But it also shows a way forward. If we can solve the NEETs issue in the North East, we can solve it anywhere.
“The Government must reform welfare, rewire the education system, and back local leaders in areas like the North East to boost regional growth and get young people into jobs.
Methodology
The Interim Report of the Young People and Work Review (the ‘Milburn Review’) estimates that the NEET crisis across the UK leads to £21.6 billion per year in extra spending and lost tax revenues. The Milburn Review assumes that a NEET young person would otherwise earn the median wage for their age, with foregone tax revenue estimated from there. It then adds the benefit expenditure on NEET young people, the estimated cost of inactivity on health expenditure, and a discounted estimate of the lost tax revenue and added benefit spending from the heightened likelihood of someone who is NEET remaining inactive throughout their working life. With 957,000 NEETs at the time of the Review, the £21.6 billion finding is equivalent to a fiscal cost of £22,571 per NEET.
In 2025, 4.1 per cent of young people aged 15-24 were NEET in the Netherlands. If the UK had the same rate, 671,608 fewer young people would be NEET. Multiplying this by the per NEET cost estimate from the Milburn Review, we estimate that the Treasury would save £15.2 billion per year