Britain's youth are facing a dire situation, and the country is paying the price for its failure to invest in them. The generation that grew up during the post-2008 crash austerity years and in the shadow of the Covid pandemic is feeling the brunt of it. With public service provision dwindling, living costs soaring, and the AI revolution upending jobs, young people are feeling lost and uncertain about their future. This is a critical issue that extends well beyond the jobs market, and it's time for a change.
One of the key drivers of youth inactivity is the legacy of austerity years. However, other factors such as Labour's management of the economy, AI's impact on jobs, and the cost of living crisis are also playing a role. The consequences of Tory spending cuts are now maturing, and the situation is dire.
The review into youth unemployment by Alan Milburn is a vital step forward. Britain is missing out on the talents of a million young people not in education, employment, or training (Neet), and this is a problem that extends beyond the jobs market. It's about how the building blocks of a just and prosperous economy have been whittled away, and it's a call to action to put things right.
The tragedy is that Britain has ended up allocating vast sums to the consequences of failure instead of investing in prevention. For every £1 spent on employment support for young people, the state spends £25 on benefits. This is a costly and unsustainable situation that needs to be addressed.
Sure Start is another cautionary tale. The Conservatives' decision to scrap the network of family hubs opened by Labour was supposed to save money, but research shows that as funding dried up, spending on looked-after children and safeguarding rose by more than half. The cost of helping disadvantaged families did not vanish; the support simply shifted from prevention to crisis management.
This pattern is repeated across government. Instead of investing in public services early to stop problems from developing, the state is in firefighting mode. The task for Andy Burnham is to end this shortsighted approach by rebuilding a preventive state - a model involving investment to support the foundations of society.
The size of the economic, fiscal, and social prize would be substantial. The NHS provides a clear example. As much as 40% of the NHS budget goes towards treating preventable conditions. Preventable illness accounts for half of GP appointments and 70% of inpatient hospital bed days. After years of underinvestment, the service is also highly inefficient.
Recent research by the Health Foundation shows that restoring the deteriorating health of the UK's population to the level of 2014 would boost GDP by 2% and generate a £72bn dividend for the public finances. The Office for Budget Responsibility has also said that the spiralling health budget could be kept in check by investing in prevention.
The challenge for ministers is that the costs to the economy and government finances of the Neet crisis are £125bn a year and rising. Getting more young people into work would revitalize the life chances of millions and drive up labor participation, boosting the economy and public finances.
Ahead of the autumn budget, there is a compelling argument for Burnham's government to take action. However, building a preventive state will come with challenges for a prime minister hemmed in by the UK's current tight fiscal predicament and in a hurry to show progress. Moving money upstream is difficult because the savings from preventive spending take time to materialize, and spending on acute need and welfare cannot be simply turned off.
The incentives favor firefighting over fixing. However, refusing to make the transition is a bad choice. Britain is already paying the price of a crumbling NHS, rising welfare bill, jobs market inactivity, and consequent weak economic growth. Milburn's review is therefore a critical test of whether Britain will grasp the nettle to rebuild a preventive state from the ashes of the austerity years. The alternative is to settle for a country hamstrung by the costs of failure, where young people feel lost.
