Category Archives: economy

Crunching the NEET numbers: Is the crisis worse than we think?

Youth unemployment has rarely been higher on the political agenda. The ‘NEET’ acronym, which applies to 16-24 year olds not in education, employment or training, has become a common feature of our political vernacular: ‘one million NEETs’ a phrase now all too familiar in conversations around skills, welfare and the future of work. Since January 2026, the term ‘NEETs’ has been mentioned more times in the House of Commons than in the entire period between 2020 and 2025. The subject is likely to face more scrutiny in the autumn, as the final, ‘solutions’ report of Alan Milburn’s review into young people and work is published.

What actually lies behind the one million figure? And what do the intricacies of the data mean for the future of the crisis, and for how we assess the government’s existing, and upcoming, policy interventions in the space?

The total number of 16-24-year-olds classified as NEET has risen from 740,000 in June 2022 to one million in March this year. Since the Milburn Review was commissioned in November last year, the estimated number of NEETs has risen by 50,000, and there is little sign that the increase is slowing. The latest estimates equate to 13.5% of the total 16 to 24 cohort, or close to one in seven of Britain’s young people.

The headline number only tells part of the story. Zooming in on the statistics tells us that the NEET crisis is not, as is perhaps commonly assumed, most acute among school or university leavers. Instead, it is among the eldest cohort of young people (23 to 24-year-olds) that the scale of the problem is most apparent, and where the long-term consequences of disengagement are arguably greatest.

The older the NEET, the deeper the problem

According to ONS data, 18 to 20-year-olds account for approximately 30% of the total NEET figure. The ‘NEET rate’, the percentage of young people within a given age group, among the entire 18-20 cohort across the country is relatively low (11.4%), and the overall number has undergone a decline in the last two years. The majority (56%) of these NEETs are classified as economically inactive (not working and not looking or able to do so) with the remainder unemployed.

Among 21 to 22-year-olds, the age at which many will leave university or further education, the NEET rate rises to 17%. The balance shifts ever so slightly to 43% that are unemployed and 57% economically inactive.

The final age group, 23 to 24-year-olds, is where the NEET picture becomes much starker. NEETs in this age group account for over a third of the one million total, and the figure is equivalent to a staggering 18.2% of the age cohort, almost one in five. More striking still is the composition of that group. Just 36% are unemployed, while 64% are economically inactive.

That inactivity figure will be a source of much consternation for policymakers. We know from Alan Milburn himself that once young people stop looking for work that ‘the route back is much harder.’ We also know that 45% of today’s 24-year-old NEETs have never had a job, and that those who have never worked by 24 are far more likely to struggle to find sustained employment for the rest of their lives – a long-term ‘scarring effect’ that follows young people into adulthood. The fact that the number of 25 to 49-year-olds unemployed for 12 months or more has risen from 151,000 in April-June 2025 to 198,000 in April-June 2026 may be an early sign of this reality showing up in the data, especially as today’s 25-year-old NEETs slip out of the 16-24 limelight.

Under the Labour government, there have been some attempts to intervene. Keir Starmer oversaw the launch of various initiatives under the Youth Guarantee banner. This include the Jobs Guarantee, offering government-funded six-month work placements for 18 to 24-year-olds on Universal Credit who have been looking for work for 18 months; and the Youth Jobs Grant, worth £3,000 to employers that hire a young person on UC who has been looking for work for six months or more. Together, these policies are expected to support 150,000 young people into jobs over the next three years.

Likewise, in recent weeks Andy Burnham has proposed introducing technical education qualifications for 14 to 16-year-olds in schools; a move billed as a way to boost skills development for young people and enhance their readiness for ‘the jobs of the future’, matched to local employer need, with positive knock-on effects for career options. This proposal, alongside commitments to devolve 16-19 funding powers to regional mayors, has been billed by the government as the ‘first step’ in the prime minister’s plan to tackle the youth unemployment crisis.

There are merits to both interventions but also limits. The Youth Guarantee schemes, for example, targets young people already visible through the benefits system, leaving the ‘hidden NEET’ population with little equivalent support (those who do not receive any welfare support from the government, estimated at around half of the total). Earlier exposure to technical education may help prevent young people becoming detached from work in the first place, and devolved powers mean more tailored local skills provision in some regions. However, the reforms will do little for the large cohort of older NEETs already sitting outside the labour market, with the implementation of these reforms not expected until at least two years down the line.

The findings and recommendations of the Milburn Review will need to be wholesale and ambitious if they are to make a meaningful dent in the NEET numbers. But they must also take account of where the biggest NEET challenge actually lies, among the eldest cohort. While policymakers often point out that ‘NEET does not begin at 16’, their future interventions must be equally guided by the truth at the opposite end of the spectrum that NEET does not end at 24. The current trajectory appears unsustainable. ONS figures this week, showing a further fall in job vacancies, suggest the crisis may well get worse before it gets any better.

 

GK Strategy are a sector-leading team of consultants with expertise and experience across the education and skills landscape. If you have questions about government policy in the space, or would like to discuss GK’s public affairs offering, please contact:

Scott Dodsworth – Managing Director at scott@gkstrategy.com.

Natty Croucher – Associate at natty@gkstrategy.com

What could skills policy look like under a Burnham-led government?

The prospect of Andy Burnham succeeding Keir Starmer as Prime Minister is significant for the skills sector. Burnham is a strong advocate for technical education and has criticised previous governments for their ‘obsession’ with higher education, including former Labour Prime Minister Tony Blair’s target of having more than 50% of young people go to university.

In his first major speech since launching his bid to replace Starmer on Monday 29 June, Burnham acknowledged that while university is ‘great for those who want it’, there also needs to be a focus on the life chances of those who don’t wish to opt for the higher education route. Given he has long called for ‘true parity’ between academic and technical education, as highlighted in his manifesto for his 2015 Labour leadership bid, Burnham is likely to place much greater emphasis on study programmes linked to in-demand technical and vocational occupations as part of a broader effort to create clearer pathways into employment for young people.

Burham’s Manchester Baccalaureate (MBacc), which provides a pathway into the region’s high growth sectors through technical and vocational qualifications, is a clear example of what this shift could look like on a national scale. Launched by the Greater Manchester Combined Authority (GMCA) in September 2024, the MBacc guarantees every young person in the region a clear pathway to employment opportunities through a combination of careers advice services, work experience placements and technical qualifications, including by expanding access to T Levels and apprenticeships.

Since its launch in 2024-25, the MBacc has benefitted from growing support amongst local employers. In January 2026, GMCA confirmed that several leading employers, including Autotrader, IBM and the NHS, had pledged over 1,000 additional work placements to T Level students. This demonstrates how engaged and invested businesses can be in skills and the future workforce, provided the right policy framework is in place. The MBacc not only provides technical education routes into growing regional industries, but it also encourages young people to make subject choices at the ages of 14, 16 and 18 that support progression into these pathways.

Another aspect of Burnham’s approach is the emphasis he places on greater collaboration between skills, health and employment, specifically the need to adopt a place-based model while pivoting away from a nationally directed skills system. One of the advantages of a place-based model is the recognition of significant regional differences in the causes of unemployment and the nature of local labour markets. This includes inconsistent access to training provision and the variety of opportunities for growth across the country. A Burnham-led government is likely therefore to see more devolution by default, whereby employment support is further integrated with local health, skills and community services. This would mean that providers in the FE and HE sectors play a much larger role in supporting people into work.

A Burnham premiership is likely to see a more devolved and technically-focused skills and training system. On a practical level, this is likely to involve granting established combined mayoral authorities (like London, Greater Manchester and the West Midlands) greater autonomy in shaping skills provision around local labour market demands. For employers and training providers, this direction of travel will place greater emphasis on more joined-up local working and support across education, health and employment services. While this has the potential to significantly transform the skills sector, the test for Burnham is whether he can demonstrate that a localised, devolved approach will deliver economic growth, boost living standards, and give every young person growing up a ‘clear path into a re-industrialised Britain’.

If you would like to talk more the potential of a Burnham-led government and what this could mean for the skills sector, please email Noureen@gkstrategy.com.

Will the Chancellor’s ‘securonomics’ strategy drive growth in a new age of instability?

Throughout her time as Chancellor, Rachel Reeves has insisted that the government’s main objective is to facilitate economic growth. During her Mais Lecture on 17 March 2026, Reeves set out a vision for long-term economic growth, using the speech as an opportunity to highlight the ways in which the government will overcome challenges such as fiscal constraints, low productivity, and global instability.

Reeves reaffirmed her belief in ‘securonomics’, an economic strategy where the government helps individuals and businesses gain economic security by investing strategically in sectors like technology, financial services, science and infrastructure. Reeves emphasised that the government needed to play a more active role in guiding investment given the impact of the middle east conflict on the global economy. She stated that market disruptions caused by the COVID-19 pandemic, the Ukraine-Russia war, and the US-Israel war with Iran meant that ‘globalisation, as we once knew it, is dead’. As a result, the government would need to find balance between building resilient public services and facilitating private sector growth, as well as a balance between importing goods and products from other countries and bolstering domestic supply chains.

A central theme of the lecture was the ‘big choices’ the government is making to shape the UK economy over the next decade. The Chancellor placed significant emphasis on securing closer ties with the EU, arguing that it was essential for future growth. She stated that a closer alignment could reduce trade barriers. Reeves acknowledged that Brexit has had a negative impact on the UK economy, a shift from previous years where she had shied away from being overtly critical of Brexit. Reeves stopped short of expressing support for rejoining the EU, instead stating that the UK could find greater alignment with Brussels on policy, while still operating outside the EU’s formal structures. If the government is successful in forming a closer relationship with the EU, she remarked, it could ease the administrative and customs costs for businesses importing from and exporting to the European Union.

While business owners will be pleased to see the Chancellor discussing reducing trade barriers with the EU, Reeves’ attempt to set out a vision for regulatory alignment with the EU may be more concerning for businesses. Reeves said that the government would be prepared to align with EU regulation where it is in the ‘national interest’ to do so, and would maintain regulatory autonomy in sectors with strategic importance for the UK. However, this ignores the post-Brexit reality – the UK and the EU are growing apart on their regulatory goals.

Recent UK governments have increasingly highlighted their ability to implement more flexible approaches to regulation than the EU as a selling point to attract global business. Reeves herself wrote to 17 regulatory bodies in January 2025 urging them to ‘tear down regulatory barriers’ and focus on opportunities to facilitate economic growth. For example, Reeves has implored the Financial Conduct Authority to reduce ‘anti-risk’ regulations and improve competitiveness in financial services sub-sectors, including consumer finance. This is a significant contrast from the EU’s approach, which is more precautionary and is unlikely to result in the reduction of detailed consumer protection rules. If the government does pursue regulatory alignment with the EU in financial services, it would need to consider the impact on regulations, such as affordability assessments and disclosure requirements. Altering these regulations could increase compliance costs for businesses and would likely upset management teams that have spent the last five years adapting to the UK’s Consumer Duty.

The Chancellor also argued that technological advancement is critical to boosting productivity, creating jobs, and positioning the UK as a global leader in emerging industries. As part of this plan, Reeves said the government will support regional growth through fiscal devolution that will empower local leaders, and will also create sector hubs in different cities. This includes establishing Leeds’ Northern Square Mile as a destination for global financial services. To support regional growth the government will create new city-level investment funds and allow regions to retain more of the tax revenues they generate, with the aim of stimulating local investment and reducing reliance on central government.

Reeves commitment to supporting technological innovation in financial services, as well as facilitating growth across the country is likely to provide opportunities to businesses in emerging financial services sub-sectors that harness AI and machine learning. Tech-focused sub-sectors, such as embedded finance, could benefit from these plans, including businesses providing payments and money transfers services, peer-to-peer lending services, and insurtech services. Investors focused on these sectors should monitor the government’s progress in establishing finance or technology sector hubs in various cities across the UK, as well as any funding announcements relating to these sectors.

The Mais Lecture reinforced a consistent economic strategy centred on stability, investment, and reform. While the lecture did not introduce any new policies, it did clarify the government’s long-term economic goals and Reeves’ commitment to ‘securonomics’. However, Reeves will need to use the coming months to share further details on the extent to which she wants key sectors within the government’s industrial strategy, such as the financial services and technology sectors, to be aligned with the EU on regulation. The Chancellor is ‘optimistic’ about the government’s ability to drive investment and growth but will need support from the business community to do so. Investors and businesses should consider potential scenarios where they can support the government to ensure that policy, funding and regulation is geared towards creating the best possible environment for growth in the UK.

If you would like to discuss the Chancellor’s growth strategy and its impact on businesses in more detail, please get in touch with joshua@gkstrategy.com.

Understanding the government’s growth story

The government is facing a low-growth challenge that is constraining its ambition and capacity to improve living standards in the UK. GDP per capita, the average level of economic output per person and a metric key to understanding changes in living standards, has plateaued since the Covid-19 pandemic. Poor levels of economic growth have plagued the UK since the 2008 financial crash. GDP per capita rose by 0.9% year-on-year in Q3 2025, weaker than the 2010s average of 1.3% and a significant shortfall of the pre-financial crash average of 2.5% (1993-2008). High levels of immigration in recent years have also disguised the economy’s malaise and masks an underlying weakness in the UK’s per-capita economic performance. Weak growth directly limits the amount of revenue that can be collected through taxation to meet rising demand for public services and fund the government’s programme of reforms.

Improving the UK’s economic growth trajectory has emerged as a key objective of policymaking. It is vital that ministers create the regulatory and economic environment to stimulate growth in the economy that bridges the gap between policy ambition and fiscal sustainability. The Chancellor Rachel Reeves has called on regulatory bodies to rebalance their statutory duties and reduce the regulatory burden on business to stimulate competition and growth. This includes, for example, the Competition and Markets Authority’s reforms to the merger remedies guidance. At the same time, Reeves has increased public spending by almost £70 billion a year and tweaked her fiscal rules to offset capital expenditure to further increase spending. These decisions have help fund policies such as the energy secretary Ed Miliband’s £15 billion Warm Homes Plan to kick-start the domestic retrofit and energy upgrade sector over the next five years.

Mixed and unspoken signals

Despite some positive moves in the right direction, the absence of a clear, coherent political narrative from the centre of government has left investors and businesses grappling with mixed and often conflicting signals from different parts of the government machine. While Ed Miliband passionately talks about the Warm Homes Plan creating thousands of jobs, the cost of employment has significantly increased with changes to employer National Insurance Contributions and the introduction of the Employment Rights Act which is estimated to cost businesses £1 billion a year.

The cumulative impact of policy decisions has meant inflation in the economy has remained stubbornly high. The UK was an outlier amongst G7 economies in reducing levels of inflation in 2025. Numerous flagship government policies have also directly increased the cost of doing business in the UK which has translated into higher prices for consumers, reinforcing inflationary pressures. This is despite treasury ministers inheriting the sharpest fall in the headline rate of inflation from the previous Conservative government. Inflation was 2.8% in June 2024 (the Conservatives’ last month in office) and now stands at 3.4%, having peaked at 4.2% in July 2025.

The unspoken message to investors and businesses is thus: bear the brunt of higher business costs now before any economic gains begin to materialise from wider de-regulatory reforms, such as changes to streamline the planning system being introduced through the government’s Planning and Infrastructure Act. It is a sizeable political and economic wager and 2026 will be critical in determining whether this strategy begins to pay off. Ministers will be keeping a close eye over the coming year for early signs of economic improvements.

The strategy’s political risk is timing. The economic dividend of the government’s supply-slide reforms, such as overhauling the planning system or the new growth imperative on regulatory bodies, risks arriving too late in the parliamentary term for the government to get any meaningful credit. If the economy is not firing on all cylinders or living standards do not meaningfully improve for voters, the state of the economy will be a key battleground issue at the next election.

For businesses, 2026 will be a critical year for engaging with government as ministers will be eager to expediate regulatory barriers that are currently holding back growth plans and economic activity. For investors, understanding where ministers are politically committed and where a possible course correction is most likely to take place will be critical to navigating the rest of the parliamentary term.