580. How to Solve Britain’s Youth Unemployment Crisis

In Britain, we spend £25 on benefits for every £1 we spend helping young people find work. So why have successive governments failed to fix this – and what does Alan Milburn’s review, due this autumn, say needs to change? How have countries with the lowest youth unemployment rates tackled the issue, and what is the one intervention Andy Burnham’s government should put its money behind? How can we convince employers to take a chance on young people? Rory and Alastair are joined by Alan Milburn as they answer all these questions and more in this week's edition of Question Time. __________ Enjoy Rory and Alastair’s interview with Andy Burnham by searching ‘Leading’ on Spotify, Apple, or YouTube. Go deeper into the world of The Rest Is Politics by signing up for our free newsletter HERE, featuring exclusive interviews, analysis and weekend reads from Alastair and Rory. Join The Rest Is Politics Plus. Start your free trial at therestispolitics.com to unlock exclusive bonus content – including Rory and Alastair’s miniseries – plus ad-free listening, early access to episodes and live show tickets, exclusive newsletters, discounted book prices, and a private chatroom on Discord. The Rest Is Politics is powered by Fuse Energy. Stop overpaying for energy. Switch at fuseenergy.com/politics and get a free TRIP+ subscription. Sponsored by Lloyds. Move faster with daily global market analysis, the download on tokenisation and how to manage your company's energy transition all from Lloyds Corporate & Institutional Banking. Search Lloyds Corporate. __________ Instagram: @restispolitics Twitter: @restispolitics Email: [email protected] __________ Social Producer: Emma Jackson, Bex Tyrrell Video Editor: Bruno Di Castri, Lorcan Moullier Assistant Producer: Daisy Alston-Horne, Evie Townend Producer: Evan Green Exec Producer: Bella Soames Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Alastair Campbell?

  If the Burnham government is to be a success, then of the many challenges that need to be met, the education, employment and training crisis among young people is right up there. How can we claim to be making the most of our potential as a country when we have more than 1 million 16 to 24 year olds who are NEETS? That is not in education, employment or training. That is one in every eight. And unless there is major intervention, we could be at one in six within five years. The cost to the economy is enormous and the cost to so many individuals likewise. It's no wonder there is a mental health crisis among the young. Alan Milburn, former New Labour Cabinet Minister, is the man charged with trying to work out

• 0:45Alastair Campbell?

  what has gone wrong and how we can put it right. And he joins us today for a very special question time. We've had so many questions from listeners and viewers. Why is it happening? And more importantly, what on earth do we do about it?

• 1:00Rory Stewart?

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• 2:03Alastair Campbell?

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• 2:47Alastair Campbell?

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• 4:09Rory Stewart?

  Welcome to the Rest of This Politics question time with me Rory Stewart.

• 4:11Alastair Campbell?

  And me Alastair Campbell.

• 4:13Rory Stewart?

  So first question from our special session with Alan Milburn is from Susie, who says, what is this issue about NEETS? What's going on here? What's the scale of this problem? Why is it something that we should care about?

• 4:25Speaker 03

  Well, it's a million young people, all thereabouts, aged 16 to 24, who are not in education, employment and training. The number's been rising. It's around 14% of that population. The truth is Rory, it's been a problem for a very long time. The NEETS rate, it's a horrible word by the way, so if listeners have got a better suggestion than the word NEETS, I'd be grateful for it. It's been around for a very long time. The NEETS rate has barely been below 10% in 25 years. So this is a problem that is endemic, it's chronic, but it's also different from what it was before. Our generation tends to think of the problem through the youth unemployment sort of lens.

• 5:08Speaker 03

  This is no longer about youth unemployment. This is about youth detachment. Six in 10 of these young people have never worked, they've never had the chance to be unemployed because they've never been employed. So this is a different phenomenon and a lot of it is driven by health, particularly mental ill health, but changes in the labour market and so on. So, you know, I talk about a lost generation and that is the real risk. If you've got a million young people potentially rising to a million and a quarter over the course of the next few years, who've got no attachment either to the world of work or the world of learning, that is storing up a huge amount of problems for the future.

• 5:42Rory Stewart?

  And am I right in saying there's something actually quite dramatically British about this, that it's a little bit different from what's happening in other advanced economies?

• 5:52Speaker 03

  Yes, absolutely, it is. It's, I think we've got the second worst NEETS rate in the whole of Europe. Romania is below, but comparable countries, you know, 50 miles to the west, Ireland has got a NEETS rate that's about half. 50 odd miles to the east, Holland has got a NEETS rate that is about a third. So there's a peculiarly British problem and it's a product of a lot of things, of course. It's a problem of labour market change, fewer entry level jobs, all of that sort of stuff that's been going on. People talk about the decline of the Saturday job, fewer apprenticeships for young people. That combined with this mental health crisis has created a perfect storm that is very peculiar

• 6:34Speaker 03

  to Britain and we haven't frankly had the right public policy response and not, to be candid, have we had the right response from employers and educators and others in civil society.

• 6:45Alastair Campbell?

  Alan, there was a, there's a question from Kevin Ingles, who wants to know whether we should be worried. The second part of your report has been postponed until after the budget. When I saw you at the Labour Party Conference, the thinking was that this would come, your report would come before the budget, you'd put out some big ideas that would require a lot of funding, then the funding would be provided. But it now seems that we'll have the budget and then your report. So I share that concern. Should we be alarmed about this or are you happy?

• 7:14Speaker 03

  You shouldn't be alarmed. I think you spoke to Andy, I think you spoke to the Prime Minister, didn't you, about this when you, when you had him on recently? I thought, Andy, you know, give us our answer, which is, look, the truth is, in terms of the funding for this, and it will require some investment upfront, of course it will if we're going to deal with this. You can get money out the back end, so to speak, by getting the benefits bill down, but the only sustainable way of doing that is to get young people into jobs so they're not on benefit, they're paying their taxes and therefore over time the benefits bill could come down. That's the only sustainable way of doing it. But the truth is, the money was only ever going to come through the spending review process, not through the budget. So no, I'm not worried about that at all. You know, it'll come, the report will come in the, in the weeks following John Healy's

• 7:57Speaker 03

  budget and, you know, from all the conversations that I've had with the Prime Minister and with the Chancellor and indeed with other ministers, look, the government as a whole is signed up to this. They know it's a, it's an existential crisis for the country and more importantly, it's a visceral issue across the country for, for families, for young people, for communities. And the government would be very well advised, I think, to align with that concern about what's happening to the future downshift of young people and more importantly, to do something about it.

• 8:25Rory Stewart?

  So question from John, how do you think the government should explain why this is a problem to people? Why has the government's not spoken about it enough? And how would you Alan, if you were Prime Minister, explain to people why it really matters, why we should be worried about this?

• 8:41Speaker 03

  I'm not sure that they haven't spoken about it enough. I mean, both John and Andy in their Labour Party Conference speeches sort of talked about this issue as being a real issue. It's really interesting, you know, if I, if I do something like a radio phone in. Most of the calls are not about needs. They tend to be from the parents of young people who have just graduated from university and are struggling to get a graduate level job. And the interesting thing about this is the need problem used to be a problem for other people's children. But when you've got fifteen percent of these one million who've got a degree, thirty percent who've got five good GCSEs, this is a problem for all of our children. And we're all worried about what's going to happen in the future, right?

• 9:23Speaker 03

  And so the reason that I think this is so important politically and not just socially is that there's something going on in society that is a visceral, I was going to say concern, but it's bordering on a fear about what is going to happen to the next generation of young people. And that's more than about employment. It's about is AI going to eat all the jobs? What about the mental health crisis? Can you get on the housing ladder? The number of first time buyers in decline? All of that and more. And people are feeling that the sort of generational promise that we all grew up with, that each generation would do better than the last, that that's a promise that's now being broken. And that's why politicians go deal with it.

• 10:00Alastair Campbell?

  A question from Miranda. Was Tony Blair's education, education, education a mistake? I'm guessing what Miranda means by that was the commitment that we had to the goal of fifty percent of young people going to university. Martha, is it time we rethink traditional education exams for children struggling with the standard system? Take them as a whole, the education debate and the centrality to this.

• 10:22Speaker 03

  Well, first of all, on the sort of, you know, the government that both you and I served under Tony's leadership, was that a wrong thing to do? No, it wasn't because, you know, the nature of the economy is changing very fast and you required more skilled labour for the future. It's changing faster than ever. And the truth is, over time, we've become a world leader in higher education. Thank God for that. I'm a chancellor of a great British university at Lancaster and we want more and more young people being able to get into higher education if they can. We're a world leader in higher education, but the truth is, we've become a laggard in technical and vocational education. And the question is, can we do both? And I think we can. And if you look at the low need rate countries like Holland

• 11:06Speaker 03

  or Germany or Denmark, the truth is, they've over invested in vocational education, further education and apprenticeships. And if there was one thing that you were going to change, it would be to put your money as a government and as a state, as a country, behind those sort of interventions.

• 11:24Rory Stewart?

  Well, we had a question here from Izzy. Which aspects the Dutch education system could help reduce the number of needs in the UK? I mean, this is getting quite niche because we're getting into other countries. But it certainly seems, as you're saying here, Alan, that other European countries have done better. We've talked on the podcast in the past about how remarkable Switzerland seems to be in the range of vocational training it offers. But one thing that you get back and that people would push back against Izzy is it's not that easy to redesign a country's education system. It might well be the Netherlands or Switzerland's doing something amazing, but it might also be the case that it would take incredible resources, changes and time

• 12:09Rory Stewart?

  to redesign our system to be like that. And I guess you probably went through a version of this when you were running the NHS, where people would come to you and say, well, why can't we have a French system? And your answer might be, well, French system might be very good, but redesigning our whole system and become the French system would be a a massive expanse in time, right?

• 12:28Speaker 03

  Yeah. And look, you can't lift and shift other countries, whether it's education, health or welfare systems, but you can learn. You can learn from them. And certainly when we went to Holland, you know, a few weeks ago, which was a really interesting visit. I'll tell you the thing that was really striking. It was all about the primacy of work. So every single young person that I spoke to were, you know, if they were in college, for example, they were all doing some part time work at the same time. When I spoke to all the kids, every one of them, whilst they'd been in school, had been doing a part time job of some sort in a restaurant or in a hotel or in a bar or in a shop or whatever. So the much famed death of the Saturday job that we talk about here doesn't seem to have happened there.

• 13:14Speaker 03

  And it shows up in the data. So about fifty one percent of Dutch young people aged sixteen to eighteen, whilst they're learning, are also earning. The same number in this country is seventeen percent.

• 13:27Speaker 03

  So there's something about the primacy of work and the purpose of work. And it's not just about the gifting of income that it gives, it's the gifting of a purpose. And so their system allows much greater interplay between, to put it crudely, learning and earning. And our system tends to force you to choose. So you can see that in work experience, for example, far fewer young people.

• 13:49Rory Stewart?

  A little bit. So we really understand how the Dutch system does that and how it's different from our system.

• 13:54Speaker 03

  So for example, it places a great premium on work experience. So it's just normal. You know, in our country, the truth is, work experience is very haphazard. All too often it relies on who you know rather than what you know. So you go to your mum and dad, you know, they know somebody somewhere, they get you into a decent workplace. But often you've got to organise it yourself as a kid. And that obviously favours those with higher degrees of social capital than others. So we know how that cuts in class terms. And so this isn't working. And in my view, work experience has got to become a mainstream part of what in particular secondary education does. But also in primary education, it's never too early

• 14:35Speaker 03

  for children to sort of begin to understand what the world of work is about and what the range of opportunities and potential is. So we've got to be opening young people's eyes and not just opening up the opportunities for them at as younger age as possible. We've never institutionalised that here. And that's one of the things that I think we need to do.

• 14:54Alastair Campbell?

  A question from John, who's a Trip Plus member from Cumbria. How do the findings and recommendations of your report, and that of Professor Peter Fonagy and his colleagues, compare and contrast? And the Fonagy report is that one which is published recently about this seeming growing crisis in young people and mental health. Peter Fonagy very much against this notion of the snowflake generation. There are issues to do with diagnosis of autism and ADHD, but essentially he is, he's on the side of young people in this and he's basically saying we've got an awful lot more to do to help them. How do you see your report fitting with his?

• 15:32Speaker 03

  So I think Peter and I are very aligned. We've been talking all the way through for the last sort of several months about this. And obviously his report came out very recently and mine will follow. So first of all, Peter's absolutely right. You know, this debate, the thing that angers me most about this whole debate around young people is that somehow they're to blame. It's their fault. They've gone soft. There are the snowflakes. They don't have resilience. They're not trying. They're not putting in effort. Honestly, I go around the countries, you know, ask, I'm talking to young people and very often meet them when they've been applying, sometimes for dozens, sometimes hundreds of jobs over the course of a month, never getting a response, by the way, which is shocking, you know, so that not only dents their confidence, it kills their hope.

• 16:16Speaker 03

  So it's not a shortage of effort on the part of young people that's a problem. My view is a shortage of opportunity and a shortage of support. And that's what the state and employers together have got to address. Point one, point two. Peter is right to say that distress, anxiety is rising in this generation, maybe for understandable reasons. Not one single cause, it'll be multi, it'll be multi causal, but it's a real thing. I think what we ought to worry about is the rate of diagnosis rising faster than the rate of prevalence. And that's a problem. Diagnosis, as you know, can be a really good thing because it helps people. It helps them sort out their futures and what they need.

• 16:56Speaker 03

  But it can also be a form of identification for young people, which is too much focused on what they can't do rather than what they could do. And I think this is the general problem in the health and welfare system, that the starting question that we often ask is what can't you do? And do you need some income support rather than what could you do? And do you need some employment support? Eighty three percent of these young people who are neat when we've surveyed them want to be in work and training. I've never met a single young person who wants to be neat. They want to do what we all want to do, which is to get purpose from contributing. But the system is set up in such a way that it ends up trapping them in inactivity rather than helping them to be active, whether that's learning or earning.

• 17:41Speaker 03

  And that requires, to Rory's earlier question, that requires a fundamental redesign of the system. If you like, it's too much a welfare system and it's not enough a work system. And the lesson to learn from the Dutch in particular is that we've got to put greater primacy on the benefits that work can bring for this generation of young people.

• 18:01Rory Stewart?

  It's an interesting, I mean, I was just looking at the figures. And that common mental health disorders among Asels and England's and the figures I've got seem to have increased from about fifteen percent when you guys were first coming into government to about twenty to twenty three percent today. And for young people, again, an increase from about one in six to about one in four. And particular increase, I think, in particular types of diagnosis, ADHD, autism. Tell us a little bit about this. I mean, it's because you seem to be saying two things, actually. One is that there are genuine issues here and I'd be interested in that. You know, why would more people genuinely have these conditions in the case of the past?

• 18:44Rory Stewart?

  What does that say about our society? And secondly, why we might end up with diagnoses going up ahead of prevalence?

• 18:53Speaker 03

  So I think great question and the right one. So look, there'll never be a single root cause analysis answer to that question. Some would say it's about the impact of social media, it's the bedroom generation, a lot of young people stuck in their bedrooms. We have a small team going around the country, talking to neat young people. And when they start their focus groups, the first question that they ask is what time did you go to sleep last night? Two o'clock, three o'clock, four o'clock, five o'clock, sometimes never. So this is a generation that have become trapped. A portion of them have become trapped in their bedrooms, stuck on their phones. So that's obviously had some impact. But the world's a pretty anxious place, right? It's not irrational and there's a lot to worry about and be fearful of.

• 19:37Speaker 03

  And particularly as we look forward, AI, what's going to happen to the jobs market, all of these things. So some of that is undoubtedly going on, but what we can't have is a situation where we're saying, look, the answer to this is to get a diagnosis. And by the way, the way the NHS works is we've got this diagnose, wait, treat model. So you're waiting for your diagnosis. Whilst you're waiting, you're not working, you're getting more anxious, not less. Whilst you're waiting, you tip into welfare. Once you tip into welfare, you can't get out. If you get a health and disability benefit today as a young person, you stand a 50% chance in 15 years' time of still being on that benefit, still being unemployed. So everybody talks about the fiscal costs and they're real.

• 20:20Speaker 03

  And you started, Alistair, with the economic costs and they're huge. But the real cost is in the life chances of young people. It's ruinous for them, the way the system is set up. So when I talk about this, I talk as much as anything else about being a moral crisis for the country. It's a moral crisis, not just a fiscal crisis or an economic one. And that's the reason the politics has got to lean into it.

• 20:41Alastair Campbell?

  We had a lot of questions about AI. Edward, isn't it time we regulated or set requirements on recruiters and the use of AI in sifting? This relates to your point about not even getting a hearing when they see a CV. Matt, what can the government do to change hiring? So my CV is actually seen by a person, not AI. Dean, how can we stop AI taking jobs so rapidly? And I think it's fair to say the tone of the questioning about AI was was almost universally alarmed.

• 21:09Speaker 03

  Yes, and I get that. And obviously, look, there's a balance to be struck here, isn't there? Because AI is going to bring enormous benefits to the world, not least in my old beat in in health. You can see that if we can get the the right alignment between advances in analytical ability and genomic science, we're into a different world of being able to predict and prevent our health for the first time in human history, rather than simply having to diagnose and treat it. That will be a wonderful thing, not least in drug discovery for cancer and so on and so forth. And some of that is beginning to happen. But there are downsides, as there have been with every single technological advance that we've seen in in human history. And, you know, one of the issues that young people in particular raise is this question of being

• 21:54Speaker 03

  protocolized, if you like, with their job applications, no longer speaking to a human and instead simply being sifted out, never getting a response, never getting feedback, feeling like the effort that you put in isn't being recognized, isn't being rewarded. If anything is going to make you depressed and dispirited, is that? This is ending up in the sort of, it's a rejection economy where people are just rejected out of hand without having any feedback at all. Some employers are beginning to realise that that is not on and are finding ways actually of using AI and technology to be able to provide good answers and support and feedback to young people. So I think there's a lot to learn from that.

• 22:36Speaker 03

  I think in terms of government generally, I would say in terms strategically of where we are with AI, we were probably, the government is probably behind the pace because the pace of change is is so rapid. It needs to catch up and it needs to think very hard in particular about where, if there is public money involved going to companies who are using AI, which has the impact of limiting young people's opportunities in the jobs market, that requires a second look, in my view.

• 23:06Rory Stewart?

  I guess a company is using the AI, they would say, because it's more productive. And one of the challenges in the British economy traditionally have been we haven't made investments in productivity. We've tended to, compared to France or Germany, have a lot of people doing jobs which could be mechanized and could be replaced by technology. So companies would say, whoa, whoa, whoa, are you actually saying if I have an option to use technology to make my company more efficient, reduce my wage bill, grow more quickly, compete internationally, you're going to say to me that I can't do that

• 23:49Rory Stewart?

  and I'm going to have to hire a human because that will make a big problem if I'm competing with Germany, France or the US?

• 23:54Speaker 03

  So obviously there are different problems to solve here. And you're right about Britain's productivity rate, of course. You know, we've had this huge problem and that is in part a consequence, as you know, of being undercapitalized and under digitalized as a nation. We simply are not investing enough in capital, in infrastructure or in digital. So we need to do that to correct. But I also think there's a sort of moment in time about economic policy here. So I think the argument has been won that capital investment is a really good thing. I'm not sure that we've won a different argument, which is that investment in human capital is as important as is in physical capital. Because unless we're investing in the next generation of young people,

• 24:38Speaker 03

  then we're storing up an enormous amount of trouble for the future of the British economy. So we estimate in our first report that the drag on Britain's economy in terms of growth amounts to about 125 billion quid a year from not having these young people in work. That's as much as we spend on education every year. So this is about a different, just as there was a different way of having to think about capital investment as being a good long term thing, we've got to think about human investment as being a good long term thing. And the truth is, if we're not investing in the future of young people, we're not really investing in the future of the country, are we? And I speak with feeling about this as someone who's growing older because I want these young people in work

• 25:20Speaker 03

  because I want them not on benefits, I want them paying their taxes so they can look after my generation in old age. So this is not about a generation versus a generation. We've got a shared interest in maximizing the contribution that young people can make.

• 25:34Alastair Campbell?

  How can we convince employers to take a chance on young people? The jobs guarantee funds wages for six months, but this is much harder for smaller businesses. And that question, Alan, comes from Vicky Spratt, who did a brilliant series on Gen Z for The Rest is Politics. And if you want to go back and listen to that, because it covers a lot of these themes that we're talking about, then just become a member at therestispolitics.com.

• 25:57Speaker 03

  Yep, she's absolutely right. And look, the truth is, every time an employer, particularly an SME, recruits a young person, it's always a risk for a very simple reason, they're unproven. It's not like a 38 year old, if you hire an 18 year old, there's no track record, there's no CV, there's none of that, there's no work experience very often. So we've got to make it less risky and more easy for employers to hire young people. And over the course, not everybody bangs on about the minimum wage and national insurance contributions. And by the way, they have had an impact on the youth labour market. There is little doubt about that. But this goes back not over a couple of years, but over very, very many years,

• 26:39Speaker 03

  where the regulatory burden, the fiscal burden, the organisational burden on employers has been rising at the same time as the pastoral burden has been going up. Because if you think about the average young person now coming into work, they're probably carrying more stuff with them. We talked about this mental health issue and ADHD and autism than was the case in the past. So we're asking more of employers, but we're imposing more. I'm sorry, that is an equation that just doesn't add up. It doesn't work. And that means that there are going to be some very difficult issues that the government is going to have to lean into if it is going to get the partnership right with employers. Because the truth is, look, you know, for 40 years, Alistair,

• 27:23Speaker 03

  public policy has sort of lived a fallacy about this question. It's assumed that if we fix the young people, make them more employable, improve the standards in schools, up their skills, toughen their benefits, that that will be the answer and will solve this problem. Okay? And you might need to do more of all of that. But unless you fix the demand side and ensure that there are employers who want to employ young people, you can fix the supply side as much as you like. These two things have got to go together. And that's why it's got to be a shared national cause, in my view, for employers as well as public policy if we're going to solve this problem, you know, in its roots, which is about making sure there's opportunities for young people to get into work.

• 28:04Alastair Campbell?

  Let's take a quick break and then we'll we'll come back for for more questions in a second.

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• 29:47Alastair Campbell?

  Welcome back to the Restless Politics Question Time. Me, Rory Shudd. And me, Alastair Campbell. And we're talking to Alan Milburn, who is in charge of the Neets Review. Lucy, how can we change the narrative that young people are just lazy? She's a young person who feels that our generation thinks that a lot of young people actually just don't want to work. I did a podcast recently, I told you this at the Labour Party Conference, Alan, but a young woman called, from your neck of the woods, called Riley, who said, can we get rid of the word Neets? We should be called Deets. We're desperate for education, employment and training. So, you know, and yet, they do feel that. They, a lot of young people feel that our generation just looks down on them, thinks that they're lazy, thinks they're entitled, thinks they're spoiled. It is a very powerful narrative.

• 30:32Alastair Campbell?

  Is that something you're going to address in this report? Or do you think that's just a more societal, cultural issue that we've got to think about?

• 30:38Speaker 03

  I actually think we're beginning to win the argument, to be honest. Maybe I'm overly optimistic about it. But one of the things that really struck me when we began this work, you know, getting on for a year ago now, was precisely that, that you had to win an argument about, in the great blame game, who was to blame here? Was the fundamental problem that it was young people to blame? Or was the fundamental problem that there was this systemic issue that was to blame? And, you know, I've come to the very strong view, it's a systemic problem. It's a problem about how public policy works. It doesn't have youth participation at its core. All of these systems, education, health, welfare, they operate in separate silos. The labour market is assumed just to look after itself.

• 31:21Speaker 03

  Employers will do their thing. We can't have that view if we're going to solve the problem. And I think, you know, I think the best evidence for the fact that young people are not the problem is young people themselves. So when we go out and talk to them, when we poll them, when we survey them, the answers are consistent. I was talking to the Children's Commissioner about this the other day, Rachel De Souza, and she's done this massive, she's got all this data, it's incredible. You know, the number one issue, the number one thing in all the things in the world that young people could be asking for more than anything else? What's the number one thing? A job. A job. They just want what we always wanted. They want a job. They want an opportunity to be part of, not separate from. They don't want to be attached, they want to be involved. And as I say, when we've surveyed Neets,

• 32:07Speaker 03

  horrible word, 84% of them want to be in work or training. The young people are on health and disability benefits. 50% of them would say that they could work or be in training now if they were given the right support, but they're not. What we're doing is we're spending, for every 25 quid that we spend on giving income support to young people on benefits, we're spending a pound on employment support. So the very thing that young people want, which is to be in work, is the very thing that the state isn't gifting. And that's just, it's wrong.

• 32:40Alastair Campbell?

  That's a stunning fact. For every pound we spend investing in young people getting to work, it's costing us 25 to keep those who are not working, kind of, you know, off the breadline. Can you give us an indication of what sort of scale of policy recommendations you're going to make that might fix that?

• 33:00Speaker 03

  So the welfare state and its first principle, which is, it's always got to be there for people when they're needed, is the right principle. But it can't just be a safety net. For young people, it's got to be a springboard. It's got to provide them with a ladder up. And what it does instead is it's providing them with an elephant trap for which there's no escape. And what we've got to do is, in my view, fundamentally reshape what the welfare state does with a new emphasis on participation, whether that is in work or training or education for young people. And what that really means is that the two aspects of the welfare state, one is about income support and benefits, and the other is about employment support

• 33:45Speaker 03

  and getting people off benefits. We've got to dial down the first, and we've got to dial up the second. And that is quite a fundamental redesign. And it's going to be difficult. And in some cases, it's going to be quite painful. But honestly, we can't, we can't just keep ignoring this. Because we're ruining people's life chances by this sort of, you write them a cheque, but you don't give them a plan. You write them off, you sign them off. And look at the data. Look what happens to them. Not just that their health deteriorates, but their ability to earn income and be independent deteriorates. You know, we did these numbers about, if you were neat for six years, from 18 to 24 years of age, as about a quarter

• 34:26Speaker 03

  of neat young people are, your lifetime earnings loss amount to well over a quarter of a million quid. That's what you lose. And that's not just an arbitrary number, that's a deposit never paid for your house. It's holidays never had. It's opportunities that you're never going to be able to grasp. So we've got to change, back to this question about narrative, we've got to change the narrative around welfare. Because if it's all about, how much income do you get through benefits today, rather than about, how do your life chances improve tomorrow, then we continue to do what we continue to do, and we'll get what we've been getting, which is more young people who are trapped on benefits rather than being in work. And that's not where they want to be.

• 35:06Rory Stewart?

  I guess we now need to get to the real nub of this, which is, you're hinting at stuff. You know, there's an elephant trap that they're stuck in. You're hinting at painful choices. But there's nothing you've said so far that anyone's going to disagree with. What's going to make a difference is you introducing policies that are going to be genuinely radical. And there are going to be winners, and there are going to be losers, and there are going to be politicians screaming, and there are going to be lobbyists screaming, and there are going to be NGOs screaming. So explain to us, as brutally as possible, what the really tough choices are, and why they're so difficult for governments, and why governments haven't done them for the last 25 years.

• 35:47Speaker 03

  Okay, so how long have you got? So this is not just about, first of all, it's not just about welfare. Everybody who wants to speak about welfare, great. And there are some really difficult choices in there. And I've sort of, you know, begun to outline what some of that might be. How do we move people from a world where they're gifted a temporary income, rather than being gifted a long-term future?

• 36:07Rory Stewart?

  And Alan, can you start with that? Because again, that's quite abstract. What does that mean in practice? And because otherwise, we won't understand where the opposition's going to come from, or where the problems come from.

• 36:17Speaker 03

  So what it means in practice is, you come into the system right now, and if you are assessed as having a health condition, you are put on what's called politely the health journey. You get universal credit health, or you get PIP. And by and large, once you get on it, you can't get off it. Okay? Because the incentives kick in. So, you know, you get this income. The risk of trying a job is very high, so people don't. And that's why you get this data point about a 50% chance of young people who get a health and disability benefit still being on it in 15 years' time. So what we've got to do, in my view, is we've got to make sure that young people are being gifted not just

• 37:00Speaker 03

  an income, but an opportunity, and critically, the support to grab that opportunity. So if you think about it, for a young person who comes in, say, with mild or moderate anxiety or depression or ADHD, the automatic response at the moment is, what's the benefit entitlement that we can give you? What we should be saying to young people is, what's the help and support that we can give you to enable you to do what you would like to do? You know, is there a job? Is it training? Is it apprenticeship? Is it a place and further education? You know, is it some volunteering or community work if you've got learning disability? Is it a supported internship? But that's not the first question that we ask. We ask the wrong first question all the time, and then we're surprised about

• 37:42Speaker 03

  the answer. So welfare reform's one part of it. Sorry, Rory. But the other part of it, none of this begins at 16 or 18. Okay? There's a brilliant longitudinal study in Bradford, called Born in Bradford, which is traced, thousands of young people, we actually set it up in the new Labour years, in that city, looking at what's happened to their life chances from the age of four or five. They can predict, I'm sorry to say, with tragic accuracy, who at the age of four or five is likely to be neat at the age of 16 or 17. That is a tragedy. And that's about communities and schools and early years. So what goes on there is as important as what goes on in welfare. So we've got to

• 38:25Speaker 03

  ask some fundamental questions about, is the school system set up right? Is the curriculum that we're providing for young people, is it gifting the adaptability that they are going to need in a world of AI, where jobs are going to be changing pretty fast? Is it doing that? Or is it so stuck in its tram lanes around qualifications and examinations, but it isn't providing that agility and adaptability that young people are going to need in the future to be successful? You can't protect the young against change. But what you can do is a better job at ensuring them that they've got the adaptability skills to be able to survive in a world of constant turbulence, which is the world they're going to be in.

• 39:08Alastair Campbell?

  But Alan, we had a, we've already had a curriculum review, and it didn't really meet the sort of challenge that you're talking about. And also, I get the feeling from what you're saying, that you're going to be putting forward proposals, which Andy Burnham has indicated he'll be minded, you know, tonally, he was very positive about your work when we talked to him last week. But, you know, when Keir Starmer brought forward the welfare and disability benefit reform bill, he had 126 backbenchers.

• 39:37Alastair Campbell?

  Organise the rebellion against it. It sounds to me like you might actually be be bringing forward suggestions for change that go further than some of the things that Labour MPs voted against.

• 39:49Speaker 03

  Yes, that is true. We will be bringing a fundamental change and reform of the welfare system for the under twenty fives to the government, just as we'll be doing that in the education system, the skills system, the health system and in labour market policy. But the reason I believe it's different, Alastair, and the reason that I believe that the Labour Government, the Labour MPs and Parliament are going to back this is because this is not being framed as some sort of fiscal grab on the welfare bill. It may have important fiscal benefits in that we can reduce the benefits bill over time.

• 40:30Speaker 03

  But the primary purpose of this is to change not the fiscal trajectory, but the life chances trajectory of a whole generation of young people to make sure that they're getting the opportunities and the support that they need to be able to get into work. And when I have those conversations, in particular, as I have with Pat McFadden, um, the uh, welfare uh, and pension secretary over the course of these last few months with Labour MPs. This is something that they understand. They know that the current system is not only denuding young people's life chances, it's ruining them. And that's not a future that we should be looking for for the next generation of the young. So there is going to be a fundamental choice for the country. But honestly, you look at the numbers.

• 41:16Speaker 03

  It's insane. I mean, this is getting the numbers fiscally, the numbers of young people on benefit. We're going to end up in a world where if we're not careful, on PIP alone, the numbers of young people getting PIP are going to quadruple over the course of twenty five years to the year twenty thirty seven. This is unsustainable, I'm sorry, and it's unsustainable, not because of the fiscal cost, but because of the life chances cost.

• 41:43Rory Stewart?

  And can you explain to listeners who don't understand, what what is PIP and why could it be an elephant trap? And and what kind of change could make it better?

• 41:52Speaker 03

  A PIP is it's it's a personal independence payment. It's there to help not just young people, but others who need support with their ill health, their disability to maintain their independence. It could be spent on a whole variety of things. It doesn't have any participation requirements attached to it. And, you know, a lot of young people can use it in order to be able to go out to work or to learn. Um, but that is not a formal part of it. And I think when you look at the overall welfare system and the benefit system in particular, you see that the percentage of the benefits bill going to young people, which has some sort of support attached to it

• 42:34Speaker 03

  to enable young people, whether they're disabled or not, to be able to get into work, is pretty limited. And so we've back to that twenty five pound, one pound ratio, we've got to fundamentally change that in such a way that the very thing that young people want is the thing that the welfare state is gifting them. And that's not what's happening today. There'll always be a small cohort of young people with severe, enduring, complex needs who are not going to be able to work, who are not going to be able to participate. And in my view, they need more support, including more financial support than they're getting at the moment. But for the vast majority of young people, we should start with this proposition. If you can work, you should work. The job of the state is to enable that to happen.

• 43:20Speaker 03

  Um, and that requires more opportunities and the jobs guarantee and the government's youth guarantee are perfectly good things, but they're a starter for ten. They're not a scale play. And that's what we have got in this report. We've got to look at what can be done to build on those and to make sure that the practical support for young people, being able to get access to early mental health support, whether digitally or otherwise, being able to get some vocational rehabilitation, being able to get some personal counselling, having a plan that enables you to get off welfare and into work. That's a thing that in other systems in the world with far lower need rates than we have, those are just commonplace. It's just that we've never adopted them.

• 44:03Rory Stewart?

  Just, so I really get it in my head. We've got a young, let's say, man called Alan, age nineteen, who's on PIPs. Describe some of the challenges they might face, what their elephant trap feels like, and describe the world that you would want

• 44:22Rory Stewart?

  Alan to be in in five years' time. What's, what, what's, how, how, how's, how's he trapped at the moment? And what would, what would the better system be?

• 44:30Speaker 03

  If he's on a, on a health and disability benefit, you pretty much come into the system.

• 44:36Speaker 03

  And early on, you go through what's called a work capability assessment, which basically decides, can you work or can't? It's very binary. Okay, so maybe Alan comes in with mild ADHD, okay, which by the way is a fluctuating condition. It's not a permanent one. But the system makes a permanent decision. You're not fit to work. And therefore, what it does is it pays you more ironically than if you're not paid to work. If you're not paid to work, you get more support. And by the way, you get more hassle from the job centre to make sure that you are looking for work than if you're not. If you're on one of these so-called health journeys, universal credit health or PIP, pretty much

• 45:19Speaker 03

  you are left on your own. You don't get any support. You don't get any hassle. There's no so-called conditionality attached to the benefits that you get. So you're on your own. And therefore, what happens is you get stuck. And the data is telling us not just that the numbers are very high you get stuck, but they're getting worse and worse and worse over, over time. So that's what happens to people. And at the same time, these are the very people who are telling us and indeed telling the state, oh, by the way, what we really want is to work. We want to be independent, not dependent, you know? We want to be able to participate, not be inactive. And yet that's the very thing that young people are wanting and very thing

• 46:00Speaker 03

  that the state isn't providing. And that's why you've got to do this change. And I think, you know, I mean, maybe I'm, you know, one of the biggest arguments I ever had with, with Tony Alastair was when we were arguing about something, um, probably about health reform or something. And he said to me at one point, so the problem with you, Alan, is that you're too rational for politics. And and it's sort of a bit true. I sort of am. I sort of believe in data and analysis and all of that thing. And maybe I've been overly, overly rational about this and overly optimistic about it. But I think we've just reached a crescendo on this where it can't clearly go on as it is.

• 46:40Speaker 03

  It's not sustainable. It's getting worse, not better. The feel in society amongst families, employers, politicians is heavens, we've got a generational crisis. And you just feel at that moment that rationality and optimism is going to prevail because it has to.

• 46:59Alastair Campbell?

  Alan, my final question, um, I'd be interested in, this is from me rather than one of our listeners, but I'd be really interested in what you think your past experience has brought to this. And also just how different it is being a cabinet minister who is regularly seeing the prime minister and has got, you know, really can make decisions and being an outside, an outside insider outsider who's been given a job, but ultimately you're not going to be the, the decision maker. I just wondered, I'd be really interested in the dynamic of that and how you were feeling about that.

• 47:36Speaker 03

  Yeah, no, it's a really interesting phenomenon because obviously this is an independent review. Um, it was set up by the Starmer government and he has more than embraced it and brought huge energy and commitment to it. And I think it is, I think as an issue, it's seen on his soul. He feels what I feel about it, that this is visceral and it's a generational inflection point and therefore we've got to, got to deal with it. Um, so it's independent, but what we have been doing all the way through this is we've been in active conversation with most cabinet ministers. So with Avet in health, with Pat in

• 48:15Speaker 03

  welfare, with Lucy in education, with Lisa in DCMS, with Angela, I was just talking to last week about local government mayors, with John as the chancellor, with Andy. So, so we're in a conversation with them and, you know, a lot of the conversation is basically sort of testing the bounds of what is possible and what is, what is feasible, but it's also testing the bounds of what is right. And so this is going to be a bit different from normal independent reviews. So you know what happens? You come along, you produce the report, you hand it over, the government says, oh, that's very interesting. We'll spend six months looking at this. And then six months later, we'll produce a white paper and two years' time, we'll have some legislation. That can't work politically for Andy Burnham because he's a half-term prime minister. He's got to get on with it.

• 49:00Speaker 03

  So the way that we try to set this up is in such a way that when we produce the report, there won't be a lot of surprises to the government because we'll have been in an active conversation with them. And therefore, we're going to concertina the time that it takes from creating this thing to implementing it. And from day one, the idea is to get on with implementation. By the way, we've been in conversation with all the other political parties as well. I briefed Kemi and the, a number of the shadow cabinet three, three weeks ago. I've spoken to Reform. I spoke to Ed Davey this week from the Liberal Democrats. We've spoken to the SNP, you know, et cetera, et cetera. We will continue to talk to all the political parties because my view about this is

• 49:39Speaker 03

  they will all have different views about how to change this. But what no one is resiling from is the need to change it. And that, in my view, is a good thing.

• 49:50Alastair Campbell?

  Will you be involved in implementation?

• 49:52Speaker 03

  Um, we're sort of in a discussion about whether that might be possible or, or not. I don't know yet. Um, so so obviously, you know, it's an issue that I care about, you know, because of where, mainly about where I come from in my life. And I've just been very, very lucky and I just can't stand the thought of a whole generation of young people who are not going to have, it's not luck, you're not going to have the opportunity that I had to get on in my, in my life. So I care about it, of course, absolutely. But we've got to find a way, I think, of ensuring that what we've done with this review, which is, you know, one on the same time, be sort of very independent, pushing the government hard and yet trying to find a way of collaborating with government to make it happen. That is something I, you know, we'd love to find a way of continuing in the future.

• 50:35Rory Stewart?

  You've pointed out that it's been twenty five years of this problem. So that implies that the Blair government, the Brown government, the Cameron government, the May government, the Johnson government, the Sunak government didn't manage to deal with the Starmer government. So I'd be interested in why. Because I guess that might be a clue to why you might fail too. What are the things that have stopped government dealing with it? And you're a great optimist, but if you didn't get this through, what do you think are going to be the two main reasons why you don't manage to get this reform through and why we're still stuck with this problem in five, 10 years' time?

• 51:13Speaker 03

  So I think what happens in politics and in life is that you see a problem and it just looks too big. And it becomes almost inevitable and inertia takes over. So it's not that there's been ignorance, but there has been neglect. As I say, this is a problem that has gone on for a very, very, very long time. And I think people have struggled with, you know, it's a huge elephant in the room, a million young people. God, how the hell do you deal with that? And the only way of dealing with it, in my view, and this is what, you know, when I started this work, you know, I said to my team, look, this is going to require a system answer. It's not an individual policy answer. That's why this report is not going to look like 12 recommendations and let the government pick and choose.

• 51:58Speaker 03

  It's going to feel much more like a white paper or a manifesto for change. Guys, we've got to move the dial fundamentally. Halway measures are not going to do the trick here. We've been trying that for donkey's years. If you think about the history of public policy, Rory, it's littered with youth employment schemes from the YTS, New Deal, Kickstarter. And some of them have actually been quite good, but here's the thing. None of them have lasted, not one, not one, because they've not been systemic. They've been temporary, they've been initiatives, they've not been strategic change. And so strategic change, as all of us know, is very, very hard for governments up against short-term cycles to be able to do. But that's what we've got to do with this.

• 52:43Speaker 03

  This is not a programme that is about one or two years, it's about 10. And so the question, the risk factors are the obvious ones, which is, is government and civil society prepared to stay the course? Point one. Point two, is this going to become more than the property of just the state and the government? Because unless you've got employers and mayors and local authorities on board to make this happen, then none of it will happen because the truth is labour markets are not national, they're local. And what we've got to do, as Andy talks about rewiring the state, is to make sure that the powers and accountabilities to make these changes happen, happen at a local level, not just at a national level. So, so risk two is, can you get all the players on board?

• 53:26Speaker 03

  And risk three, in a time of obviously difficult, a difficult fiscal position, is, you know, can you over time put the resources in that are going to be required to invest in apprenticeships and further education and support for young people to enable them to get into work? So my answer to that last question is, there's a counterfactual, which is if you don't invest, you'll end up paying a massive price. And what we've got too comfortable with, in my view, in this country, is paying the price of failure and being content to do that, rather than doing the preventative work that is necessary, getting upstream and investing early in order to prevent detachment later. So this is a moment, this is a choice, and it's a big one.

• 54:08Speaker 03

  And what I love about Andy's energy and his way of approaching things is that he's come into this as Prime Minister with a view that actually, you know what? I am going to do the difficult things for the long term. I am going to be prepared to stick it out. I am going to be prepared to make some difficult choices. This is one of those.

• 54:26Alastair Campbell?

  Well, that's why your one in 25 is such an important fact. A bit of comms advice, Alan, go big on that.

• 54:32Speaker 03

  Thanks, mate.

• 54:33Alastair Campbell?

  Thank you, thank you very much for your time. Honestly, it's been great to talk to you as ever. Um, I don't know if you know, I don't know how regularly you listen, but Rory often talks about you as one of his heroes, following your earlier appearance on the podcast, but thank you for this second one.

• 54:48Speaker 03

  Well, he's one of my heroes too, and so are you, Alistair.

• 54:52Alastair Campbell?

  Of course, of course, of course, yeah.

• 54:54Speaker 03

  No, well, it's true. No, look, thank you so much and thanks for, thanks for spending the time on this because it really is a, as you're finding, most importantly from your listeners, this is a, it really is a visceral thing.

• 55:06Rory Stewart?

  Thank you, Alan, very, very much.

• 55:07Speaker 03

  Thank you.

• 55:07Rory Stewart?

  Speak soon, I'm sure we'll have you back soon. Thanks again.

• 55:10Speaker 03

  All right, good to see you. Cheers, guys.

• 55:13Alastair Campbell?

  Well, there was a word he used at the end there, Rory, which was the M word, manifesto. Uh, I mean, that was, there's a lot going on in this thing. You know, he talked there about all the ministers that he's been dealing with. And I wonder, I just wonder, look, he's, where I think he's absolutely right is this is a problem that we've been sitting around with too long. It's grown too big, something big has to happen to deal with it. But secondly, that's why I was so interested, interested in whether he could be, whether you can do this from outside, because this is going to require so much drive within government, across government to make it happen. Um, it's a big, big, big, big project, this.

• 55:51Rory Stewart?

  Yeah, I mean, one of the things that's difficult as an outsider to completely understand is, and I, I wonder whether some listeners will feel this, is deciphering where the really tough, painful decisions are going to be. I mean, there was, am I right that what he's hinting at

• 56:08Rory Stewart?

  is it's basically going to be more difficult for somebody to get an unconditional PIP? That if you have ADHD, you're not going to be able to sit on this disability payment. But the whole system's going to be changed so that, and, and so I guess that's where the objection's going to come from, which is that constituents are going to be going to their Members of Parliament pretty quickly and saying, oi, somebody's just taken away my disability payment. I've got a serious condition. How the hell am I expected to work? And I, you know, I saw that because I saw this when the Tories tried changes to some of the benefit systems in 2010, 2012. I think I talked to you about it. I had, you know, blind people coming into my surgery saying they've just taken away my disability payment because somebody.

• 56:52Rory Stewart?

  And remember, it's not, you know, it's not a perfect system. It's in the end, some, somebody, a nurse, a doctor, a contractor out there in the world, meeting with a young person and deciding whether or not they're eligible. And there's a really complicated incentive system going on here, where I guess if you're the young person, you probably want the reassurance that

• 57:16Rory Stewart?

  you have a backup, that if things go wrong, people recognise that you have a disability and therefore you're going to get some payment from the state if you don't get a job. But at the same time, Alan's saying that that's an elephant trap. Am I right? That's the elephant trap he's talking about?

• 57:29Alastair Campbell?

  Yeah, absolutely, yeah. You get trapped in the system and it, and it becomes, I mean, I, it's, the other thing that I think is interesting is, if I read what Pat McFadden was saying at the Labour Party Conference, what Pat McFadden's been saying in his public statements and articles he's writing, I do, it is interesting, this thing where he's clearly working to some extent, hand in glove with ministers, trying to push an agenda. I was very interested in this thing, he said that he thinks the MPs get it this time. Uh, that is where this thing's going to get very, very severely tested, I think. Because as you say, you said there were winners and losers. And we all know that when it comes to something like the welfare state, you know, the losers can, they, they get a lot of attention. Rightly, they get a lot of attention.

• 58:14Rory Stewart?

  Well, and of course, it's, it's, it's, these are Labour MPs, right? So if what they are is people on low incomes, who are your constituents, who suddenly had their benefits cut and are being driven into more poverty, it's not going to be very surprising that if you're a Labour MP, you're going to be like, whoa, whoa, whoa, this is not what I signed up for. And they're not going to buy in necessarily to the story, oh, well, it'll be fine for 19-year-old Alan because he's going to find his way into a great job. They're going to be saying, no, no, no, no, no. Alan's got a serious mental health condition, he can't really be expected to work, there's no good work available. I mean, I was interested in the questions that we got actually. Because they weren't, and I, I, it's sort of interesting what you think about this, Alistair.

• 58:59Rory Stewart?

  Very few of the questions we received is what are the tough choices going to be? How are the benefits going to be cut? How's this going to work? The questions were, how can we change the narrative that young people are just lazy? How much is this problem due to boomers not retiring? What's the point of getting a degree if I'll still be economically invisible? Do you need to address the fact that a little joy or reward in most jobs these days? We've forgotten to fix toxic work environments. So a lot of the questions were not people saying, this is a really tough public policy choice where we're going to have to cut the welfare bill and radically change the incentives for young people to go into work. They were questions from young people talking about how difficult it is to get a job. The AI questions were partly about that too, weren't they?

• 59:44Alastair Campbell?

  Look, I think it's interesting how he's done this report in these two stages. But the, I'm guessing that the second report, which we were expecting for the budget and economy afterwards, is going to be where this bigger argument is then laid out alongside some difficult policy choices that the government is going to have to face. It's funny, at this conference I was at in Edinburgh this morning, there was somebody there who said that they thought that Alan Milburn's Neets report was going to be the most seminal moment of this government's life. We'll, we'll see whether that's the case.

• 1:00:14Rory Stewart?

  Well, I mean, I think, I think the explosion that's coming is that at the moment, there will be a lot of enthusiasm and support from young people who think this is a report that's going to understand young people, understand how tough it is to get a job, make it easier for them to get a job, deal with the toxic work environments and help them. But actually, what they're going to see in policy terms is something that's not going to feel like that to them. In the short term, it's going to feel to them as though, wait a sec, this is not what I was expecting. This is actually about the government cutting my benefits, cutting the support I'm getting and telling me that they're putting more money into what presumably will be

• 1:00:55Rory Stewart?

  people delivering youth training schemes, incentives to employers, um, stuff to try to get you a job. And, and if I was a young person, I'd be like, whoa, whoa, whoa, whoa, whoa. I've had my benefits cut and all this money's gone to some mysterious organisation running a youth training scheme, providing me with training. And it's not really dealing with either my mental health issues or the fact that I don't like these jobs I'm being offered.

• 1:01:19Alastair Campbell?

  There we are. Right, well, thank you to Alan Milburn. Thank you to all of you who wrote in your questions. And we'll be doing more of these sort of question time specials, no doubt, in the future. But meanwhile, Rory, see you soon.

• 1:01:30Rory Stewart?

  See you very soon. Bye bye.

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