Milburn Interim Review Deep Dive: What it means for FE

Alan Milburn’s interim findings into young people not in education, employment or training publish at 11am on 28 May 2026. The 217 page diagnostic is uncompromising. For further education, it is both a vindication of long held arguments about resourcing and reach, and a challenge that goes well beyond the sector itself, whilst also reflecting and building upon previous programmes and looking at everything from the impact of SEND to transport as barriers to be overcome for young people.

This is not a report about young people refusing work (Milburn highlights that 84% of NEET young people want a job or training). It is a report about a country that can often see disengagement forming years before adulthood, but has built no reliable system to prevent it. For FE, the uncomfortable truth is that colleges are both the safety net and one of the least resourced parts of that net.

What FE Leaders Need to Know

The report names FE as “the landscape” for young people at risk of becoming NEET, but says colleges are “serving those with the most complex needs with some of the most constrained resources.” Student numbers down 14% since 2016/17, per student funding £2,000 below HE, 32,000 unfunded students, half of new staff leaving within five years.

The funding structure penalises the institutions serving at risk students. In year growth is paid retrospectively. Funding is reduced when students fail to complete. The college that exists to catch struggling young people is structured to make catching them harder.

The Apprenticeship Levy has drifted toward funding higher level apprenticeships for older existing employees. Starts for under 19s have collapsed from 130,000 in 2014/15 to 75,000 in 2024/25. Foundation Apprenticeships are welcomed but the verdict is conditional on scale.

Apprenticeship starts for 16–24 year olds have fallen by 35% since the Apprenticeship Levy was introduced in 2017

Some key statistics in the Young People and Work Report highlights that Apprenticeship starts for 16–24 year olds have fallen by 35% since the Apprenticeship Levy was introduced in 2017. Level 2 starts – the entry-level provision that matters most for young people outside work – have fallen by 68%.

The report highlights that the architecture is the problem. Schools are inspected on attainment, not destinations, colleges are funded for enrolment, not sustained outcomes, and the LEO dataset that would link everything together is not routinely available to colleges, local authorities or strategic authorities.

At 18 the NEET rate trebles, statutory duties end, and around 314,000 18 to 24 year olds are neither in work, in education, nor on benefits. No institution is responsible for finding them.

Youth unemployment has risen from 9.2% in mid-2022 to now 15.8%

Youth unemployment has risen from 9.2% in mid-2022 to now 15.8% and more than a quarter of a million young people have been unemployed for over six months, the highest figure since early 2015.

Interestingly, only 2% of those currently on apprenticeships were previously NEET, highlighting that the system is not reaching the young people who need it most.

One million Lives, and a Structural Problem

At the end of 2025, 957,000 young people aged 16 to 24 in the UK were NEET. If they formed a city, Milburn writes, it would be the third largest in the country, larger than Leeds, Glasgow or Cardiff. On current trajectories his team forecasts the cohort reaching 1.25 million, or one in six young people, within five years.

Those figures predate the latest data. ONS estimates published the same morning put the cohort at 1,012,000 for the first quarter of 2026, meaning the million Milburn warns about has, on the headline measure, already arrived.

The proportion of 16–17-year-olds doing any paid work has nearly halved, from 35% in 2006 to 19% today

What separates this from previous waves is the composition. Nearly six in ten young people NEET are now economically inactive rather than unemployed. They are not looking for work. Six in ten have never had a job, up from four in ten in 2005. Among 24 year old NEETs, 45% have never had a paid job. The proportion of 16–17-year-olds doing any paid work has nearly halved, from 35% in 2006 to 19% today. Milburn calls this “detachment”, and he means it as something different in kind to the cyclical youth unemployment Britain has handled before.

Britain has also moved from the EU average a decade ago to 27th out of 28 in the comparator table. Only Romania records a higher youth NEET rate. France, with a similar rate to the UK going into the pandemic, has stabilised. The Netherlands sits at 4.1%, Denmark at 8.4%. The UK has tumbled while others have improved, which Milburn argues should also tell us the problem is solvable.

The Shift that Defines the Crisis

One number does the heavy lifting in Milburn’s diagnosis. The proportion of young people who are NEET due to a work limiting health condition has risen by 70% in a decade. Among disabled NEET young people, those citing mental health as their primary condition has almost doubled to more than four in ten.

Of those who fell into health related economic inactivity between 2017 and 2019, almost eight in ten were still NEET more than two years later. A young person first claiming health and disability benefits in 2019 is a third more likely to be NEET five years later than someone who first claimed in 2010. Cohorts are doing worse than the cohorts before them.

This is what Milburn calls “an interlocked health, disability and participation issue”, and it forms the backbone of his case that the welfare state, as currently configured, is “exacerbating inactivity” rather than enabling participation.

1 in 5 NEET young people now report mental health as their primary condition, more than double 2012 levels

The combined share of anxiety/depression, autism and ADHD as the primary condition for 16–24 year olds claiming PIP has risen from 49% in January 2020 to 64% by January 2026. Nearly half of all PIP claims among young people are now for autism and ADHD, compared to less than 1 in 10 for all PIP claimants. One in five (20%) of all NEET young people reported mental health as their primary health condition in 2025, more than double the share in 2012 when it stood at 7.7%.

The First Rung has Thinned

The report devotes substantial space to dismantling the supply side preoccupation in NEET policy. Better prepared young people arriving at a labour market that has thinned its entry routes will still be left outside. Roughly 30% of the NEET population now hold good GCSEs or equivalent, 21% have Level 3, and 15% have a degree. The labour market is simply not absorbing them.

Apprenticeship starts among young people have fallen by 35% over the past decade, with starts for under 19s collapsing from around 130,000 in 2014/15 to around 75,000 in 2024/25. Hospitality vacancies have halved in four years. Saturday jobs are in freefall. The young person who once walked into a shop, spoke to a manager and got a chance is now screened by a portal, an automated test, a recorded interview or an algorithm before anyone has looked them in the eye.

This matters because the education system has been quietly absorbing the shock. As labour market participation by young people has thinned, education participation has thickened. That buffer is now weakening. By age 18, a lower proportion of young people were in education or apprenticeships in 2024 than ten years earlier. Of those still in education, more were in higher education and fewer in further education or apprenticeships, the routes most accessible to those at risk of becoming NEET.

This is the system shock that should focus FE minds. The education shock absorber is failing precisely where the sector serves.

Further Education: Weaker, Smaller, Doing the Most with the Least

Milburn’s chapter on education and skills is the section the sector will read and re read. The verdict is not flattering for policymakers, but it is sympathetic to colleges themselves.

By 2025, only Romania recorded a higher youth NEET rate among EU countries

FE, the report says, is “the landscape” for young people at risk of becoming NEET, not a marginal part of the post 16 system. Around 42% of 16 to 17 year olds in England attend an FE college, rising to 53% in Wales. Compared with high performing countries such as Germany, the Netherlands and Denmark, the UK’s higher NEET rate is partly attributable to lower vocational participation. Resolution Foundation analysis cited in the report shows 22% of 18 to 21 year olds in the UK are in vocational education, against 35% in those comparators. By 2025, only Romania recorded a higher youth NEET rate among EU countries. A decade ago, the UK rate was close to the EU average.

And yet, in Milburn’s words, FE colleges are “serving those with the most complex needs with some of the most constrained resources.” Student numbers fell by around 14% between 2016/17 and 2023/24. Real terms 16 to 18 spending will remain well below early 2010s levels even after the increases promised in the Post 16 Education and Skills White Paper. Funding per FE student aged 16 to 18 sits at £7,860 against £9,906 per HE student. There are an estimated 32,000 unfunded students in the sector. Vacancy rates among FE staff stand at 3.9 per 100, with around 50% of new staff leaving within five years.

The funding structure compounds the problem. Because colleges are funded for 16 to 19 year olds largely on the basis of previous year intake, and growth funding is paid retrospectively, colleges absorb the risk of in year growth. Funding is reduced when students fail to complete. Students at risk of non completion are therefore financially risky to enrol. The institution that exists to catch the young people the system is failing has, in Milburn’s account, been structured to make catching them harder.

Around one in ten learners aged under 19 fails to complete their FE course each year. Welsh evidence cited in the report shows that 53% of learners who withdrew cited personal factors, with 67% of those flagging mental health.

The pastoral burden is the part FE leaders will recognise most sharply. The review found that FE staff “often perform informal brokerage and pastoral roles that are invisible in policy but critical for at risk students.” Lecturers act as mentors, employment coaches and referral agents to health and social services. These functions are unfunded, unmeasured and unrecognised. When budgets are constrained, as they have been for over a decade, these are the first capabilities to erode.

Apprenticeships: Drifted, Captured, and Slowly Being Reformed

The apprenticeship section is similarly damning. The Apprenticeship Levy, the report concludes, has been “disproportionately used to fund higher level apprenticeships for older, existing employees.” Higher apprenticeship starts grew from just over 2,000 in 2010/11 to more than 140,000 in 2024/25, over the same period that starts for under 19s collapsed. SME starts fell sharply alongside the Levy. The system has strengthened progression for those already in the labour market while narrowing access for those outside it.

Where apprenticeships do work, they work powerfully. Milburn cites lifetime economic value of £56,000 for a Level 2 apprenticeship and £104,000 for a Level 3, against £54,000 and £67,000 respectively for equivalent classroom based qualifications. But the route does not hold for previously NEET young people: only 49% of previously NEET apprentices are still employed by the organisation afterwards, compared with 68% of those who were not previously NEET. Around a quarter of the apprenticeship budget, an estimated £620 million in 2021/22, was spent on apprenticeships that were not completed.

The Foundation Apprenticeship route, launched by Skills England in August 2025, is welcomed, with the expectation of up to 30,000 starts over the current parliament. The new hiring subsidy and recent Growth and Skills Levy reforms are acknowledged as steps in the right direction. The verdict is conditional: whether they prove sufficient to reverse the structural drift away from young people depends on scale and sustainability.

Careers, Work Experience and the Missing Employer

Careers guidance gets a more nuanced verdict. The Careers and Enterprise Company, the Gatsby benchmarks and rising school engagement get credit, with Milburn citing CEC estimates that high quality careers provision reduces NEET likelihood by 8%.

But access remains deeply unequal. Only 32% of young people reported receiving face to face careers advice in 2025. Apprenticeships were discussed with just 18%. Lack of work experience is the single most cited barrier to work among young people, and the vast majority of NEET young people Milburn’s team spoke to had done no work experience at all.

The OECD comparison is striking. Around 40% of UK students are enrolled in combined school and work based programmes, against 90% or more in Denmark, Hungary, Ireland, Latvia and Switzerland. The system, in Milburn’s phrasing, “cannot claim to prepare young people for the labour market while keeping employers at arm’s length from the classroom.”

The Post-16 Cliff-Edge and the Architecture Problem

At 18 the NEET rate nearly trebles to 13%. At 21 it reaches 20%. Nearly 44% of all NEET young people in England are concentrated in the 22 to 24 age group. This is the cliff edge where statutory participation duties end, local authority tracking finishes, and institutions relinquish responsibility without anyone picking it up.

Raising the Participation Age is mandated but weakly enforced, with fragmented responsibility. Around 57,000 16 to 17 year olds in England are NEET despite the legal requirement. More troubling, in England in 2023/24 around 314,000 18 to 24 year olds were neither in work nor in education and not themselves receiving benefits. They are, in Milburn’s phrase, “out of work and out of sight.” No institution is responsible for finding them.

This is the architecture failure that runs through the whole report. The Department for Education holds, through its Longitudinal Education Outcomes dataset, what Milburn describes as “one of the most powerful tools in the world for understanding what happens to young people in England after they leave education.” It links education records to tax, benefits and employment data. It is not routinely available to schools, colleges, local authorities or strategic authorities. The people who most need to see where young people end up cannot see it.

Schools are inspected on attainment, not destinations. Colleges are funded for enrolment and completion, not for sustained outcomes. Jobcentres see only those who claim. The NHS records treatment but not return to work. Each institution holds a fragment. No one holds the whole.

What the Numbers Cost – The annual cost to the country of nearly one million NEET young people is £125 Billion

Milburn estimates the total annual cost to the country of nearly one million NEET young people at £125 billion, more than is spent on education in England each year. A single young person spending the full six year period NEET between 18 and 24 will lose, on Milburn’s modelling, up to £293,000 in lifetime earnings, with a corresponding lifetime cost to the state of up to £240,000.

For every £1 spent on employment support for young people in 2024/25, around £25 was spent on benefits

For every £1 spent on employment support for young people in 2024/25, around £25 was spent on benefits. Less than half of the £8.1 billion currently spent on key benefits for 16 to 24 year olds carries any participation support or requirements. Only around one in five young people NEET in England gets meaningful employment support from the welfare system.

What Comes Next?

Milburn is careful about what this interim report is not. It is a diagnosis, not a prescription. Final recommendations will follow later in 2026.

The directional commitments are nonetheless visible. Milburn calls for a shift from a “Welfare State” focused on income replacement to a “Working State” focused on participation, citing and building upon over two decades of intervention from the New Deal for Young People, the Future Jobs Fund, the Work Programme, the Youth Contract, Kickstart, Traineeships and the Youth Offer as a record of sustained effort and sustained failure. Programmes layered on top of fragmented architecture have not worked and will not work.

For FE specifically, the implications are pointed. Colleges are the institution most exposed to the cohort the system is failing, the most fiscally constrained, the most measured on the wrong things, and the most likely to be asked to do more. The Post 16 Education and Skills White Paper, the Schools White Paper, Skills England, Foundation Apprenticeships, V Levels, supported internships and the Youth Guarantee are all in flight. Milburn’s verdict is that they are necessary but not sufficient. The architecture itself is the problem.

That sets up the final report later this year as the moment when the policy reset, if there is to be one, is defined. Whether it is genuinely the system reset Milburn calls for, or another initiative layered onto fragmentation, will be the test. The FE sector should be ready to make its case.

Alan Milburn’s Young People and Work: Diagnostic Report publishes at 11am on 28 May 2026. The final report, with recommendations, is due later in 2026.