Alan Milburn, the former Labour health secretary, is set to lead a major review that will scrutinise the impact of the rising youth minimum wage, amid warnings that young people are being priced out of the jobs market.
Risk of a 'Lost Generation' on Benefits
Launching an inquiry into why a quarter of 16- to 24-year-olds are not in education, employment, or training, Milburn issued a stark warning. He said the UK risks creating a 'lost generation' of young people condemned to a life on benefits unless the government confronts 'uncomfortable truths' about the labour market.
Milburn, a social mobility expert and veteran of Tony Blair's government, told the Guardian that the country faced a 'perfect storm' in the youth labour market following the Covid-19 crisis. This has been exacerbated by decades of systemic failure and policy neglect in education and welfare.
'You write off a generation, you write off the country’s future,' he stated. 'We’re plunging young people into a lifetime on benefits, rather than creating an upward escalator, with opportunities for people to learn and to earn.'
Minimum Wage Increase Under the Microscope
A central and contentious part of Milburn's review will be examining the national minimum wage for younger workers. His intervention echoes concerns from economists that the government's drive to equalise youth rates with the adult rate could see some priced out of entry-level jobs.
'We’ve got to look very carefully at exactly that,' Milburn said. 'We’ve got to make sure that in a fragile youth labour market... public policy is providing the right incentives for employers to employ more young people, rather than less.'
This stance is likely to cause dismay among some Labour MPs and trade unions, as the party has pledged to end 'discriminatory' lower pay rates for young adults. Andrea Egan, the incoming general secretary of Unison, recently warned in the Guardian that she would call time on supporting politicians who act against the union's interests.
Confronting 'Uncomfortable Truths' on Mental Health and Technology
Milburn's review, due to report to Work and Pensions Secretary Pat McFadden in the summer, will not shy away from radical recommendations. He plans to investigate the steep rise in mental health-related sickness claims among the young.
He cautioned against a narrative that work is inherently bad for mental health, arguing that 'good work, in particular, is extremely good for people’s mental health.' His findings will be informed by a separate clinical review of mental health diagnosis ordered by Health Secretary Wes Streeting.
Furthermore, Milburn highlighted the need to prepare young people for the 'tomorrow’s potential tsunami' of technological advance, which could further disrupt the youth labour market. 'What we have got to do is equip people to be able to adapt, be agile enough, to have enough resilience, to be able to succeed,' he argued.
Political Fallout and a 'Broken' Social Contract
The former cabinet minister linked the economic plight of the young to a dangerous political disillusionment. He suggested that as mainstream parties fail to address generational inequality, young people are deserting them and could turn towards right-wing populist groups like Reform UK.
'That should be something that people would want to avoid, particularly people who are concerned about progressive politics,' Milburn said. 'It’s pretty obvious that that social contract is being broken.'
He also criticised the government's recent approach to welfare reform, describing its failed attempt to win over MPs as 'self-evidently' badly wrong. Framing reform purely as a cost-cutting measure was 'not a sensible approach,' he said, insisting that the only sustainable way to reduce welfare bills is to first create more opportunities to learn and earn.
With Labour struggling in the polls, Milburn offered a final piece of advice to the centre-left: 'Generate hope for the future. The biggest deficit in the country is the shortage of hope.'
