Peston: Why Milburn's NEET reforms will upset both left and right

Alan Milburn’s report into how to fix the national scandal of so many young people alienated from work, education or training - or at least his media management of it - is proof that New Labour was only ever sleeping. His briefing of his main and most contentious recommendations to The Times today is like 1997 all over again. He’s getting the difficult and controversial stuff out early, as part of a longer story he’s been telling for months about how he is on a moral mission to reduce the numbers at home and on benefits.

It is a mission that will be felt as painful by some young people, as their benefit entitlements are changed. But I am not sure that he and the prime minister are in total control of the narrative, in the way that Tony Blair and Gordon Brown were almost 30 years ago, when Milburn was the baby in their administration. Because right now, just a few days before his report is published, he and Andy Burnham remain vulnerable to the predictable charges from left and right.

As of what we know from Milburn’s selective disclosures, the left of the Labour party, the Green Party and the LibDems are highly likely to accuse Milburn and the government of taking vital benefit payments from vulnerable young people. And they will accuse Burnham of cruelty. Yet it is also inevitable that the Conservatives and Reform will attack the plans for not cutting the growth in the welfare budget fast enough. Badenoch and Farage will accuse Burnham of weak leadership.

Benefits shake up could see some young people lose out Tories warn young people that 'if they don’t show up, they won’t get welfare' Believe it or not, there is something to both charges, and yet - if Milburn and Burnham get their story right - both could be dismissed as irrelevant, off the point. How so? First of all, the 900,000 or so 18 to 24 year olds who are not in education, training or work - or almost a million so-called NEETs if you include 16 and 17 year olds - is a peculiarly British problem.

The numbers who are NEET has risen much faster since Covid than in most other European countries and at more than 15% of that age group is a third higher than in comparable economies and double the rate in some. Second, the incapacity and disability welfare bill for this cohort, as indeed for every age group, has been rising fast and is set to continue rising fast. Third, compared with many other countries, such as the Netherlands, Germany and much of Scandinavia, there is less vocational training for young people, less variety in entry level jobs, fewer work or training strings attached to benefits of all sorts, and much less mental health and job search support.

When you look at the challenge in those terms - and when you assess the performance of previous comparable initiatives such as Gordon Brown’s Future Jobs Fund - the inescapable conclusion is that even restricting and reshaping benefit payments is highly unlikely to save as much as the very significant costs of job coaches, subsidies to employers and mental health support. An effective approach to significantly reducing the number of NEETs would be a policy of spending large sums of money for the next few years to yield savings that would only become meaningful in around a decade or more.

The rewards would ultimately be significant, because potentially hundreds of thousands - even millions cumulatively - would not spend their lives on benefits. That would lead to more tax revenue, less welfare cost, and much greater personal happiness. But the chances of it showing up as anything other than net cost in the five-year forecasting horizon of the Office for Budget Responsibility is pretty close to nil. The political and economic challenge for Burnham and Milburn is to frame what they are doing as an investment in Britain’s future prosperity and social cohesion.

If they can achieve that, both voters and the nation’s creditors - who remain anxious about the size and fragility of the public finances - will give them the benefit of the doubt. But it won’t be a walk in the park. Subscribe for free to our weekly newsletter for exclusive and original coverage from ITV News. Direct to your inbox every Friday morning. Have you heard our podcast Talking Politics? Tom and Robert dig into the biggest issues dominating the political agenda in every episode…