Andy Burnham’s announcements on technical education are welcome, but they will be meaningless if young people have no jobs to move into. The Budget will be the real test of how he plans to grow the economy, says Georgiana Bristol.

Andy Burnham has arrived from the North with a series of new pledges and spending commitments, including VAT-free energy bills, cuts to business rates for local pubs, and a £2 cap on bus fares. City AM readers, however, will be relieved that TfL’s hopper fare remains at £1.75.

Whether these are smart retail policies that provide a downpayment on tackling the cost of living, or evidence of a new Prime Minister who is not addressing the bigger forces keeping the UK stuck in neutral, it is undeniable that his focus on tackling the NEETs crisis is perhaps the most significant since his entry into Downing Street.

This must sit at the very top of any government’s priority list. The arguments are familiar: around one million young people are NEET, with the cost to the taxpayer potentially reaching £1m per person over a lifetime in welfare spending, and a personal cost of £1m each in lost lifetime earnings. Beyond the numbers, current inactivity levels represent a shocking waste of human potential. In the words of Alan Milburn, we are seeing a “wasted generation”.

Burnham’s plans to boost technical education across the country will be welcomed, and they will help build a pipeline of young people ready for work. But they will not help the current cohort of inactive young people. New research shows that two thirds of 16- and 17-year-olds currently receiving the upper tier of PIP are claiming for mental health or neurodevelopmental conditions. It is rightly shocking that these individuals are being paid more than double what someone of the same age working the legal term-time weekly limit would earn. While it is not true for everyone, many young people suffering from anxiety or depression can benefit most from a job, especially if support is designed to move them toward regular participation rather than long-term inactivity.

Incentives matter

As any good economist would say, incentives matter. Burnham’s remarks this week, which hinted at greater conditionality for welfare payments to young people, could mean that those receiving sickness benefits may lose them unless they do voluntary work or training. That is clearly a positive step if the aim is to move more young people into work.

But incentives are of limited use if there are no jobs for them to move into. Statistics published by the ONS last week showed that since 2024, there are 75,000 fewer 16- to 18-year-olds in payrolled employment. The biggest falls have been in retail and hospitality, which have traditionally been major employers of young people. It is no surprise, then, that fewer young people are being hired.

Why has employment in these sectors fallen? Readers of City AM will not be surprised to hear the answer: if you raise the costs of employment — through sharp increases in the minimum wage, higher Employer NICs, or a much heavier regulatory burden from the Employment Rights Act — you get less employment.

There is also the issue of underemployment among those already in work, which receives far less attention than young people being locked out of the labour market altogether. Some of this raises broader questions about how well university prepares young people for work. But it is also something the Jobs Foundation sees directly. Talented interns with real ability in communications, policy or project management apply for jobs in those fields and cannot get them, so they end up taking whatever work they can find instead. Their skills are underused, and the economy loses the contribution they could have made.

This is not because employers have decided a degree is worthless or stopped valuing the skills that come with one. Rather, broader economic conditions, together with real uncertainty about how AI will affect hiring, mean firms often cannot justify making the hires.

Business leaders listening to Burnham today will be encouraged to hear a Prime Minister talking about the national mission of moving young people into work. Most business leaders I know see helping to tackle this crisis as one of the most important things they can do for their local communities.

But they will also be alarmed by reports that Burnham has already announced more than £20bn of spending pledges that are not accounted for in official forecasts. After two consecutive Budgets of tax rises, the business community and wealth creators across the UK simply do not have the capacity to absorb a third round.

Policy advisers in Downing Street and the Treasury may view businesses and “the rich” as cows to be milked, but the reality is that the people who will suffer most from any tax rises are the young people who do not have jobs and are waiting for businesses to create them.

So yes, thank you Andy for today’s downpayment on tackling the NEETs crisis. But if you truly want to make a dent in the number of young people being wasted, tax rises must be ruled out for the upcoming Budget. Businesses must be supported so they can create more jobs, and the policy focus now has to stay on the practical steps that connect training, incentives and entry-level hiring. And let’s hear more about how you plan to get the British economy booming again.

Georgiana Bristol is chief executive of the Jobs Foundation.