Britain is facing mounting economic and social costs due to what has been described as a systemic failure to invest in preventative public services, according to findings from a review led by Alan Milburn. The review specifically highlights the severe impact on young people, with calls for a fundamental shift towards a 'preventive state' to address the growing challenges.
The situation is particularly acute for young people, with only one in four believing that everyone in society has a fair opportunity, and most expressing a view that the system is rigged. This sentiment is attributed to a generation that matured during the post-2008 austerity years and in the wake of the Covid-19 pandemic, facing diminished public service provision, rising living costs, the impact of artificial intelligence on jobs, and environmental concerns.
Mr Milburn's review into youth unemployment underscores the critical issue of approximately one million young people in the UK not in education, employment, or training (NEET). This challenge, he notes, extends beyond the immediate jobs market, pointing to an erosion of the foundational elements required for a just and prosperous economy.
While acknowledging other factors such as Labour's economic management, the disruption from AI, and the ongoing cost of living crisis, the review highlights mounting evidence that the consequences of Conservative spending cuts implemented during the austerity years are now manifesting with "disastrous consequences."
The risk of a child becoming NEET, according to Mr Milburn, can be traced back to their earliest years in preschool. An examination of education policy, youth services, and the broader public sector over the past 16 years—which covers the lifespan of the generation currently entering the workforce—reveals a consistent trend of funding reductions.
Within youth services in England, spending has decreased by 76%, representing a loss of £1.3 billion. This has resulted in the closure of thousands of youth clubs and a reduction in social worker numbers. Similarly, per-pupil spending for schools in England remained frozen for 14 years, and investment in school buildings, many of which have been affected by the Raac (crumbling concrete) crisis, fell by a quarter.
The core issue, as outlined in the review, is that instead of allocating funds to prevent negative societal outcomes, the UK has increasingly spent vast sums addressing the consequences of these failures.
The NEET crisis serves as a stark example: for every £1 the state invests in employment support for young people, it spends an estimated £25 on benefits. With the current rise in inactivity among this "cut adrift" generation, these costs are projected to climb further without decisive intervention.
The Sure Start programme, a network of family hubs initiated by Labour and later scaled back by the Conservatives, is cited as another cautionary tale. Despite the intention to save money, research indicates that as Sure Start funding diminished, spending on looked-after children and safeguarding increased by over 50%. This suggests that the cost of supporting disadvantaged families did not disappear but rather shifted from preventative measures to crisis management.
This pattern, where the state operates in a "firefighting" mode rather than investing in early public services to prevent problems, is reportedly replicated across various government departments. For Andy Burnham's government, the challenge ahead is to reverse this short-sighted approach by rebuilding what the thinktank Demos refers to as a "preventive state," involving strategic investment to strengthen societal foundations.
The potential economic, fiscal, and social benefits of such a transition are deemed substantial.
The National Health Service (NHS) offers a clear illustration. Up to 40% of the NHS budget is allocated to treating preventable conditions. Preventable illnesses account for half of all GP appointments and 70% of inpatient hospital bed days. Decades of underinvestment have also rendered the service highly inefficient.
Recent analysis by the Health Foundation indicates that restoring the UK population's deteriorating health to 2014 levels could boost Gross Domestic Product (GDP) by 2% and generate a £72 billion dividend for public finances. The Office for Budget Responsibility (OBR) has similarly suggested that the spiralling health budget could be contained through preventative investment. In a "better health" scenario, the Treasury watchdog estimates that the national debt could be approximately 45% of GDP lower by the 2070s.
For ministers, the current annual cost of the NEET crisis, at £125 billion and rising, presents a significant economic and financial burden. Getting more young people into employment could revitalise the life chances of millions and enhance labour participation, thereby boosting the economy and public finances.
Ahead of the autumn budget, there is a compelling argument for Mr Burnham's government to take action. However, establishing a preventive state will pose challenges for a prime minister constrained by the UK's current tight fiscal situation and the need to demonstrate rapid progress.
Reallocating funds "upstream" towards preventative measures is difficult because the resulting savings often take years to materialise, frequently benefiting future governments, while spending on acute needs and welfare cannot be immediately curtailed. This issue is particularly evident in early-years services, where reforms may take a lifetime to yield measurable statistical benefits.
This timing discrepancy has historically made the Treasury sceptical, as costs appear immediately while savings are delayed. This creates an incentive structure that favours addressing immediate crises over implementing long-term preventative solutions.
However, the review argues that refusing to make this transition is a detrimental choice. Britain is already contending with the repercussions of a struggling NHS, an increasing welfare bill, widespread job market inactivity, and resultant weak economic growth.
Mr Milburn's review is therefore presented as a crucial test of the UK's willingness to "grasp the nettle" and rebuild a preventive state from the legacy of austerity. The alternative, it suggests, is a nation hampered by the accumulating costs of past failures, where a significant portion of its young population feels disenfranchised.
