One In Five Young People Rely On Handouts

A “lost generation” of unemployed young people is costing the economy billions of pounds a year in benefits, youth crime and educational under-achievement, a major report discloses today.

The first large-scale study of its kind also shows that the population of “Neets” – people not in education, employment or training – is more than double that of Germany and France and is still growing.
     
A group of young teenage children demonstrate in London at the lack of financial help for youth clubs
Teenage children wearing black hooded tops demonstrate in Westminster at the lack of financial help for youth clubs

Roughly one in five young people faces a lifetime on government handouts, under-achieving in education and runs the risk of falling into crime, says a report by the London School of Economics for the Prince’s Trust charity.

The study, entitled The Cost of Exclusion, warns that the problem of “youth exclusion” is draining £3.65 billion a year from the exchequer, enough to fund a 1p cut in income tax. It says the strength of the economy is masking the true cost of having 1.2 million young Neets.

Martina Milburn, the chief executive of the Prince’s Trust, the charity founded by the Prince of Wales in 1976 to help young people into education or employment, said: “This problem is creating a huge economic cost to society. These figures are quite conservative and the true cost is probably even larger.

“There is also a major cost to young people in terms of their lives. If a young person gets on to benefits and stays there they are always going to be a drain on the economy.”

Economists from the Centre for Economic Performance, LSE, funded by the Royal Bank of Scotland, also calculated that youth crime costs £1 billion a year, educational under-achievement costs £18 billion in lifetime lost earnings and that Jobseekers’ Allowance costs £20 million a week.

But savings of £90 million a week could be made by cutting youth unemployment, and £2 million could be saved in terms of youth crime avoided, it claims.

The report says: “Unemployment is at its lowest for a generation… yet there are a significant number excluded from this prosperity, they are on the outside looking in. This comes with a big price tag.

“By re-engaging young people and helping them turn their lives around, this report shows that we can save the UK economy billions each year.”

The percentage of 16- to 24-year-olds classed as unemployed in 2005 in England was nine per cent, but the percentage classed as Neets was twice as high. Germany has a rate of only 4.6 per cent and France only 3.4 per cent.

The report paints a picture of how this “lost generation” is facing under-achievement at school, which leads to a 12 to 15 per cent loss of earnings in later life, a higher risk of falling into crime and poorer than average health. Two-thirds of young offenders are unemployed, says the Government’s social exclusion task force.

Mrs Milburn said: “These young people lack confidence and faith in themselves. They are disenchanted in their core.

“There needs to be a partnership to address this problem. It means key people sitting round a table with the voluntary sector looking on a practical level how you actually reduce these numbers.

“The Prince’s Trust has programmes to tackle this but we need to look at ways of making it sustainable, so the funding is always there.”

A Department for Work and Pensions spokesman said the Government had helped 700,000 18- to 24-year-olds back to work and that welfare reform was targeting the “hardest to help” young people in the inner cities.

But he added: “We know that we need to upskill, which is why the Department for Education and Skills has just published a Green Paper to make it compulsory that a young person stays in education or training until they are 18.

“Staying until that age improves life chances, happiness and earning power.”

A Government report two years ago found that the proportion of 16- to 18-year-old Neets rose by one per cent to 11 per cent in 2005 despite Labour’s pledge to cut the figure by 20 per cent by 2010.