Structural Stagnation and Future Outlook

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Michael, can you take us through what's in the report, what Alan had to say at this launch, um, and what you make of the stats within it? Sure. As you say, Pat McFadden was introducing Alan Milburn, who's been doing this review into the NEETs crisis, and that's because for the last few years, actually, this is not a this is not a recent government phen phenomenon, this has been going on since really the pandemic. The number of young people who are not doing anything with their lives is really increasing. And this review is in two parts. So the part that Alan Milburn revealed today is his diagnosis, and then later in the year he's going to get into his proposed solutions. And for me, the most alarming part of the report is he forecast that within five years we're gonna have one point two five million people on NEETs. And he said that even in an optimistic scenario, that would pass one million. But Newsflash, that's already happened because also today, before uh the Melbourne review was released. We had the latest NEETs figures from the ONS and they find that it has gone over one million, which is just a really staggering figure. And there's lots of m alarming statistics in the report. I mean he's tried to estimate the cost of this. He said that it's costing us something like $125 billion every year, which is more than we spend on education. And he had some really alarm ing statistics about where this could go if we don't change course. The one that really struck out to me was that he said that if current trends persist, then we expect one in twenty of today's five year olds to be on incapacity benefit when they're age twenty-two. And the government says, and Pat McFadden says, that you know, this is the crisis of our time, we're all aware of it now. And Alan Milburn seemed to have quite an optimistic tone, but I'll be honest, I was sat in the room of the press conference, and maybe I was just grumpy because it was boiling hot because they'd turned off the aircom because we couldn't hear him. But I was sat there just so pessimistic about this because Milburn warns that we we risk losing a generation of young people. But I think his own report shows that they're already irreparably lost. I mean he points to the fact that the vast majority of them say they want to work, but we know from his own statistics and from other statistics that once young people have been out of the workforce for a long time, once anyone's been out of the workforce for a long time, the chances of them engaging with it again are really quite low. And I also think he didn't get into the the solutions today, that's for for later in the year. But the things that you would have to do, I mean looking seriously at whether the minimum wage is too high, looking at whether you how you're going to change the incentives in the welfare system. One, clearly, the rump Labour Party is not prepared to do that, nor I think really are the MPs from any other parties. But also, it could be too late. So I think sadly the conversation maybe needs to move on to not how we stop this crisis, but how we adapt our society that's gonna have an ever growing level of worklessness. I think it ties into lots of different wider issues, as Michael says there, one of which is about making work pay. And we've discussed before on this podcast about how increasing the minimum wage, very well meaning, but of course means that as the value of work has stagnated since two thousand and eight, there are perhaps less incentives maybe to work and to get on to aspire than there was previously, because actually the difference between the average income and what someone on minimum wage is earning has now been steadily eroded. I think the same is true very much of those on neat. And one example, of course, is in the blog you wrote for us on Coffee House, Michael, you know, the quote from Milburn, um eighty-four percent of neat young people in the review survey said they want to find a job educational training. That for me does show a sort of failure to grasp the issue here, failure to offer a lead. And you think when the British economy has done best in recent decades in the eighties and nineties, there was often a sense perhaps of being able to get on and work. And the inability to make work pay, I think, is also partly fueling this. Just to pick out a few more statures I thought were quite striking, fifteen per cent of those NEETs were graduates. So this is very much divorced from the previous argument about going to univers ity to booth employment prospects. I think it does tie into much bigger issues and it is, I think appropriate of the word crisis and whatever happens in twenty twenty nine, this is going to be one of the fundamental changes 'cause otherwise m taxes can go up, growth can increase, but if more and more money is being shoveled here, that is going to mean less money for things like capital expenditure, things that actually boost real economic growth and there's loads and loads of stats in the in this report, and it is saying this is an amazing piece of work just for how jam packed with facts and and stats it is. But one think tank, the Centre for Social Justice, was keen to point out that one one area they seem to have missed is immigration. And they've called out this particular also shocking statistic that the at same time as this Nietzsche crisis has been going on, they say that since twenty twenty, twenty seven young non EU migrants have ended up being hired for every young Brit. Now one of the journalists at the So twenty-seven times. Yes. So for every one young Brit that's been hired by firms in Britain, twenty seven non EU Boris Wave migrants have been hired. Now that was put to Alan Milburn in the press conference, and he said that he had looked at this and he personally didn't believe that there was evidence of migration having a factor to the NEETs crisis. He thought it was more to do with wider jobs market incentives. So millions several million people coming to the country had no impact. Well but he he was picked up on this and he says something that I've I've not heard someone say before, which is he actually thinks that migration can be used as an advantage to solve this problem because it's his view that as we were discussing last week migration numbers are are coming down. Many projections show that net migration this year potentially could go below net zero. And he said that there was going to be an opportunity there for governments to not turn back to the EU or outside the EU to fill James, we don't know currently who will be occupying number ten, you know, in a few weeks, let alone years. But whoever that is, what difficult political choices will they be facing when it comes to needs? They're gonna have many different choices and it ties back to the question of migration and priorities. Um but ultimately it's how do you create the incentives to get people to work? And I think that the problem is that this is tied up in so many it's like a sort of string and how do you even One of the facts that Michael has picked out in his blog is about eight in ten GPs think that they are over prescribing mental health illnesses, uh giving out antidepressants things that they don't need to, and I think that that does show the problem here which is that part of it's about health, part of it's about culture, part of economic incentives. Um but I would say that the Labour Party their current posture is one which is much more relaxed than the statistics would suggest they ought to adopt. It's been a bit of a Twitter spat day before our old editor Fraser Nelson and Torsten Bell on the seriousness of this issue and saying, Oh yeah, we are going to deal with it. But I have to say, I mean, the rhetoric coming out of Whitehall ever since the pandemic has been very much oh, we'll fix this as an issue, but actually not getting into solving it as a problem. And so in terms of the Labour Party, I would say that currently the conversation the Labour Party is having is very different to what the economic data is saying. You look at Andy Burnham today, uh there was a thing on his website um suggesting that he wanted to push for migrants to be able to access benefits from day one. He's now pulled that down and it's just a new turn. But having that open access to these benefits, albeit you know, in a slightly removed way from NEET, does show I think the Labour Party's mindset, which is one very much sort of universalism, encouraging these benefits, not realising of course that the beverage scheme of the nineteen forties was much more prescriptive. And I think that that returning to that debate will be a key fault line between reformers and those who are happy for the current system to carry on like it is. And let's not forget that Keir Starmer had a crack at welfare reform and got absolutely nowhere. In fact, the U-turn on welfare, I would argue, was the first or biggest unraveling in his authority within the PLP. Michael, there was some you know beginnings of discussion about remedies, even though that was not the topic of this report. The prospect of bringing back national service was an idea touted at uh the press conference. What do you make of that It's an interesting idea on the grounds that it's um it's better to be doing, you know, something rather than um nothing. And I I think Milburn to his credit is not going to be boxed in to maybe political constraints that Pat McFadden wants him to be boxed into. I think he will be critical of things like wage compression from the minimum wage and things like the national insurance rise. He already mentions them in in today's report. On um on national service, personally I I see I think that's a bit gimmicky. Um it's it's a it's a sticking plaster to actually trying to sort out the fundamental structural problems about pay, about our lack of resilience to mental health things. But what's um on the kind of Labour Party point of this, what's worrying a lot of people in sort of policy areas of Whitehall is the new obsession with inequality that we've we've seen. Oh, we're we're streeting antiburn. Inequality. Everyone wants to close inequality. And clearly the NEETs crisis is contributing to inequality. However, I think most economists would say the way you solve inequality is by growing the country, get productivity growing. And I think there's a worry in policy areas of Whitehall that if you become solely um obsessed with redistribution, with pure inequality, then you will end up making these problems. So for listeners for context, uh Tony Blair's essay yesterday, which we haven't discussed on the podcast, but which where Streeting then put out a response for in The Guardian suggesting that w Tony Blair's critique of the current state of the c the economy uh actually no no, it wasn't about that. It was about inequality he suggested was the real issue and sort of slapped down from where's to