Britain has just crossed a threshold. More than a million young people aged 16 to 24 are now outside work, education, and training. The number has not been this high since 2023. The economy needs 130,000 new workers for the green transition by 2030. The financial cost of doing nothing runs to £125 billion a year. And in East London, the young people most likely to bear the consequences are the least likely to benefit from the solutions being planned for them.
On Wednesday the 27th of May, two things happened in Britain simultaneously and almost nobody noticed the connection.
The Office of National Statistics published its quarterly NEET figures, showing that 1,012,000 young people aged 16 to 24 are not outside of employment, education and training. On the same morning, Alan Milburn, the former Health Secretary appointed by the government last November to investigate the crisis, released his interim report describing youth inactivity as the most significant challenge facing the country. He warned that without direct intervention; the number could reach 1.25 million by the end of the decade.
The second thing that happened: the Bank of England published an updated analysis on climate transition risk in the financial sector, underscoring for the third consecutive year that the green economy requires a workforce Britain does not yet have.
The gap between those two documents is where a generation is disappearing.
The Numbers, and What They Actually Mean
Starting with what we know. One of 7.4 young people in the UK is now NEET. That rate, 13.5 percent, is up from 12.5 percent a year ago and 10.7 percent before the pandemic. More striking than the headline figure is what sits inside of it. Of the 1,012,000 young people counted as NEET in the first quarter of 2026, 613,000 are not simply unemployed and looking for work. They are economically inactive, meaning they have stopped looking entirely. This figure is the highest since ONS quarterly recording began in 1992.
The Health Foundation published analysis in March tracking what has changed within the NEET population over the past decade. In 2015, 26 percent of NEET young people reported a work-limiting health condition. By 2025 that figure had risen to 44 percent. A 70 percent increase, in a decade. The Milburn interim report found the same pattern and used sharper language: over half of those NEET in 2025 had a health condition, and one in five had a diagnosed mental health condition specifically.
The IFS, in a paper published this week, identified three compounding causes. First minimum wage rises of 18 percent in real terms for 16 and 17 year olds in 2024, and a further 13 percent in 2025, have made young workers more expensive to hire relative to older ones, particularly in the low-margin sectors that traditionally provide first rung employment. Second, the rapid adoption of AI across the knowledge economy. Third, a sustained collapse in adolescent mental health predates the pandemic but accelerates sharply during it.
None of these is a simple problem with a simple solution. Together, they have produced something the data had not seen in this form before.
The AI Problem Nobody in Policy Is Saying Out Loud
The IFS is careful in its language. It describes the AI factor as a concern that “could reduce demand for young workers” and flags it as requiring further study. But underlying research is less equivocal.
Stanford economists Eritk Brynjolfsson, Bharat Chandar and Ruyu Chen tracked employment outcomes for US workers aged 22 to 25 in AI-exposed roles between late 2022 and mid 2025. Employment in those roles fell 13 percent over that period, driven almost entirely by a decline in new hiring rather than layoffs of existing staff. In software engineering and customer service specifically, entry-level employment dropped roughly 20 percent. Older workers in the same roles saw employment rise by between 6 and 9 percent.
This is the mechanism. AI is not firing young people. It is stopping companies from hiring them in the first place. The entry-level positions that would have existed back in 2021, doing routine analytical or administrative work that new hires learn from, has quietly been absorbed by a language model. The senior staff who would have supervised that junior employees now manage more work with less headcount. The graduate who arrives in 2026 finds there is nowhere to begin.
In Britain, the effect is most acute in finance and professional services, the sectors that dominate the employment landscape of East London. Canary Wharf‘s banks have been cutting graduate intake while announcing AI investment programmes. The two facts are rarely mentioned in the same breath. They should be.
East London’s Specific Exposure
The recent deprivation is running through Tower Hamlets, Newham, Hackney, Barking, and Dagenham is well documented. What is less often said it’s that these boroughs produce disproportionate numbers of young people who enter the labour market through exactly the pathways that are closing fastest.
Tower Hamlets and Hackney have the highest rates of income deprivation affecting children anywhere in England, according to the Indices of Multiple Deprivation 2025. Young people from low-income households are more likely to be starting their careers without family networks, unpaid internship capacity, or financial cushion that allow them to absorb a slow labour market.
They are also more likely to have had their education disturbed. The disadvantage gap at Key Stage 4 is now at its highest level since 2010 and 2011., and the proportion of disadvantaged young people achieving Grade 5 or above in both English and Maths is half the rate of their peers.
Youth Employment UK’s analysis of the January to March 2026 ONS data put the unemployment rate for young people no tin full-time education at 14.6 percent the highest since 2014. The number of vacancies had fallen 7 percent in a year to its lowest since April 2021. In East London, where hospitality, retail and entry-level financial services work absorb a large share of 18- to 24-year-olds, those vacant figures are not abstract. They are the closed door at the end of a CVs.
The May of London’s support for Young Londoners NEET programme has just been approved for extension to 2028 with £9 million from the Adult Skills Fund. Those are 13 projects, supporting just over 3,000 young people across the whole of London. To be clear about the scale: 3,000 young people helped, against a national NEET cohort now exceeding one million.
The Green Economy Is Hiring. Just Not Here.
Here is the part that ought to generate real anger, or at a minimum of genuine political urgency.
The UK’s net-zero transition requires 130,000 new workers in the energy sector alone by 2030. Meeting that demand in just energy and construction will require an additional £1.7 billion in training investment between now and then, according to research commissioned by the University and College Union. LinkedIn’s Green Skills Report, published in January 2026, found that green ring globally grew almost twice as fast as the available green skills base between 2021 and 2025. Demand is racing ahead of supply.
Sixty-six percent of young people in the UK tell researchers they believe they have suitable green skills. But only 27 percent can define what a green job actually is, according to the Prince’s Trust. Interest exists. Infrastructure does not exist. The pipeline is broken at exactly the point where it should be richest: the 18 to 24 cohort that will spend its entire working life in the transition economy.
The green bond and sustainable finance market managed by Canary Wharf has grown substantially. But the capital flows of climate finance have no mechanism to address skills gaps in Newham. There is no product in the sustainable finance toolkit designed to train a 20-year-old in Stratford for a solar installation apprenticeship. The green gilts Rachel Reeves issued in the autumn budget infrastructure. They do not fund the people who will build or maintain it.
Apprenticeship starts in England have fallen 32 percent over the last decade, from 494,880 in 2016 to 2017 to 337,140 in 2022 to 2023. Forty percent of colleges canceled courses in 2024 due to staffing shortages, including electrical installation and engineering, two of the disciplines most crucial to the energy transition. This is not an abstract policy failure. It is a specific, measurable gap between a declared climate ambition and the decisions that would make it real.
The Macro Context and the Political Arithmetic
Milburn’s interim report puts the total annual cost of youth inactivity to the UK economy at £125 billion. That includes £3.2 billion in direct benefit spending on NEET’s, £2.7 billion in estimated wellbeing costs to the young people affected, and £200 million in additional health spending. It does not include the long-run cost to tax revenues of a cohort that enters its peak earning years after having spent their formative working years outside the labour market.
The Bank of England’s caution rate-cutting cycle is not helping. With borrowing costs still elevated relative to the pre-2022 period, the small businesses and hospitality operators that would ordinarily absorb young workers at entry-level are operating on tight margins. The employer National Insurance increase that came into effect in April has compounded this, the IFS was explicit: policies designed to raise wages and employer costs hit young workers hardest, because they work in sectors with the least margin to absorb them.
Britain is not alone in this. The Milburn report noted pointedly that a decade ago the UK’s youth NEET was closer to the European Union average. By 2025, among EU and comparable countries, only Romania recorded a higher rate. That is not a coincidence or date artefact. It is a result of a decade of underinvestment in further education, a benefits system that creates perverse incentives around health-related inactivity, and an economic structure that loaded the costs of the pandemic and the cost-of-living crisis disproportionately onto young people.
What Needs to Happen, and Why It Probably Will Not
The Milburn report praised young people. Eighty-three percent of NEET young people surveyed that they were actively trying to find work or training. The problem is systemic, not motivational.
He described the UK’s education system as too focused on exam results and not enough on student destinations and identified what he called an “age-based institutional fracture” and 17 to 18, where support is withdrawn at precisely the moment it is most needed.
The green economy needs these young people. The finance sector funding the green economy needs to accept some responsibility for building the workforce the transition requires. That is not a charitable suggestion. It is a straightforward assessment of where the labour supply for net-zero infrastructure will come from. If Canary Wharf’s institutions want to issue green bonds and collect fees for sustainable finance mandates; they might also consider whether their corporate social responsibility programmes extend to skills pipelines in the boroughs where their staff eat lunch.
The government has a Youth Guarantee, a Milburn review, a Get Britain Working programme, and £9 million NEET fund for all of London. Against a £125 billion annual problem, that is a policy response that has not yet matched the scale of its own diagnosis.
The young people in Newham and Tower Hamlets who are NEET today will not be NEET forever. But the research is clear that time spent outside work and education at this stage compounds. The wage penalties, health effects, and reduced career trajectories accumulate. The longer the system responds, the more expensive and difficult the repair becomes.
One million young people. Nowhere to go. If this is you, you are not alone.
This is not a coincidence. It is a policy choice. And it is still being made. Something needs to change and fast.
