Young people not in work, training or education is estimated to be costing the UK £125bn a year, with 16 to 24-year-olds facing a "perfect storm" of challenges, a review has found.

The education, health and welfare systems are no longer fit for purpose in preparing young people for adult life, said its author former minister Alan Milburn.

"We are at risk of a lost generation," he warned, with one in six 16 to 24-year-olds set to be out of work, education or training by 2031 unless "urgent" action is taken.

"The problem is that for too many young people, opportunities are not growing, they're shrinking," Milburn said.

The damning report comes amid growing concerns over the number of young people not being able to secure a job in the UK.

Official figures released on Thursday revealed more than one million young people were not in education, employment or training - the highest level in more than 12 years.

"This is a visceral feeling in the country…it's bordering on a fear in the country among parents and grandparents that this generation is going to be a lost generation," Milburn told the BBC.

Milburn was tasked with investigating why so many young people are not in employment, education or training - known by the acronym Neets.

The interim report released does not include potential solutions to the crisis, but these will come at a later date in a final report.

His review, and other statistics, paint a grim picture for young people in the UK:

• Six in 10 Neets have never had a job. In 2005, this was four in 10, the report says
• But 84% of Neet young people surveyed want a job or training, it adds
• There were 1,012,000 young people classed as Neet between January and March 2026, making up 13.5% of all young people in the UK, according to the Office for National Statistics (ONS)
• The number of people classed as "economically inactive" - not looking or available to work - rose to about 613,000
• The number of young people classed as unemployed - not in work but seeking a job - was estimated to be 400,000
• Entry-level jobs have sharply declined, with the number of mid- and lower-skilled jobs in the economy falling by around 1.6 million over the past 20 year
• Vacancies in hospitality have halved in the last four years alone, ONS data also shows

Milburn's report estimated "the cumulative cost" to the UK of almost one million Neet young people at £125bn per year.

That includes £38bn a year in lost economic potential, and £63bn a year lost due to economic "scarring", as they are less likely to work in the future. It also includes losses in tax revenue, increased health and benefits spending.

The total estimated amount is more than more than annual education spending in England.

Work and Pensions Secretary Pat McFadden, said the review laid "bare the scale of the challenge and the root causes of youth unemployment we now need to confront".

"We are already taking action by bringing forward the biggest youth employment reforms in a generation to create 500,000 opportunities for young people, including a Youth Jobs Grant for businesses starting next month, more apprenticeships, and subsidised employment to help young people get a foot on the ladder," McFadden said.

But shadow work and pensions secretary Helen Whately criticised the government's policies, claiming Labour had "made it harder for a young person to take their first step into work".

The report said there is not one factor causing the crisis, with the Covid pandemic, smartphones and the current jobs market all having an impact.

"The evidence does not support a single explanation," he said, adding that there was "no evidence" of a link between migration and joblessness among young people.

"It supports something harder to accept: that the institutions we built to support young people into adulthood are no longer fit for that purpose, and that the country has known this for some time."

He challenged the narrative that young people do not want to work and that they were not to blame for the youth unemployment crisis.

"You hear some call them work shy, snowflakes, soft - this is a generation that is trying, putting in hundreds of applications a month," he told the BBC.

"They hear nothing back, it's the silence that kills.The old contract in society was always you put in effort and got a reward, each generation would do better than the last - this contract has been broken for this generation."

In a speech, he added that changes in mental health had also reduced the supply chain of young labour, with a sharp increase in the number of Neets reporting anxiety and ADHD as a key factor as to why they are not in work or training.

Systemic problems, he claimed, were also leading to a "bedroom generation" who doomscrolled and did not leave their rooms.

The report featured one young person detailing the effects of the Covid lockdown.

"We weren't really seeing people in person, so we didn't get used to the social aspect of connecting with people. Maintaining eye contact, hand gestures and all sorts. We were just sitting behind screens. There were skills that people were struggling to develop," they said.

Zaynah, 24, has suffered from physical ill health and has not had a job since leaving college. Over the past year, she has applied for more than 200 jobs but said she never heard back from any of the employers.

"Getting a job is very hard because with my issues, I haven't got that much experience, I've never worked before," she added.

"So I feel like it's restricting me and I'm not getting jobs.'' She said she was planning to start doing some volunteering so she can improve her CV.

Luke, who studied product design at university, said he applied for more than 400 positions and had only secured one interview as a cleaner which he did not get.

''It's humiliating," the 23-year-old said. "You think 'okay I've got all the knowledge, I've got all the skills, all I'm waiting for is a job to put it in practice'.

"It makes you depressed, especially the amount of rejections."

Meanwhile Rocky had been out of work for a year before he joined Nando's as a waiter. Three years on he is now an assistant manager.

"I'm 23 years old and I'm a manager at Nando's," he says. "I feel happy with myself. I can look back and tell my doubters that I made it.''

Milburn said the problem in the UK was worse than in other countries, with the number of young people out of work, training or education being three times higher than Holland and twice of Ireland.

High street retailers and hospitality businesses such as restaurants, cafes and pubs often offer the first experience of work for many young people.

But in the hospitality sector vacancies have halved in the past four years. Some employers have argued it has become more difficult to hire young people due to higher minimum wages and increased taxes, such as employer National Insurance contributions.

The boss of Next, Lord Simon Wolfson, told the BBC this week that just two years ago, the retail giant typically received 10 applications for every shop vacancy, but that number had since risen to 19.

David Fox, founder of the Tampopo restaurant chain, said inflation and the costs of employing workers such as National Insurance increases and higher minimum wages were preventing him from hiring more young people.