Alan Milburn, the former health secretary leading the government's review into youth inactivity, has put forward his first recommendation for the Department for Work and Pensions (DWP): introducing Australian-style insurance rules to make it easier for small businesses to offer work placements. The proposal emerges as the Milburn Review winds up, with nearly one million young people currently classed as NEET (not in education, employment or training).
Insurance costs a barrier for small firms
A source close to the Milburn review said young people are losing their first chance to enter the workforce because the cost of insuring them is a significant barrier for small businesses. The source added: “With millions of sole traders across the country, that’s a lot of first chances lost over something that should be simple to fix.”
“Taking this step would be a win-win, ensuring cost wouldn’t stand between a willing employer and a young person who just needs a foot in the door,” the source said.
Under the proposed model, Australian state and federal governments provide various insurance arrangements—such as state-backed risk pools, department-managed policies, and specific coverage extensions—to protect approved student work experience, school placements, and government-administered employment or community programmes.
System failures driving NEET rate
The interim report of Mr Milburn’s review identified several system failures driving the rising NEET rate. These include a social security system that incentivises people to claim health and disability benefits while providing too little employment support, mental health services that are unable to meet rising demand, and an education system that is not giving young people the skills and opportunities to transition into work.
Mr Milburn also highlighted poor coordination between services and fragmented accountability at a local level as key barriers to improvement.
Full report expected next month
Mr Milburn is expected to release his full report into youth inactivity next month after the Budget. The recommendations are aimed at cutting the benefits bill and getting more people into employment.
