Founders, employers and charities warn that the combination of rising employment costs, an education system built around exam metrics and a patchwork of short-lived funding schemes is leaving a growing number of young people stranded outside work and education. In the first quarter of 2026, the number of young people who are Not in Education, Employment or Training (NEET) passed one million for the first time since 2013.
The All-Party Parliamentary Group (APPG) for Entrepreneurship recently held an evidence session to investigate how employers and charities can support young people who are NEET into work, and what practical policy change is needed from government, including whether entrepreneurship should be treated as part of the answer rather than a separate career option.
Chaired by Tristan Osborne MP, a former teacher and chair of the APPG for Entrepreneurship, the session brought together founders, education charities, training providers, venture capitalists, academics and young entrepreneurs with direct experience of startups of their own.
While the session was held under the Chatham House Rule, we have summarised the core themes and policy ideas discussed below.
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The cost of a first chance
A broad consensus emerged that cost is the first and most immediate barrier to hiring a young person. A trade body representative criticised the double whammy of increasing National Minimum Wage rates for young workers and the hike in employer National Insurance for increasing the cost of employment — with research suggesting the policy-driven cost of doing business has risen by around 70% over the past decade for a typical employer. When margins and time are tight, participants argued, it is young people who employers pull back from first because they are perceived as carrying more risk.
Micro-businesses (those with fewer than ten staff) were repeatedly described as the natural first employer for a young person without a track record, precisely because they are more flexible and less likely to pigeonhole a new recruit into a single narrow role. But participants warned that small businesses are least able to absorb the simultaneous shocks of tax changes, employment reforms and the ending of zero-hours contracts in their current form.
A training provider delivering apprenticeships from entry level to degree level made an important point about foundation apprenticeships (short, roughly eight-month programmes designed to let a young person prove themselves to an employer before a longer commitment). These apprenticeships were described as working well in principle. In practice, however, employers can currently hire an experienced, skilled worker for the same wage as an unskilled young person, because the National Minimum Wage has closed the gap between the two. National Insurance relief for young hires, in this account, “goes nowhere near” closing that gap. The contributor’s conclusion was that without direct wage subsidy for these roles, take-up will not shift, regardless of how good the training pipeline is.
Hiring in the dark
Another barrier that many businesses face is the uncertainty in the market, specifically the shape and function of positions in their companies. One academic said that while employers often cite cost when asked why they are not hiring, when pressed, they often admit the deeper problem is that they do not know what roles they will need in two or three years’ time. Managers themselves are not always sure how to develop someone for work that is changing so quickly. Training a young person for a role that may not exist by the time they are productive was, in this account, an ask many employers see as unreasonable, and uncertainty may be as big a brake on hiring as cost.
This related to a wider concern about trust in new employees. One policy expert argued that as remote and hybrid working becomes more common, employers increasingly select for demonstrated trustworthiness over potential — a shift that structurally disadvantages anyone entering the workforce without a track record, regardless of ability. It was also noted that Local Skills Improvement Plans, the employer-led framework intended to align training with local labour market needs, currently carry no explicit mandate to address entrepreneurship or enterprise skills, leaving that function unserved in most areas.
Trained for the wrong task
One academic pointed out that the current education system is a mismatch with what the job market requires. Young people move from an education system where success is measured against relatively predictable tasks into workplaces where they increasingly need to exercise judgement, spot opportunities, create value and work with others under uncertainty. These are entrepreneurial capabilities even when someone never starts a business, and they are currently concentrated in a small minority, disproportionately among people who have operated outside the traditional education system.
The Government’s Curriculum and Assessment Review has already reported, and any resulting changes to the school curriculum will take years to filter through classrooms. Participants were in agreement that a formal curriculum fix won’t come any time soon. That reinforces the case made in the room for using existing enterprise education organisations, such as Young Enterprise, as a faster lever than waiting for curriculum reform to take effect.
Enterprise education and general work-readiness are not separate problems, and several practical levers already exist to close the gap between them. The Government’s planned Work Experience Guarantee could explicitly count enterprise education activity — including volunteering and structured employer engagement — as a recognised form of exposure to the world of work, instead of treating work experience narrowly as a placement inside an existing employer. And careers education, which is required in schools under existing statutory guidance, was said to rarely treat self-employment, enterprise or portfolio “multi-hyphenate” careers with the same weight as employment, further education or training.
Enterprise education’s enrichment problem
One youth enterprise charity representative described a structural weakness in how enterprise education is delivered in schools. It currently sits almost entirely in the “enrichment” category (after-school clubs and optional extracurricular programmes) rather than being timetabled. This matters because enterprise education gives young people a place to make decisions, try something, get it wrong and adapt, which is the kind of low-risk practice they need before a first job. The same contributor cited one school that had bucked this pattern, building the programme directly into timetabled lessons for a group of boys at risk of exclusion; attendance, attainment and behaviour all improved, and the school has since repeated the approach and shared it with others. This youth enterprise charity representative noted growing interest from No.10 and the Treasury in enterprise education, but a marked lack of engagement from the Department for Education, the department that ultimately delivers it in schools.
A second youth enterprise provider made a related point regarding their organisation, which is consistently described by the Government as a “tool for enrichment”. They felt this was a mischaracterisation as the skills they teach are central to employability for the young people using the programmes, not optional extras.
What it looks like from the other side of the desk
Two young founders gave first-hand accounts to share their struggles of entrepreneurship. One, aged 19 and currently a degree apprentice, described trying to continue a business he had started through a school enterprise programme at 17 — and being unable to open a business bank account as a minor, a barrier that stopped the venture before it could raise any capital. The same contributor raised the ending of the New Enterprise Allowance, a benefits-linked startup support scheme that was closed to new applicants in 2022 having supported more than 100,000 businesses, as the loss of a genuine route into self-employment for young people on benefits.
A second young founder, who has run a non-profit careers platform from an early age, argued that funding for NEET-related programmes often comes with high turnover requirements, which favour re-funding established programmes and make it hard for new approaches to survive long enough to prove themselves. He also pointed out that schools and colleges across the UK are being charged by intermediaries for access to work experience placements — and are in turn passing that cost, in some cases £30 to £40 per pupil, on to families, in a country ranked twenty-first globally for social mobility. This creates a “pay-to-play” model for work experience, which locks out pupils whose families cannot or will not pay.
AI, entry-level roles and the case for micro-business support
One founder, who described building and exiting a substantial UK technology business, criticised the lack of funding for apprenticeships leading to year-long schemes being compressed into six to eight-week units. On artificial intelligence, they pushed back on claims of mass automation, arguing the real effect so far is concentrated in junior and entry-level roles being cut, and called for targeted funding to help organisations equip young people with the AI skills now in demand.
One contributor from a technology advocacy group pointed out that of the UK’s 5.6 million businesses, around 5.4 million employ fewer than ten staff — meaning even a modest shift in small-business hiring behaviour could meaningfully dent the roughly one million NEET total. The same contributor cited the Government’s TechFirst scheme, which set a target of training 7.5 million adults in AI skills by 2030 and has reportedly reached 1.7 million so far, as an existing delivery mechanism that could be pointed more deliberately at young people who are NEET and the small businesses trying to work with them.
Partnerships built around place
A corporate foundation representative working across the West Midlands described a place-based model built on partnerships with nine inner-city secondary schools and a further education college, aimed at connecting pupils with businesses earlier than the standard post-GCSE work experience week — timing that, in their account, rarely works well for either side. The same contributor raised a practical constraint that businesses of fewer than ten people are often being asked to support young people with special educational needs without any of the infrastructure larger employers have for doing so.
Where practice already works
Despite the criticism, the session highlighted examples of what already works when given room to operate: the timetabled enterprise programme that measurably improved attendance and behaviour for pupils at risk of exclusion; foundation apprenticeships, which participants agreed are well-designed in structure even where the economics around them are not. The common thread was that good models exist, but tend to remain small, patchy and locally dependent on individual relationships rather than being built into mainstream funding and curriculum design.
The same argument is now being made for higher education: since the session, Universities UK has published its Future Jobs Roadmap, shaped by employer roundtables including one hosted by the University of Exeter, which sets an ambition for every undergraduate to have access to meaningful work-based learning by 2035, with a milestone of 50% by 2030.
Policy ideas raised, grouped by likely cost to government
(Policies discussed and raised by attendees of the evidence session do not necessarily represent the views of members of the APPG.)
The groupings below are The Entrepreneurs Network’s own assessment of likely cost to government, not figures put forward in the session, and are indicative only.
No additional spending
Give Local Skills Improvement Plans an explicit enterprise and entrepreneurship remit, so self-employment pathways are planned for alongside conventional employment.
Fold enterprise education into the Work Experience Guarantee, recognising volunteering and structured employer engagement as valid work exposure, not only traditional placements.
Bring careers education into parity with other pathways, ensuring self-employment, enterprise and portfolio careers are discussed alongside employment, education and training as a matter of course.
Reform funding structures for youth-focused NEET interventions to reduce high turnover requirements that penalise new and innovative approaches in favour of continual re-funding of incumbents.
Shorten and simplify apprenticeship units for small employers, moving towards shorter, modular formats rather than fixed 12 to 18-month programmes.
Target existing AI skills schemes, such as TechFirst, more deliberately at young people who are NEET and the small businesses trying to adopt AI, rather than treating AI skills and youth employment as separate policy tracks.
Targeted spending to consider
Move enterprise education out of the “enrichment” category and into timetabled provision, building on examples where this has measurably improved engagement.
Address paywalled access to work experience placements, so schools and colleges are not passing costs on to pupils and families.
If further funding were available
Subsidise wages for foundation apprenticeships, so employers are not choosing between an experienced hire and an unskilled young person at the same cost.
Awaiting the final word
The session closed with the view that unless the cost of taking on an inexperienced young person comes down, no amount of curriculum reform, programme design or training pipeline will change what employers do. Several participants made the point that a well-designed apprenticeship route is worth little if the employer at the end of it can hire a skilled worker for the same money.
Yet participants also showed some optimism, in that much of the answer already exists in the system, albeit not at the scale needed. That includes timetabled enterprise education rather than after-school enrichment, foundation apprenticeships whose design works, even if the economics do not yet, and the millions of micro-businesses that remain the likeliest first employer for someone without a track record. What these have in common is that they are small, locally dependent and outside the main funding lines. Taken together, the discussion made the case not only for making it cheaper and less risky to hire an inexperienced young person, but for stronger routes into self-employment, more enterprise education and work-based learning, and a bigger effort to build people who can create new value rather than simply compete for existing jobs.
That makes the timing of this session significant. Alan Milburn’s interim report, published in May, diagnosed the rise in NEET numbers as a whole-system failure and largely stopped short of recommendations. The final report, carrying those recommendations, is expected this autumn. Milburn has already signalled that it will engage with the cost of employing young workers, and the Government is reported to be weighing a slower path to a single adult minimum wage rate. The open question is whether the review treats entrepreneurship as part of the answer — that is, self-employment as a legitimate destination, enterprise education as core rather than enrichment and micro-businesses as the first rung.
Resources relating to this discussion:
Starting Out and Starting Up: Making Self-employment a Route into Work for Young People: Drawing on Sage payroll data and ONS statistics, the report finds that the payroll route into work is narrowing for 16 to 24-year-olds, while self-employment among the age group has risen to around 193,000. Analysis by Cebr suggests that moving just 5% of NEET young people into self-employment could add around £4 billion to the economy by 2029. The report recommends a Startup Allowance pilot, a £3,000 Youth Enterprise Grant and a youth strand of Help to Grow focused on AI.
Innovation and Entrepreneurship Capability, Early Work Based Learning and the Transition into Employment: Written evidence to the APPG from Raphael Dennett argues that youth unemployment is as much an experience problem as a vacancy problem: 61.6% of NEET young people have never had a job, up from 42% twenty years ago, while entry-level hiring is shrinking and employers increasingly favour candidates who already have experience. He calls for enterprise education, including through Young Enterprise, to be treated as core work-readiness provision rather than optional enrichment, and for self-employment, venture creation and social enterprise to be recognised as credible youth employment outcomes alongside jobs, apprenticeships and further study.
Global Entrepreneurship Monitor. Beyond the Unicorns: Everyday Ambition, Uneven Support: Youth entrepreneurship hit a record high in 2025, with 19.6% of 18 to 24-year-olds starting or running a business, even as NEET numbers passed one million, according to the Global Entrepreneurship Monitor (GEM) UK 2025/26 report. Young founders rely mostly on family and their own savings to get started. The report argues policy should focus less on encouraging young people to start businesses and more on helping them survive once they have.
Growing Opportunity: Young People, Real Jobs: A panel on supporting young people into work, featuring the Department for Work and Pensions, the Youth Futures Foundation, the British Retail Consortium, Greater Manchester Chambers of Commerce and Maximus. It covers the £2.5 billion Youth Guarantee, the evidence for apprenticeships and employer concerns about rising employment costs and the capacity of small businesses to engage.
Careerbay: A youth-led community interest company founded in 2019 by Daniel Peacock, then 17, in response to the 2018 Youth Select Committee report on work experience. Its platform connects young people with employers offering work experience and apprenticeships, and reports more than 100,000 visitors a year, over 4,000 registered young people, more than 400 work experience opportunities and over 600 apprenticeships. It also offers employability training through Careerbay Academy with LEVRA, and in 2025 joined the Edge Foundation’s Apprenticeships Work campaign to make it easier for SMEs to hire apprentices.
Are Teenagers Ready for Work?: This BBC Radio 4 programme, made with the Radio 5 Live Teen Summit, follows two 15-year-olds in Newcastle upon Tyne through work experience and their plans after school, and hears from their managers, their deputy head and young people already in work. One employer says young people are less prepared than they were 10 to 15 years ago, while young workers who missed out on work experience describe being “thrown in the deep end”. A Survation poll of 2,000 13 to 18-year-olds for the BBC found 44% want schools to offer more work experience.
Closing the Youth Jobs Gap: The latest report in Impetus’ Youth Jobs Gap series finds that young people from disadvantaged backgrounds are twice as likely to be NEET as their better-off peers, a gap that qualifications explain only half of. New modelling estimates that each additional NEET young person costs the state at least £244,000 over their lifetime. Its 14 recommendations include a Cabinet Office NEET Unit with a binding reduction target, a 16 to 19 Student Premium, a structured work-readiness offer from Key Stage 3 and stable funding for intermediaries that broker matches between SMEs and young people.
Earning or Learning: A New Agenda for Youth NEET Reduction: Drawing on evidence from more than 200 stakeholders, the Skills Commission at Policy Connect argues that the £2.5 billion Youth Guarantee will fall short unless benefits, local funding, data and accountability are reshaped around it. It calls for a funded Work Experience Coordinator in every Careers Hub to turn the new work experience entitlement into delivery, a “Participation Protection” rule so low-income families are not left worse off when a young person starts an apprenticeship and a single digital front door where employers can advertise apprenticeships and work experience placements.
Realising the Potential of Work Experience: The Youth Select Committee, made up of 11 to 18-year-olds, concluded in 2018 that access to good-quality work experience remained patchy and inconsistent despite recent reforms, and put a series of recommendations to the Government. Young people also asked for an online platform to help them find placements, an idea the Skills Commission echoed eight years later in its call for a single digital front door for placements.
Youth Voice Census 2026: Youth Employment UK’s survey of 11,508 young people aged 11 to 30 finds that lack of work experience is now the most commonly cited barrier to employment among those asked, at 57%, up from 47% in 2025. Only 35% of eligible respondents were offered work experience in the past year, yet 72% of those who did a placement rated it good or excellent, and three quarters of those looking for work say paid work experience would help them find a job.
IGL Evidence Bites: Entrepreneurship Education: The Innovation Growth Lab’s review of 15 experimental studies finds that results vary widely: some programmes build lasting skills while the effects of others fade quickly, and design matters as much as content, from tailoring programmes to participants’ age to choosing role models carefully. It cautions against using entrepreneurship education to improve employability, since the evidence suggests wage employment is unaffected or reduced. An accompanying blog sets out research gaps, including linking efforts to build innovation skills with efforts to foster entrepreneurs.