Lord David Blunkett, a Labour peer and former home secretary, has suggested that government departments may need to find funding from their existing budgets to finance reforms to the welfare system. Writing in The Telegraph on Friday, Nov. 13, 2026, Lord Blunkett stated that Cabinet ministers must find "sufficient resource" to support a forthcoming overhaul of support for young people. He noted that while a 1998 employment program he oversaw was funded by a windfall levy on private utilities, no such levy exists for the current proposals.
The recommendation follows a review by Alan Milburn into the rising number of "Neets"—young people aged 16 to 24 who are not in education, employment, or training. According to a report in The Times, the Milburn report, scheduled for release on Tuesday, Nov. 17, proposes moving young people away from sickness and disability benefits, such as the health element of Universal Credit and the Personal Independence Payment (PIP). Under the plan, these individuals would instead receive a "youth allowance" set at the standard Universal Credit rate.
Mr. Milburn stated that his proposals involve a "big rewriting" of the system and acknowledged that the transition would not be "pain-free." Official figures cited in the review showed the number of young people in the Neet category exceeded one million earlier in 2026, the highest level in over a decade. Mr. Milburn estimated the economic cost of the issue at approximately £125 billion annually, factoring in lost tax revenue and increased health and welfare spending.
Prime Minister Andy Burnham told reporters that the review would point to a "new way" of supporting young people to prevent them from remaining on benefits into their 20s. However, 10 Downing Street has not ruled out whether these changes will apply to current claimants, stating that the government must "invest earlier" rather than continuing to pay for the cost of failure. The lack of specific detail has drawn criticism from Labour MP Clive Lewis, who expressed concern that media previews of the plan have created uncertainty for constituents.
The scale of the proposed funding shift is significant, with Mr. Milburn estimating the total economic impact of youth unemployment and inactivity at £125 billion per year. By suggesting that government departments find resources within their current budgets, Lord Blunkett is signaling that other public services might see their planned spending used to cover the initial costs of this welfare transition.
The next steps for this policy will begin on Tuesday, Nov. 17, 2026, when the full Milburn review is scheduled for publication. At that time, the government is expected to clarify whether the new youth allowance will apply only to new applicants or if existing claimants will be transitioned to the standard rate. Disability charities and Members of Parliament have indicated they will scrutinize the report for its impact on vulnerable groups.