"My generation thought in argument"

Alan Milburn on how politics has changed and tackling youth unemployment

Today we have an interview with Alan Milburn, who is currently leading a major government review into youth unemployment. Alan was Labour MP for Darlington from 1992-2010 and in Tony Blair’s cabinet from 1998-2003, first as Chief Secretary to the Treasury and then Secretary of State for Health. As well as running the review he’s also currently lead non-executive director at the Department for Health, working on the reform programme there.

I talked to Alan about how this government compares to the one he worked in 25 years ago, and the challenges it’s facing, as well as how he’s planning to tackle the growing problem of young people being out of work.

Coming up over the next few days we have a post from Lawrence on the ongoing shambles over the Iran war; and next week Sam has a write-up of some absolutely fascinating and exclusive new polling on how the contours of British politics are changing.

You can read all three of Sam’s local election previews, including predictions for all 136 councils, by clicking this link.

And Lawrence’s latest piece on how Ukraine became a drone superpower here.

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Sam: Can I start by asking you about the differences between the government you were part of after 1997 and the one you’re working with now? What’s changed?

Alan: To start with the bleeding obvious: the world is a very different place. This idea of a poly-crisis is real. It’s not an accident. It’s not that somehow the public have become irrational. I mean, personally, I didn’t vote for Brexit. I wouldn’t have voted for Trump, but I understand why people did. It’s a product of a shift in geopolitics, from an era of unfettered globalization giving way to a view about the nation state having a different relationship with the market and protecting strategically important sectors of the economy, energy and so on.

So when people blame the politicians and say ‘Oh, they’re not as good as we were’ that’s not true. I don’t think it’s not about caliber. It’s about context. The context is harder.

Having said that, one of the things I don’t understand about this generation of politicians is that I think my generation thought more in argument. We tried to make an argument for how the world was, what we wanted to change, and how we were going to do it. This generation seems less intent upon that, for reasons I don’t fully understand. Maybe politics has become more tactical and less strategic. So one obvious difference between now and 1997 is that then the government came into office with a sharper, clearer strategy and an defined agenda for change.

The truth is this government hasn’t always had that same clarity which at times has felt like it’s necessitated flying the plane and building it at the same time.

Sam: Why do you think that is? In both cases there were several years to prepare during which Labour would have expected to win.

Alan: I think it was a strategic choice to make Labour as small a target as possible in order to avoid the risk of the country voting Conservative. In some cases this was complemented by thinking behind the scenes. Wes Streeting did that and could hit the ground running as a result. Or take an interesting one - Ed Miliband came in with a clear plan, and an agenda. And a knowledge of how Whitehall works. You might disagree with it, but he knows what he’s trying to do. That’s not been true in all policy areas.

Finally, and this is a bit more understandable if you’ve been out for a long time, a lack of awareness about how government needs to operate if you’re going to do change. At times there’s been a misalignment between objective, strategy and operating model.

Sam: What about at the departmental level? You went into health in 1997 [initially as a Minister of State and then as the Secretary of State from 1999]. Now you’re seeing how it operates as lead non-executive director helping Wes Streeting. Do you see big differences in the way the civil service works, the way that expectations are set within departments?

Alan: The big difference is that the risk aversion is 500% higher. I’ve thought a lot about why that might be, and there are many factors, but I think one of the principal reasons is towards the end of the Conservative era the senior civil service came to believe that its job was to save the country from the government. Maybe that was a good thing, given it was chaos, but that’s left a legacy. So I see more and hear more ‘not sure about that, oh dear that will be quite difficult’.

This feeds into another big difference from my era: with something like the [health department] 10 year plan, that ended up being written by a small group of people, me included, with the mainstream machine largely exempted from that process, which is just an odd thing to do. It tells you that the role of the civil service in terms of being a generator of change and ideas has diminished over time. It’s become much more defensive, much more conservative.

When you talk to some of the permanent secretaries, they say that their expectation was fashioned by corporate memory of 1997 when Labour came in, not with a fully-fledged encyclopedic agenda, but with clarity about priorities: Bank of England independence, minimum wage, reform of public services, constitutional change. That is what they expected, and it just didn’t happen.

Sam: I had conversations with civil servants expecting that, and then you’d talk to Labour MPs who were expecting the civil service to have folders of plans of all the things the dastardly Tories had prevented them from doing. Everybody was waiting for everybody else.

Alan: But in the end, look, it’s easy to point the finger at civil servants. And institutionally and culturally, there has to be change. But this is about political leadership. I’ve never been a fan of saying ‘everything would have been okay if it hadn’t been from the obstructionism of the civil service’.

Sam: Also risk aversion is partly about political context, right? If you don’t dare take risks, it’s because you’re worried you’ll be punished if they go wrong.

Alan: And that is the opportunity to learn the lessons of the last couple of years and recognize that the only way forward is to really seize the mantle of change. That will be the contest of the next general election. In 2024 the winner was tactical voting. The public are quite sophisticated, increasingly so, and they voted to get the incumbent out. The question next time round is, where does the tactical vote go? Does it go against Reform because people are worried about Farage and what that might represent, or does it go against Labour? And the only way to make sure it goes the former way is for Labour to change things more than they are.

Sam: One of the things that was said a lot when this government came in was ‘we want to be an insurgent government’. I heard that phrase a lot. I don’t think you could say that that’s happened. What would it actually require to be an insurgent government? I’m interested in this question of why even the things the government has done that are popular when you poll them, haven’t been noticed by anybody, whether that’s nationalizing British Rail or minimum wage increases. Whereas people do have a sense of what Farage stands for. Those interested in voting Green know what they stand for. How do you do that as a government when you can’t be quite so simplistic about the trade-offs?

Alan: I think the phrase about the government becoming an insurgent is a misnomer. What the government’s got to be is an agent for change.

You do it through strategic clarity and narrative creation. The biggest job of leadership today in any setting, corporate or politics, is a job of explanation. What is going on in the world. Why is it happening? What are the choices before us? You create narratives and one of the things that worries me most is when people say: the answer to all of this doesn’t lie in any of that stuff, strategy or narrative but in delivery. Sure you might be able to make people 10 quid a week better off by the end of this Parliament, but you need to construct a story and, critically, a purpose around that. This is why it doesn’t land at the moment.

Then you’ve got to alight upon some big, sweeping changes that actually make sense to people who connect. And this is why public service reform is important, because everybody’s bothered about whether they can a hospital appointment? Is your health improving? Is education improving?

Sam: This relates to the point you made earlier that politicians now don’t seem to think in argument in the same way that they did 30 years ago. I have a theory that it’s partly about the way speeches are used now. In the Blair era they were used to make an argument from start to finish, whereas now speeches are now lists split up into small sections. Occasionally you get one that’s actually a coherent argument, but mostly they seem designed to be cut up into clips. So politicians never take the time to construct the broader argument.

Alan: Yes I think there is a problem with everything being clip based, social media and reductionism and all that but the job of politics is to elevate above that.

Somebody asked me recently what did I do every day when I was the health secretary. I thought about this and said ‘I had an argument’. I had an argument with the BMA, with the NHS, with the civil service, with the unions, etc etc.. because change begins with one thing. It begins with an argument. The genius of politics is to construct an argument that connects with the public. And when that happens, that’s when you buy patience. You buy time, because change always takes longer than you think.

Sam: Let’s go on to the to the to the review you’re doing for the government on reducing the number of young people not in employment, education or training (NEET). It’s always difficult to do cross government work. You’re trying to look at education, health, welfare, local government, it’s very ambitious. How have you set it up to try and make it work?

Alan: It is always such a hard question. The review sits in DWP, and that’s where the team is based. Pat [McFadden] is the sponsoring minister, because it comes out of what happened on welfare reform a year ago. I got into conversations with Pat about what needed to happen.

It’s pretty simple. If you frame welfare reform as being about getting costs down – which is the way the debate played out a year ago – then, guess what, you’re going to get a lot of Labour backbenchers who are unable to vote for it. We’ve got to think of it differently. The increase in welfare expenditure is a symptom of an upstream failure, which is a failure to provide opportunities for people to do the things that they want to do anyway, get a job, have a home, aspire to a decent life. That’s what everybody wants. This generation is no different than any other generation, despite all the nonsense stories about the snowflake generation.

To do that you’ve got to look at this through a systems lens and not through a department lens, which is the first challenge. Whitehall doesn’t do that. My plea is for mission based government. Keir was right to come in with a notion of mission based government, and it’s a shame it hasn’t always happened in practice. This will only work if it’s mission based because we’re looking at this, as you rightly say, across the journey that young people take from transitioning from the world of education into the world of work. This is about parenting in early years. It’s about schools and skills. It’s about employment, support and transport, which everybody forgets about. It’s about the health system and the growing incidence of mental health and neurodiversity. And then it’s about the welfare system as well. Obviously there’s a lot of engagement going on with cabinet ministers across the piece, with Wes [Streeting] and Bridget [Phillipson] and Pat and Lisa [Nandy] behind the scenes.

When you look at it through a system based approach, it becomes obvious very quickly that there is no system around stopping youth unemployment. There’s no national framework, or governance philosophy, or clear line of accountability.

You also see that it’s not a cyclical problem about unemployment that will go away over time. The nature of who the NEET group is has changed a lot. It’s now much more about detachment from the labour market. So 61% were economically inactive, which means they are not looking for work. The most horrifying data point I’ve come across is that 45% of young people aged 24 who are NEET have never had a job. If you haven’t had a job by 24, the chances of getting a job by 34 are much reduced.

So we have an old system, that isn’t really a system, dealing with a new problem. It’s not equipped to deal with this new problem for three reasons.

One, massive complexity and duplication of effort. There was a LGA [Local Government Association] survey from a few years ago about the number of institutions dealing with economic inactivity: 51 that they could identify spread across a dozen government departments. When I did some work in Barnsley a few years ago on this, we found 71 organisations in a small town, purportedly trying to help people who are economically inactive.

The second issue is that there’s no clear accountability, and in some ways, the accountabilities are becoming more frayed and more complex. There isn’t clarity about what is it that national policy should be doing, and what is it the local delivery engine should be doing. National policy is obviously critical, but labour markets fundamentally are local. And now we have this very uneven governance landscape, mayors, local authority, etc, etc. So we’ve got to get some clarity about who is doing what, what the functions are, what their responsibilities are, what their accountabilities are.

The third problem that you’ve got is that all of these different parts of the so-called system, whether it’s welfare, education or health, all operate as separate institutions with their own funding streams, their own accountabilities, their own incentives, and they often misalign. So for young people, there is no smooth transition point. There is a data cliff edge at 18 where we stop tracking what’s happening. That is true in skills and employment, as it is in mental health services.

This is quite a big system reset that needs to happen. We need a participation first mindset across welfare, health and education. The education system sees its purpose as rightly driving up standards, getting kids through the system, delivering the qualifications that are needed to compete in the labour market. Great, but nobody’s focused on destination and outcomes, or indeed work readiness, which is the biggest complaint employees have about taking on young people. In the health system, the fit note is the best example of this. It sees its job is sort of basically to treat rather than to aid recovery, if you’ve got a mental health problem, the first question that should be asked is: ‘what is it that you would like to do, and what is it that you’re capable of doing?’ And the same is true in the welfare system which has become a means of alleviating poverty by giving people state based income, but what it’s not doing is making that sustainable for people by saying ‘Okay, what are you capable of doing?’

Sam: Trying to create that kind of shift where you’re bringing systems that are misaligned together in government is very complicated. To make it happen someone needs to have overall responsibility for the objectives that you’re trying to achieve. It seems to me that the only way you could do that is by pushing it down to local or regional level. There has to be someone who can sit across health, education, the labour market and welfare in their area and pull them together, and that just cannot be done at Whitehall level.

Alan: At Whitehall level what we’ve got to get is coherence in objectives and incentives. That’s the job of the national policy framework. Candidly, right now, there is no national policy framework. It’s the fault of successive governments because this NEET issue has been around for a long time.

But then we’ve got to ask the question about, as you say, who is responsible for actually making this stuff happen? Who does the convening, who ensures that the young person is being both tracked and appropriately supported and enabled into work? That’s got to be a devolved function because the labour market in Benwell in Newcastle, where we were three weeks ago, where I grew up, it’s just different from the labour market in Bradford, where we were two weeks ago. At this stage, we’re primarily working on the diagnosis. We’ll come to the solutions in due course. But our working hypothesis is this is going to have to involve more clarity about devolved responsibilities.

Sam: One of the challenges if you want mayors to hold the ring, is they have very little formal responsibility for health, education, or welfare. How much is this about just them convening versus actually giving them real power over some of these things?

Alan: You’re probably going to have to do both. Right now we’re trying to ignite interest across the country. There’s an almost visceral feeling. I’ve never seen anything like it in 30 or 40 years, in terms of what this is eliciting from the public and from actors in civil society. There’s real fear about what the future is going to bring for this generation of young people. You’re as liable to be in a conversation about graduates as you are NEETs.

The consequence of that is that whether it’s employers, local authorities, mayors, charities, football clubs, the incoming is like nothing I’ve ever seen. I mean, we’re inundated with people wanting to do something. So we’re trying to move from analysis to activation.

One of the things that we’re trying to do is based on a conversation I had in Newcastle a few months ago with the leader and the chief executive there, Pam Smith. Now, I was talking to them about where I grew up, in the West End of Newcastle, and said, look, it’s a bloody disgrace. One in three young people are NEET. That’s become normal. What are you doing about it? So it was quite a difficult conversation. To their credit they went away and formed a NEET reduction taskforce, to start the convening job. It’s brought together the college, the universities, the schools, the employers, and they’re setting an ambition to reduce the NEET rate in Newcastle, regardless of anything I do or anything the government does.

We’re trying to activate across the country, dozens of these, so by the time I come to report in September, people feel there’s a movement for change that’s actually happening. So convening is a critical element of this. And then there are hard powers. Where mayors or local government need the authority to make stuff happen. That will require a constitutional shift in thinking about where power is located in the country.

Sam: I want to ask a bit about the politics before we finish. You said earlier, this initiative came out of the rebellion against welfare cuts last year, which means you’ve got a lot of MPs very nervous about what’s going to happen. They feel like they fought something off that would have caused real harm to their constituents and are worried it’s going to come back in some form. There’s also a narrative in the wider media which is pretty abrasive around young people, that they’re malingering and making up mental health problems they don’t have and so on. How do you convince your colleagues that this is being done for the right reasons, not just to save money, not just to appease the right wing press?

Alan: Well, I think the starting point is: Labour is what it says on the label. It’s supposed to be the party of work. We’ve got to go back to basic principles. Work is good for you. Work is actually overwhelmingly good for your mental health. The only way this can possibly work is if we are completely changing the perspective. So this is less about welfare reform and more about opportunity creation. The youth guarantee announced recently was a step in the right direction.

The question is, how do you strengthen the opportunity offer in such a way that every young person has got a guaranteed offer of a decent job, decent training, a decent apprenticeship, decent opportunities served in some sort of way, shape or form. And then you can get to the welfare reform piece of it, which is: so how does the welfare system enable that to happen?

Critically, do we move money from paying for failure and instead do what everybody says that we should be doing, which is to move that money upstream in order to enable young people to succeed? If you think of what’s happened to youth services over the course of the last 15 years, cut by 73%, is that a sensible thing to do whilst we’re exponentially increasing the cost of failure? So I have a lot of conversations with Labour MPs, and indeed, with MPs across the political spectrum. People get all of this, but they’ll only be convinced by it if they think that the opportunity offer is strong enough.

Sam: Of course, one of the common challenges around these kinds of system transformations is how do you move money upstream to early intervention rather than the costs of failure without a transition period where you’re paying for both. That’s what the Treasury often finds difficult about this type of reform programme.

Alan: You are absolutely right. We can all switch the spending in our heads. Yes, it’s hard to do it in practice, because if you do it without transition funding, you create losers, and you want to avoid that. So we’re thinking very hard about how we can best to do that.

Sam: Finally, one of the challenges that you’re hearing a lot from business is this government has made the NEET situation worse by putting up the minimum wage for young people so much. And by creating new employment rules and regulations.

Alan: We’ve talked almost exclusively about the system, but we’re looking at this through both the supply and demand lens. The supply side is obviously about: how do young people transition from the world of education to the world of work.

But unless you can fix the demand side and ensure that employers want to employ more young people, it counts for nothing. So we’re looking at what’s going on in the labour market, and there are some cyclical and structural changes that are really quite worrying. One is the decline of entry level jobs, and this is before artificial intelligence. Another is around tax and the minimum wage. It’s the first complaint I always get from an employer. I 100% understand it.

But we need to locate this in a broader context of labour market change. There is something profound happening there, and I think that will require employers to think of themselves and the role they play in a different way from what they’re doing now, and that’s going to be challenging. When I report, there will be recommendations both for employers and for public policy. To the narrow question about, are we looking at the impact of things like the minimum wage? Absolutely, of course we are. Every time you take on a young person as an employee, it’s a risk, because they’re unproven. You take on an 18 year old, they’ve got no track record. It’s different from taking on a 28 year old who has. So what you’ve got to do is you’ve got to make sure the risks are minimised and the incentives are maximised.