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Posted: Mon 26th Oct 2026
6 min read
Nearly a million young people are locked out of work and education, but a landmark study released this week suggests self-employment could offer a lifeline, potentially adding £4 billion to the economy by 2029.
The report, Starting Out and Starting Up, launched at the House of Lords by The Entrepreneurs Network and Sage, comes as Enterprise Nation rolls out its Next Generation initiative, a free support programme designed to help 18- to 24-year-olds turn business ideas into reality.
The timing is critical. The number of young people not in education, employment or training (NEET) passed a million in January, the highest since 2013. Meanwhile, payroll jobs for 16- to 24-year-olds have fallen by 129,200 since 2022, even as the overall workforce has grown.
"With youth unemployment and NEET numbers stubbornly high, we agree entrepreneurship deserves to be talked about as part of the solution, not an afterthought,” said Aaron Asadi, CEO of Enterprise Nation.
The research, which analysed 111,700 businesses and 2.2 million payroll records from Sage's database, found that self-employment among working 16- to 24-year-olds has risen from 4.5% in 2022-23 to 5.4% in 2025-26, now reaching 193,000 young people.
That absorption of displaced workers, however, only partially offsets the decline in traditional employment.
The payroll squeeze has hit hardest in sectors that traditionally offer first jobs.
Hospitality and administrative services alone account for 56% of the fall in youth employment. In London and Wales, the number of young employees dropped by more than 8% over three years.
Yet the report's economic modelling offers a glimmer of hope. If just 5% of NEET young people moved into self-employment over the next three years, roughly 16,600 annually, it could generate £4 billion in additional output.
"Every business starts with a person," said Steve Hare, chief executive of Sage, in the report's foreword. "For a growing number of young people, [entrepreneurship] is becoming an increasingly attractive and accessible route into work."
The research profiles success stories such as Olivia Regan, 23, from Solihull, who left school without GCSEs but now runs a thriving cleaning business that creates jobs for others.
Christina Davis from Newcastle trained as a doctor before building a business helping entrepreneurs grow online.
Both women exemplify what the report calls a "new generation of solopreneurs", empowered by artificial intelligence tools that have slashed the cost and complexity of starting a business.
Enterprise Nation's Next Generation programme, which launched in September, reflects this shift.
It offers free workshops, mentoring, online communities and practical resources for young founders. The programme recently announced that 23-year-old entrepreneur Tom Helm won the Next Generation £1,500 grant, plus six hours of one-to-one mentoring from experienced entrepreneurs.
His obsession with classic Land Rovers led Tom to develop a cup holder that fitted the vehicle properly and looked right. Rather than settle for something that didn’t work, he designed and made his own.
His business KESWICK3 now develops well-made accessories for classic Land Rover Series vehicles.
The Next Generation initiative also profiled Archie Shepperd, 21, founder of Urban Standard, which employs 12 people and handles facilities management contracts for 500 properties across the health and social care sector, showing that real opportunities outside employment are a viable option.
The report makes three recommendations to government:
Pilot a Startup Allowance for under-25s with mentoring support
Create a £3,000 Youth Enterprise Grant within the Youth Guarantee to match the Youth Jobs Grant paid to employers
Launch a Help to Grow programme focused on helping young people use AI to start businesses
Currently, the Youth Guarantee is built entirely around employee jobs, with no equivalent support for those wanting to create their own opportunities.
The New Enterprise Allowance, which helped 157,000 people start businesses over a decade, closed in 2022.
Alan Milburn's interim independent review of young people and work, published earlier this year, found that 45% of 24-year-olds who are NEET have never had a job, potentially losing up to £300,000 in lifetime earnings even if they return to work.
With starter job vacancies down 49% over the past decade and just one vacancy for every three NEET young people, the research suggests policymakers can no longer ignore self-employment as a route into work.
As Steve Hare of Sage put it:
"The challenge now is to ensure that more young people have the skills, confidence and support to take that route if they choose to, and to recognise entrepreneurship as an important part of the answer to the UK's youth employment challenge."
