Labour must reform welfare or condemn a 'lost generation' of young people to a life on the dole, the party will be warned today.Former Labour cabinet minister Alan Milburn is set to sound the alarm on youth unemployment, saying that without urgent action, one in six youngsters will be on jobless benefits by the end of the decade.In a sobering assessment in his long–awaited report, he says the number of so–called Neets – those who are not in education, employment or training – is on course to jump by a quarter to 1.25million.Britain's youth jobs crisis is already worse than that in countries such as Greece, France and Spain. Mr Milburn will warn that sweeping reforms to Britain's welfare, education and health systems are needed to prevent the crisis spiralling further.And the former health secretary will tell ministers that the practice of introducing piecemeal schemes on top of a 'broken system' is doomed to fail.But he will stop short of calling on the Government to reverse measures which employers say are making it harder to take on young people, such as the new workers' rights charter and big increases in the minimum wage.And he will not publish detailed proposals for reform until the autumn.Today's report says that a welfare state once built to provide a safety net is now 'exacerbating inactivity'. Former Labour cabinet minister Alan Milburn (pictured) is set to sound the alarm on youth unemployment, saying that without urgent action, one in six youngsters will be on jobless benefits by the end of the decade Mr Milburn will stop short of calling on Sir Keir Starmer to reverse measures which employers say are making it harder to take on young people, such as the new workers' rights charter and big increases in the minimum wage People outside a job centre in London. Britain's youth jobs crisis is already worse than that in countries such as Greece , France and SpainIt warns that a surge in diagnoses for mental health conditions such as anxiety, depression and autism is locking many young people out of the world of work at the same time as a decline in the number of starting jobs is making it harder to get a foot on the ladder.Mr Milburn will say that a growing number of Neets risk becoming 'permanently' detached from the labour market. 'Six in ten have never had a job. Twenty years ago, that figure was closer to four in ten,' he will say.'Detachment is no longer temporary. For too many young people it is becoming permanent. We are at risk of a lost generation.'The Tories last night warned that Labour policies, such as the £25billion hike in National Insurance, are fuelling the crisis by making it more expensive to employ young people. Employers are said to have warned Mr Milburn 'repeatedly' that big rises in the minimum wage for young workers are destroying jobs.Shadow work and pensions secretary Helen Whately said: 'Every policy choice Labour has made, from their jobs tax, capping apprenticeship funding, or trapping young people on welfare, has made it harder for a young person to take their first step into work. Their only answer has been a flurry of piecemeal work programmes – an approach this report rubbishes.'She added: 'Starmer and his leadership rivals are too busy playing politics to deal with this generational crisis.'Ryan Wain, senior director of policy & politics at the Tony Blair Institute, said: 'Milburn is spot on. An economic crisis has become a moral one as nearly a million young people are written off – denied the purpose, hope, aspiration a job gives you.'Wholesale, far–reaching reform is necessary. Make it cheaper and easier for businesses to take a chance on a young person. Enable the next generation to build skills and confidence to thrive. Give them a connection to work. Students at a vocational college. In a sobering assessment in his long–awaited report, he says the number of so–called Neets – those who are not in education, employment or training – is on course to jump by a quarter to 1.25million Marks & Spencer boss Stuart Machin (pictured) described the report's findings as 'shocking but not surprising''Doing this properly will take time but ballooning welfare spending must be controlled now. Pull the emergency handbrake on welfare by making in–kind support the default over cash payments for those conditions that do not limit a young person's ability to work.'Polling conducted for Mr Milburn's report found that 84 per cent of those classified as Neets want a job or training. But the study found a steep decline in the number of starter jobs.Vacancies in the hospitality sector have halved in the last four years, while the number of Saturday jobs was found to be in 'freefall'. The number of young people starting apprenticeships has slumped by 35 per cent in the last decade. Mr Milburn will say: 'The first rung of the career ladder has thinned. For too many young people it is now simply out of reach. 'That places them in a hopeless Catch–22 where employers ask for work experience but the opportunities for young people to gain it have narrowed or gone.' Marks & Spencer boss Stuart Machin said: 'The findings are shocking but not surprising – I hear them every day from our colleagues and customers, who are worried that opportunities and role models are disappearing.'A Saturday job in retail changed my life, built my confidence and gave me the skills to build a fulfilling career. We have a chance to provide a similar path to every young person.'The report is sharply critical of the welfare system. It finds the crisis has been fuelled by a steep rise in the number of young people who are signed off with mental health conditions that mean they no longer have to look for work. Mr Milburn has dismissed the idea of a 'generation of snowflakes'. But he will say the welfare system needs to do more to encourage and support young people into work instead of leaving them to languish on benefits.He will point to figures showing that for every £1 spent on employment support for the under–25s, around £25 was spent on benefits.'This is not a failure of young people,' he will say. 'It is a failure of a system stuck in the past. Whether it is education or health or welfare, that system fails to enable their participation in the labour market.'