Better advice for young people could held reduce healthcare bills for illness brought on by unemployment and other problems that come with it, a report has found.
Research published by youth advice and counselling charity Youth Access said illness brought on by youth unemployment is putting strain on the NHS budget.
The report, The Outcomes and Impact of Youth Advice - the Evidence, said 750,000 young adults aged 16-24 become mentally or physically ill each year because of stress from unemployment-related problems, including debt, homelessness and crime. More than a third of these people end up receiving NHS treatment from GPs, hospitals and psychiatric services, it said, at a cost of around £250 million a year.
The charity called for investment in advice services which could help solve many of the problems, and said good advice transformed many of the young people's lives, with 70% reporting reduced levels of stress, and being able to get back into education or work once their problems are sorted out.
Youth Access director Barbara Rayment said: "We welcome the Government's new focus on tackling youth unemployment, but unfortunately, initiatives like the Work Programme and the new Youth Contract will do nothing to fill the gap left by sweeping cuts to youth advice services and the impending cuts to legal aid, which will leave a further 75,000 young people without advice.
"Unless urgent action is taken now to put in place the vital advice, counselling and support services young people will need over the next few years, they - and we - will pay a heavy price."
The report used a variety of data from different sources including the English and Welsh Civil and Social Justice Survey; data from two separate exercises managed by Youth Access, interviewing 516 young clients who had been given advice; and interviews with 27 young clients aged 16-24 carried out in 2006 and followed up in 2007.
The research showed that social welfare problems, such as those relating to housing, benefits, debt and employment, have a disproportionate adverse impact on disadvantaged young adults, and young people's unresolved problems carry a substantial cost to society and the public purse.
It also found advice from a youth advice service averts serious adverse outcomes, such as homelessness and mental health problems, and leads to improvements in many aspects of young people's well-being.
The report said advice is most effective when delivered early through independent, face-to-face advice services along with emotional and mental health support.