The Work and Pensions Committee has urged ministers to cut employer National Insurance contributions for all workers under 25 in a bid to lift youth employment and reduce the number of Neets—young people aged 16 to 24 not in education, employment, or training. The committee told BBC News that it has heard “overwhelming evidence” that rising employment costs, including employer NI, are constraining training opportunities and job vacancies for young people. It noted that more than one million people in the 16–24 age group are currently Neet, a figure the committee described as a cause for concern and a drag on the economy.
The MPs argued that an employer NI cut for under-25s would address this “travesty,” pointing to structural frictions in the labour market that are discouraging firms from taking on younger staff. They also highlighted gaps between government youth employment policy for under-21s and under-25s, saying the overall strategy lacks coherence. A spokesperson for the government said it remains committed to creating opportunities for young people, reforming education, and supporting progression in work.
The backdrop includes a history of NI changes that have raised the cost of employing young workers. In April of the previous year, the employer NI rate rose from 13.8% to 15%, and the earnings threshold at which NI starts was cut from £9,100 to £5,000. The government responded by expanding the employment allowance—the amount employers can reclaim from their NI bill—from £5,000 to £10,500. The committee stressed that the higher NI burden has particularly affected retailers and hospitality, sectors that rely heavily on younger workers.
The committee also cited that, under current rules, businesses do not pay employer NI for employees under 21 or for apprentices under 25 unless salaries exceed £50,270, while non-apprentices aged 21–24 face 15% NI on earnings above £5,000. This arrangement, the MPs argued, undermines government schemes designed to raise employment rates among young people. They also flagged broader policy tensions, including benefit cuts for those in training, which they described as “inexcusable” contradictions that undermine apprenticeships.
Committee chair Debbie Abrahams said the government needs a unified, coherent strategy on youth employment. “It’ll improve policy coherence so no policy unintentionally pulls against attempts to help more young people into work,” she said. The committee praised some early steps to prioritise work and training opportunities for 18–24-year-olds but insisted they were not sufficient to tackle Neets in a meaningful way.
The discussion comes amid broader examinations of the long-term costs of youth unemployment. Abrahams and others noted research showing that even short spells as Neet can damage mental health, constrain future career prospects, and reduce lifetime earnings. A government review into youth unemployment highlighted the scale of the challenge and the economic cost of Neets, although officials argued that the government is committed to reforms that will create a clearer path into work for young people.
The debate continues as ministers weigh fiscal constraints and the potential benefits of targeted NI relief for younger workers against broader tax and welfare priorities.
