MPs urge National Insurance cut for under-25s to tackle youth unemployment

MPs have called on the Government to cut employer National Insurance contributions for all workers under 25, warning current costs are discouraging businesses from hiring young people.

The Work and Pensions Committee said it had received “overwhelming evidence” that higher employer National Insurance rates were reducing employment and training opportunities, particularly in sectors such as retail and hospitality.

The committee highlighted that more than one million 16 to 24-year-olds are not in education, employment or training (NEET), describing the figure as a “travesty”.

It also pointed to differences in the current National Insurance system.

While employers do not pay National Insurance for employees under 21 or apprentices under 25 earning below £50,270, they must pay the 15% employer rate on earnings above £5,000 for non-apprentices aged 21 to 24.

The committee also referenced former minister Alan Milburn’s review of youth unemployment, which found the Government spends 25 times more on benefits for young people than on helping them into work.

Sheila Flavell CBE, chief operating officer at FDM Group, said: “Recent conversations around graduate employment focus on whether people have jobs but not actually on whether they have the right jobs.

“Underemployment is a growing threat for the UK labour market. We have capable, ambitious graduates working in roles well below their skill level, and that is a waste of talent on a national scale.