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Cut national insurance for under-25s to create jobs, Milburn report to say
Alan Milburn’s review of youth unemployment is expected to recommend gradually reducing employers’ National Insurance costs for workers aged 21 to 24, beginning in retail and hospitality. The proposal aims to encourage businesses to hire young people, amid debate about how to address youth inactivity and the rising cost of employment.
The report is expected to suggest doubling the earnings threshold for employer NI contributions for this age group from £5,000 to £10,000, if public finances allow; an immediate cut is estimated to cost £5.1bn. It will also propose a guarantee of work, training or employment support, with possible benefit sanctions for those who refuse help, and changes to under-25s’ access to disability-related benefits. Nearly one million people aged 16 to 24 are classed as not in education, employment or training, while Milburn says £22bn a year is spent supporting economically inactive young people.
In short
- Milburn proposes phased NI cuts to encourage hiring 21 to 24-year-olds.
- The suggested threshold rise depends on the state of public finances.
- His review also proposes work support and changes to benefit eligibility.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Reducing employers’ National Insurance costs for young workers could make hiring them more attractive, particularly in retail and hospitality, where labour costs shape recruitment. Supporters may see the measure, alongside guaranteed work, training or employment support, as a way to help young people gain experience and reduce long-term inactivity, provided public finances can bear the cost.
The case against
Critics may argue that a tax cut costing billions could subsidise jobs employers would have created anyway, while offering uncertain value for money when public finances are constrained. They may also warn that benefit sanctions or changes to disability-related support risk pressuring young people whose barriers to work need tailored help, rather than penalties.