UK high street bosses urge chancellor to cut cost of employing young people
Retailers and hospitality companies have urged Chancellor John Healey to reduce the cost of employing young people in his first budget. They say higher employer national insurance contributions have made it harder to create jobs, particularly on the high street, and want the government to ease the pressure on firms and workers.
At a meeting at No 11, businesses including Tesco, Costa Coffee, the Co-op, Marks & Spencer and Sainsbury’s called for the earnings threshold for employers’ national insurance to rise from £5,000 to £6,000. The threshold was cut from £9,100 by Healey’s predecessor, Rachel Reeves; firms say the change contributed to fewer jobs for young and part-time workers. They also want relief on business rates. Separately, Healey has reportedly rejected calls to equalise capital gains tax and income tax rates, though a smaller capital gains tax increase remains possible.
- Retailers want the national insurance threshold raised to £6,000.
- Businesses say employment costs are squeezing high street jobs.
- Healey has reportedly ruled out equalising capital gains and income tax rates.
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National Insurance is a tax paid by employers as well as workers. Employers start paying it when a worker’s earnings pass a set threshold; lowering that threshold means firms pay the tax on more of their staff’s wages.
Retailers and hospitality businesses employ many young and part-time workers, and say higher employment costs can affect how many people they hire. They have asked for a higher threshold and lower business rates, a tax on many shops and other commercial premises.
The chancellor, John Healey, sets tax and spending plans in the Budget. Changes to these costs can affect employers’ hiring decisions and the number of entry-level jobs available to young people.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Retail and hospitality businesses argue that higher employer national insurance makes each hire more expensive, so raising the earnings threshold could help them preserve or create entry-level and part-time jobs. They say this matters particularly for young people, who often rely on high-street work to gain experience, and that relief on business rates could help keep local employers viable.
The case against
The government could argue that employer national insurance helps fund public services and that raising the threshold would reduce revenue or require taxes or spending to change elsewhere. A broad cut may also benefit firms without leading them to hire more young people, while targeted employment support could offer better value for money.