Tesco, Costa and Co-op Press Chancellor to Cut Youth Hiring Costs

By Daniel Okafor

Tesco, Costa Coffee and the Co-op met Chancellor John Healey on Tuesday morning to demand he cut the cost of employing young people in his first budget. The venue was No 11. The ask was specific: reduce the threshold for employers' national insurance contributions.

The meeting put some of the UK's biggest retail and hospitality employers in one room with the man who controls the Treasury's levers. Also present were Stuart Machin, the boss of Marks & Spencer, and Simon Roberts, chief executive of Sainsbury's.

What do the bosses want changed?

The target is employers' national insurance contributions, known as Nics. The companies want Healey to lower the threshold at which the levy starts to bite, particularly for younger workers. In practice, that means the state would take a smaller slice of the wage bill for entry-level staff.

The mechanism matters here. Nics operate as a tax on every pound a firm pays in wages above a set threshold. Raise the threshold, or cut the rate for young workers, and hiring a 19-year-old becomes cheaper overnight. Firms then have a direct financial reason to open roles they might otherwise leave unfilled.

High street names have watched their payroll costs climb as Nics rose. Tuesday's session gave sector leaders a chance to explain that impact to the chancellor in person, ahead of the budget that will set employer costs for the year ahead.

Who was in the room?

The delegation drew from both retail and hospitality. The named participants were:

• Tesco, the UK's largest supermarket
• Costa Coffee
• The Co-op
• Stuart Machin, chief executive of Marks & Spencer
• Simon Roberts, chief executive of Sainsbury's

That line-up spans groceries, coffee shops and department stores. It covers a large share of the entry-level jobs market for under-25s, which is exactly the hiring pool the proposals aim to make cheaper.

Why young workers specifically?

The focus on youth hiring is not accidental. Retail and hospitality employ a heavy concentration of young staff, often at or near minimum wage. For these sectors, Nics changes hit harder than for firms with older, higher-paid workforces, because the levy applies across large headcounts rather than a small number of big salaries.

A cut tied to age would give these employers relief precisely where their payroll is largest. It would also answer a political criticism leveled at past Nics rises: that they discourage firms from taking a chance on workers with no experience.

Healey heard the case directly. The bosses framed it as a budget decision that would shape hiring intentions across the high street, not a request for general business support.

What happens next?

The decision now sits with the chancellor. His first budget will show whether Tuesday's arguments moved the Treasury on the Nics threshold. For Tesco, Costa, the Co-op, M&S and Sainsbury's, the stakes are concrete: every percentage point of employer contributions translates into a measurable cost across tens of thousands of young workers on their payrolls.