Yorkshire Employers Urge Chancellor to Cut NI for Under-25s

By Daniel Okafor

A chamber representing 5,000 Yorkshire employers wants Chancellor John Healey to cut employer National Insurance contributions for under-25s in his first Budget on 28 October. The West & North Yorkshire Chamber of Commerce says the cut would help tackle what it calls the "youth unemployment crisis".

The ask lands at an awkward moment. Healey has refused to rule out tax increases after acknowledging that government borrowing costs sit at "historic highs". Labour's 2024 manifesto pledged not to raise income tax, National Insurance or VAT — the three big revenue raisers. That pledge narrows his room to fund any relief.

Why do employers want relief for young workers?

Businesses told the BBC they are still absorbing the "shock" increases in employers' NI contributions in 2024. Aqila Choudhry, managing director of Leeds care home provider Love in Care, said firms had fought rising costs for a decade before Labour's first Budget made things worse.

"The shock of the increase in National Insurance contributions [for employers] in 2024 really hit everyone as it was not expected and the impact is still being felt," she said. Businesses "desperately need no more tax rises" if they are to "survive, sustain and grow", she added.

Choudhry backs the chamber's call to cut employer NI for under-25s. She says the move would help young people not in education, employment or training.

Ken Murray, principal of York College, wants a different lever. He wants further education colleges to reclaim VAT through a rebate scheme. Sixth-form colleges teaching 16-to-18-year-olds for free cannot currently do so, which he says creates funding disparities with academies and free schools.

"We could spend more money on young people so they can do what they need to do in the community and make sure we are challenging those not in education, employment or training and get them onto high-quality jobs," Murray said.

He also asked for "more flexibility around money that is currently ring-fenced". Free courses for unemployed people exist, but uptake is "really low", he said. Funding for workers trying to upskill is scarce. Murray suggested the free courses for jobs money could be redirected there.

How hard has hospitality been hit?

Martin Greenhow, who runs bars in Harrogate, Leeds and Sheffield, said the sector had "been reeling since Covid".

"People's behaviour changed, they're working from home, they're not socialising in the same way," he said. "Fridays for our sector are down 30% on pre-Covid numbers."

The 2024 NI increase was "a bitter pill", Greenhow said. "It directly led to us making people unemployed."

He wants income tax thresholds changed so customers keep more of their pay. "People don't have the money in the pocket they once did and if they don't have it they can't spend it with us in hospitality or in retail," he said. He also pressed for action on business rates and said he was "desperately hopeful" the government would cut VAT for hospitality.

"That reduction doesn't just line people's pockets, it allows businesses to survive that are going under, it allows others to expand and make investment and employ more people, meaning fewer people claiming benefits," he said.

What can Healey actually do?

Not much without breaking pledges. Healey told a September audience: "My defining mission as chancellor is growth, good growth in every postcode. And I've set out today the way this government will set about it: more devolution, more public leadership and control, more investment, more innovation, more jobs."

That growth agenda collides with the manifesto promise to hold the three largest taxes flat, so any NI cut for young workers would need to be paid for somewhere else in the Budget arithmetic.