Conservative leader Kemi Badenoch has announced a major tax cut for employers and young workers, pledging to halve employer National Insurance for staff aged 21-24 from 15% to 7.5%. The policy is part of a Conservative plan to reverse the rising rate of youth unemployment, which has reached 16.4% under Labour, with nearly a million young people not in education, employment, or training.
Policy details
Employer National Insurance contributions were already cut to zero for workers under 21 by the last Conservative government. Under the new proposal, firms would also keep an extra £1,545 on average for every worker aged 21-24. Earnings above £50,270 would still face the standard rate, so the cut applies to the starter jobs where young people get their first break.
Conservatives say the tax change will end a cliff that currently exists, because at age 21 employer National Insurance goes from zero to the full rate. Halving what Conservatives call the jobs tax for young people will cost £2.3 billion, and the party says it will be fully funded from a Conservative savings plan to be published in full on Wednesday.
Impact on businesses
Employers have warned that tax increases imposed by Labour have made recruitment harder, with retail and the hospitality trade – including pubs – among the worst hit. These are two sectors that traditionally provided work for young people.
Badenoch will set out more details in her speech to the party conference in Birmingham on Wednesday afternoon.
Political reaction
Andrew Griffith, Shadow Chancellor, said: “Labour are destroying the future of our young people. Their jobs tax, employment red tape and minimum wage hikes have seen an explosion in the cost of employing a young worker. We will fix that.
“We will slash the tax on youth jobs in half to give young people the opportunities they deserve. Only the Conservatives have a plan to cut taxes, cut red tape, and give young people their future back.”
Julia Lopez, Shadow Business Secretary, said: “Everything Labour have done since entering government has made prospects for young people worse – from the minimum wage hikes to the trade union-dictated employment regulations, and significantly their Jobs Tax.
“Only the Conservatives understand that businesses need government to get out of the way so they can create the jobs the country sorely needs. The Conservatives are building the serious plans to cut tax, cut red tape and get Britain working again.”
Nearly a million young people are not in employment, education, or training, more than the population of Leeds, Glasgow, or Cardiff. A single wasted year costs a young person £52,000 in lifetime earnings, rising to £293,000 for someone who spends every year from 18-24 out of work and education.
