MPs have called for employer National Insurance (NI) contributions to be cut for all workers under 25 to boost youth employment. Between January and March 2026, 1.01 million young people were not in education, employment or training (NEET), a figure rising since 2021.
Report calls for policy overhaul
A new report by the Work and Pensions Committee says the UK Government's policies "do not go far enough" and that the government "must go further and faster to reduce the high number of NEETs." The inquiry heard "overwhelming evidence" from businesses, particularly in retail and hospitality, that rising employment costs, partly driven by NI increases, were reducing training and job opportunities, with young people "disproportionately impacted."
The report calls for the higher NI contribution threshold to be extended to all workers under 25, arguing this would boost vacancies, especially entry-level roles, and better align policy with strategic aims.
Lack of policy coherence
Labour MP Debbie Abrahams, who chairs the committee, said: "There is a lack of coherence across departments, with policies not aligning with the ambition to increase employment, education and training for under 25s." The report urges the government to develop a youth employment strategy with a clear target for reducing the NEET rate, and to address tax policy and benefit rules that disincentivise employers and young people.
Current schemes largely support young people within the benefit system, but 44% of NEETs are not claiming benefits. MPs want schemes to cover more people. Benefit eligibility rules also contradict the drive to boost youth employment; for example, young adult carers risk losing carer's allowance if they study more than 21 hours a week, forcing them to choose between education and household income.
Impact on young people
One participant in the inquiry said they felt like "a leech" as they couldn't contribute to household costs, while another said they felt "in limbo." Of the 1.01 million NEETs, 400,000 (39%) are unemployed and 613,000 (61%) are economically inactive.
Abrahams added: "During our inquiry, we heard from young people demoralised by the experience of unemployment. We heard how they want to work but end up feeling like leeches on their family. This situation is not only unfair to them, it is also harmful. Even a short spell as NEET in one’s formative years can damage mental health, impact future career opportunities and reduce lifetime earnings."
She said the Youth Guarantee is "a good start" but contradictions between strategic aims and scheme rules mean a Youth Employment Strategy is desperately needed. "It’ll improve policy coherence so no policy unintentionally pulls against attempts to help more young people into work."
She concluded: "But, efforts to give young people the best chance to live independently will be in vain if there are too few jobs to go to. In a challenging environment, businesses need help to meet rising employment costs. Reducing employer's National Insurance contributions for under 25s will enable them to take a chance on talented young people."
