Top business group urges Healey to cut NICs to ‘solve Neets crisis’

Britain’s leading business organization, the Confederation of British Industry (CBI), has called on Chancellor John Healey to reduce employers' national insurance contributions (NICs) during the Budget to address the "neets crisis," which affects young people not in employment, education, or training. In a report released on Tuesday, the CBI highlighted that the youth unemployment crisis is a symptom of a broader issue of increased business costs, with over a million young individuals currently categorized as neets.

The business lobby group urged Healey to implement the NIC reduction before the Autumn Budget, suggesting potential measures such as extending an exemption to workers under the age of 25, though they recognized this might not significantly affect hiring. The CBI also proposed lowering the headline NIC rate from 15% to 14%. However, the report did not specify how such tax cuts for employers would be funded.

Rain Newton Smith, the CBI's chief executive, emphasized the potential of young people, stating, "Young people have a tremendous amount to offer, yet too many are locked out of the labour market." The CBI's concerns stem from surveys indicating growing frustrations among businesses due to tax burdens, exacerbated by the 2024 Budget increase under former Chancellor Rachel Reeves.

The youth unemployment rate has surged under Labour to over 16%, and an independent review by former health secretary Alan Milburn estimated the crisis costs the UK economy around £125bn annually. Factors contributing to the neets crisis include higher NICs, an increase in the national living wage, new costs under the Employment Rights Act, and pressures from energy bills and borrowing, all of which hinder employers' ability to recruit.

The CBI urged for a 52-week reference period for guaranteed hours contracts and a "low hours" threshold of no more than eight hours per week to create more job opportunities for school and college leavers.