Calls to cut employer National Insurance contributions for under-25s

Image shows a woman with black bobbed hair wearing a white suit jacket and purple blouse. She is sat in an office with 'Love in Care' banners behind her.

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Aqila Choudhry, who runs a care company in Leeds, said businesses "desperately need no more tax rises"

ByGemma DillonWest Yorkshire political reporter

Published23 minutes ago

Businesses across Yorkshire are urging Chancellor John Healey to cut National Insurance (NI) contributions for under-25s in his first Budget.

West & North Yorkshire Chamber of Commerce, which represents 5,000 employers in the region, said the reduction would help tackle the "youth unemployment crisis".

Healey will deliver his first Budget on 28 October, but has refused to rule out tax increases after acknowledging that government borrowing costs were at "historic highs".

Some businesses have told the BBC they were still struggling after the "shock" increases in employers' NI contributions in 2024 and were hoping for tax reliefs.

Aqila Choudhry, the managing director of Leeds-based care home provider Love in Care, said businesses had already been struggling with rising costs over the previous decade, and that Labour's first Budget in 2024 had 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.

She said businesses needed help if they were to "survive, sustain and grow", adding that they "desperately need no more tax rises".

Choudhry also backed calls by the chamber to reduce employers' NI contributions for under-25s, which she said would help address the issue of young people not in education, employment or training.

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Principal of York College, Ken Murray, would like the chancellor to allow colleges to claim a rebate on VAT

Ken Murray, principal of York College, also wants to see more support for young people entering the job market.

He would like to see further education colleges be able to claim a rebate on VAT, which he said would help address funding disparities between them and academies and free schools.

Sixth-form colleges providing free education to students aged 16 to 18 cannot currently reclaim VAT through the government's rebate scheme.

"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," said Murray.

He said "more flexibility around money that is currently ring-fenced" could support colleges help young people into education.

Currently there are pots of money for free courses for unemployed people to support them to find work, but uptake was "really low", said Murray.

"If people are in employment and they're trying to upskill that is really tricky for us to find funding, so the free courses for jobs money could maybe be spent helping people do that," he said.

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Martin Greenhow runs bars across Yorkshire and said the hospitality sector had "been reeling since Covid"

Meanwhile, Martin Greenhow, who runs bars in Harrogate, Leeds and Sheffield, said the hospitality 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."

Greenhow said the National Insurance increase for employers had been "a bitter pill", adding: "It directly led to us making people unemployed."

He believes the government should change income tax thresholds so people have more money left to spend in businesses such as pubs, restaurants, cafes and shops.

"People don't have the money in their 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.

Greenhow also called for action to address business rates and said he was "desperately hopeful" the government would reduce VAT for the hospitality sector.

"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.

The chancellor's options for raising money are limited as Labour's 2024 manifesto pledged not to increase income tax, National Insurance and VAT, the three big revenue raisers.

In a speech in September, he said: "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."