More than a million young people across the UK are not in education, employment or training – a figure the Work and Pensions Committee has called a “travesty” – and MPs are now demanding that employer National Insurance contributions for all under-25s be slashed to create jobs.
The committee, which published its report on Tuesday, said it had heard “overwhelming evidence” from businesses, particularly in retail and hospitality, that rising employment costs – including the 15% employer NI rate on earnings above £5,000 – were reducing training and job vacancies. The rate rose from 13.8% last April, and the threshold fell from £9,100 to £5,000, though the employment allowance increased to £10,500.
“MPs urge cutting employer NI for all under-25s to tackle 1m young people not in education, employment or training.”
Currently, employers pay no NI for staff under 21 or for apprentices under 25, unless their salary exceeds the £50,270 threshold. But for non-apprentices aged 21 to 24, the full 15% rate applies on earnings above £5,000 – a “gap” the committee argues undermines government schemes to improve employment rates.
Debbie Abrahams, the Labour MP who chairs the committee, said: “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 families.” One participant in the inquiry said they felt “in limbo”.
The report also highlights “policy contradictions” – 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 supporting their household. The committee described the “lack of coherence” across departments as “inexcusable”.
Between January and March 2026, 1.01 million 16- to 24-year-olds were NEET – a figure rising since 2021. Of these, 400,000 were unemployed and 613,000 were economically inactive. The committee said the government “must go further and faster” and called for a unified youth employment strategy with a clear target for reducing the NEET rate.
The government said it was “determined to create opportunities for young people, reform education and support people to stay and progress in work”. The previous government, which introduced the NI increases for businesses last year, said at the time it was making the right choice to fund public services. Labour’s 2024 election manifesto promised not to raise taxes on “working people” – specifically income tax, NI, or VAT.
Some employers have argued that higher minimum wages and increased taxes make it harder to hire young people, although the Institute for Fiscal Studies found no clear evidence that higher minimum wages have been a “major driver” of young people becoming NEET.
The committee’s proposal – extending the NI exemption to all under-25s – would align tax policy with the government’s ambition. But with 44% of NEETs not claiming benefits, MPs warn that current schemes cover too few people. The question is whether the Treasury, already under pressure from rising costs, will heed the call.
