Reverse Reeves's NI increase for under-25s to help tackle youth unemployment crisis, Burnham told
The increase in employer national insurance contributions should be modified for all workers under 25 to help cut the numbers of young people not in education, employment or training (Neets), a committee of MPs has said.
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The Government must “go further and faster” to address the “travesty” of high levels of Neets, the Commons Work and Pensions Committee urged, as it welcomed early steps taken to address the problem.
Andy Burnham has pledged to help more young people into work by changing the education system and providing them with more support.
The rate of employer national insurance contributions rose from 13.8% to 15% in April 2025, and the threshold at which it is paid back has been cut from £9,100 to £5,000.
There were just over one million Neets recorded between January and March this year, equating to 13.5% of 16 to 24-year-olds.
Read More: UK unemployment rate stays unchanged at 4.9%
The committee said businesses provided “overwhelming evidence” that rising employment costs, partly driven by the increase in national insurance employer contributions which came into effect in April 2025, have reduced training and job opportunities.
Young people were said to be “disproportionately impacted” by the changes, with retail and hospitality – traditionally big employers of young people – struggling with financial pressures.
The MPs highlighted a perceived gap between Government efforts to boost youth unemployment and its approach to national insurance.
For example, businesses pay no employer national insurance for staff under 21, or for apprentices under 25, unless their salary is above the £50,270 threshold.
But employers pay 15% on annual earnings above £5,000 for non-apprentices aged 21-24, which the committee said was “undermining government schemes to improve employment rates in this age group”.
The report called for the higher national insurance contribution threshold to be extended to include all workers under 25, saying this would “boost vacancies and better align the Government’s policy with its strategic aims”.
The committee also criticised other “contradictions”, describing a lack of policy coherence as “inexcusable”.
It cited the example of the benefits received by families being put at risk if a young family member pursues training, and young adult carers potentially losing their allowance if they study for more than 21 hours a week.
The committee also said funding for the youth guarantee, which aims to ensure young people receive support and access to opportunities, should be confirmed for the next decade to remove long-term uncertainty that can damage confidence.
Funding for the policy is currently to end in 2029.
Options for those not claiming benefits should be developed as almost half of Neets are not claimants, the committee added.
It also called for a youth employment strategy to be developed.
Committee chairwoman Debbie Abrahams 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 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.
“Young people face an uphill struggle in current conditions to get that critical work experience. While the youth guarantee is a good start, the contradictions between the Government’s strategic aims and the rules of various schemes mean we desperately need a youth employment strategy.
“It’ll improve policy coherence so no policy unintentionally pulls against attempts to help more young people in to work.”
Ms Abrahams warned efforts to enable young people to live independently would be “in vain” if available jobs are limited, as she called for support for businesses 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,” she added.
The Government has been approached for comment.