**
The Resolution Foundation has issued a compelling report urging the government to abandon proposals to reverse employment tax increases, suggesting that such measures would do little to alleviate the youth unemployment crisis. Instead, the thinktank advocates for enhanced funding for apprenticeships and an expansion of youth support grants, as the number of young people not in employment, education, or training (NEETs) continues to rise alarmingly.
A Call to Action for Young Workers
The independent thinktank’s findings come at a critical juncture, with more than one million young individuals classified as NEETs this year. In a detailed examination, the Resolution Foundation contends that calls from business lobby groups to reduce national insurance contributions (NICs) for employers and decrease the minimum wage for under-21s would likely yield minimal benefits for young job seekers. Instead, the report suggests that targeted workplace subsidies represent a more effective strategy to encourage businesses to employ younger individuals.
Alan Milburn, the former health secretary, recently presented initial findings from a government-commissioned study exploring the rising NEET statistics among 16- to 24-year-olds. These findings are expected to shape Milburn’s forthcoming recommendations, which will be published later this autumn.
The Flaws in Tax Cut Proposals
Business groups have voiced concerns that recent tax increases implemented by Chancellor Rachel Reeves have exacerbated hiring freezes, disproportionately impacting young job seekers. Cressida Hogg, chair of the Confederation of British Industry, argued that the current minimum wage structure is driving up costs for employers, thereby discouraging them from hiring inexperienced workers. Similarly, former Prime Minister Tony Blair has stated that raising the minimum wage for those under 25 is counterproductive, as it may deter businesses from bringing younger talent on board.
However, the Resolution Foundation’s analysis challenges these assertions, positing that reversing tax hikes would be both wasteful and ineffective. The report highlights that most under-21s are not subject to employer NICs, and eliminating these contributions would cost the government around £5.1 billion, creating only 38,000 additional jobs—a price tag of £132,000 per job, which is hardly justifiable.
The Case for Increased Youth Support
The Resolution Foundation advocates for a significant expansion of the youth jobs grant, which incentivises companies to hire 18- to 24-year-olds who have been on Universal Credit for six months or longer. The current grant offers £3,000 per hire, and the thinktank recommends increasing the number of available places from 20,000 to 80,000 annually, which could create an additional 11,200 jobs at a much lower cost per job than tax cuts.
Moreover, the report suggests extending the jobs guarantee to young people who have been claiming Universal Credit for over a year to reach more job seekers aged 18 to 24. It also argues for limiting the apprenticeship levy to support workers under 25, as apprenticeships generate between £13 and £15 in public benefit for every £1 spent on workers aged 19 to 24, compared to just £7 for those over 24.
Lindsay Judge, the thinktank’s research director, described the surge in NEETs as a “sobering milestone.” She emphasised that tax cuts for employers are not the solution. Instead, she urged the government to invest in proven programmes that yield the greatest impact for young job seekers.
Why it Matters
The rising number of NEETs poses a significant threat not only to the future of young individuals but also to the economy at large. By failing to invest in effective support systems, the government risks entrenching a cycle of unemployment that could diminish the living standards of an entire generation. Prioritising targeted funding for apprenticeships and youth support grants over short-term tax cuts could provide a sustainable pathway for young people to secure meaningful employment, fostering both individual prosperity and broader economic resilience.
