Chancellor Urged to Cut Employer NICs to Boost Youth Jobs

By the Editorial Team · Friday, October 16, 2026

Business groups including the CBI and REC have urged Chancellor John Healey to reduce employer National Insurance contributions in the October 28 Budget to boost youth employment and ease hiring costs. They argue that lowering NIC thresholds or implementing a holiday could create tens of thousands of jobs and is critical to meeting the government's target for reducing unemployment among young people.

Business leaders have called on Chancellor John Healey to cut employer National Insurance contributions (NICs) in the upcoming Budget to support youth employment, warning that without such measures the government’s target of reducing unemployment among young people could fall short. The Budget is scheduled for October 28.

The Confederation of British Industry (CBI), the country’s largest business organization, has urged the Chancellor to raise the threshold at which employers begin paying NICs from £5,000 to £6,000. The CBI estimates this change would amount to a £3.9 billion tax reduction and could lead to the creation of approximately 41,000 new jobs, primarily benefiting young people and those seeking entry-level positions. This proposal is seen as a partial reversal of the £25 billion in tax increases affecting employers introduced in April 2025.

CBI Chief Executive Rain Newton-Smith stressed that additional financial pressures on businesses dealing with significant cost challenges would make hiring more difficult. She emphasized the need for policies that do not further burden employers if the government is serious about tackling youth unemployment.

Recruitment industry representatives have echoed these concerns. The Recruitment and Employment Confederation (REC) highlighted that wage growth, administrative burdens, and high taxes are discouraging employers from expanding their workforce. REC interim chief Maxine Bligh called for “bold action” in the forthcoming Budget, specifically urging cuts to employer NICs to stimulate job creation. Bligh also expressed reservations about the government’s proposed guaranteed hours regulations, describing them as a “gamble too far” that could impose complex and costly obligations on employers, ultimately threatening the flexibility of the UK jobs market.

Additionally, Family Business UK has advocated for a temporary six-month NIC holiday targeted at employers hiring workers aged 18 to 24. The group estimates this incentive could support the recruitment of up to 100,000 young people, further aiding efforts to reduce youth unemployment.

These calls for reforms coincide with a recent campaign aimed at addressing the challenges faced by under-25s trying to enter the labor market, underscoring growing concerns about the employment prospects for Britain’s younger generation. As the government prepares its Budget, stakeholders across business and recruitment sectors are pressing for measures to make hiring more affordable and accessible.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.