The Conservative Party has announced plans to halve the employer National Insurance rate for workers aged 21 to 24 as part of an effort to address rising youth unemployment in the UK. Under the proposal, which will be outlined by Conservative leader Kemi Badenoch at the party conference in Birmingham, the rate would be reduced from 15 percent to 7.5 percent. This change is expected to save employers an average of around £1,500 per young worker annually, encouraging businesses to hire more young people.
The move comes amid concerns over the growing number of young people not in employment, education, or training (NEETs), which currently stands at nearly one million—an unprecedented figure since 2014. Official data shows that youth unemployment in the UK has surpassed the EU average for the first time since 2000, a trend the Conservatives attribute to tax increases imposed by the Labour government in recent years.
Badenoch described the cut as "a rescue plan for young people" designed to reverse what the Conservatives call Labour’s "jobs tax," a reference to the increase in employer National Insurance from 13.8 percent to 15 percent introduced as part of Labour’s 2024 budget. She warned that the current situation, where companies are less inclined to hire younger workers, threatens the long-term earnings potential of this generation. Estimates suggest that each year a young person remains a NEET could result in a lifetime income loss exceeding £50,000.
The Conservative Party calculates that the National Insurance cut will cost around £2.3 billion, though some Tory sources estimate the net impact closer to £3.2 billion, offset partially by reductions in welfare payments and anticipated increases in tax revenues stemming from higher employment levels. Badenoch has yet to provide specific details on financing the proposal.
Labour has criticized the Conservative plan as unrealistic. A Labour spokesperson dismissed the policy as "fantasy economics," arguing that the previous administration’s policies have contributed to youth employment challenges, and accusing the Conservatives of failing to support young people adequately. Labour shadow chancellor Andrew Griffith has also condemned Labour’s own previous National Insurance increases but has indicated a desire to reduce tax burdens on youth employment, promising that a Labour government would seek to cut such taxes. Griffith has outlined plans to abolish what he describes as punitive levies, including a future mansion tax and environmental taxes, while seeking broader economic reforms.
Political tensions further surfaced as Badenoch ruled out working with Reform UK in the event of a hung Parliament, stating she would prefer a second election to a coalition with Nigel Farage’s party. She also distanced herself from former Conservative MPs who defected to Reform UK, suggesting they had contributed to internal party issues.
The debate over youth employment policies unfolds alongside wider discussions about government spending priorities, with Badenoch expressing reservations about restoring the triple-lock pension guarantee if Labour proceeds with plans to adjust pension rise calculations to fund a national care service.
As both major parties propose tax adjustments linked to youth employment, the UK faces ongoing challenges in reducing NEET figures and encouraging young people’s participation in the workforce amid broader economic uncertainties.