Milburn Report Urges National Insurance Cuts For Under-25s

An upcoming independent review led by former Labour minister Alan Milburn will propose that the government gradually lower National Insurance payments made by businesses for workers under the age of 25. The initiative aims to encourage companies to create job opportunities for young people, starting initially within the retail and hospitality sectors. The report is scheduled for publication on Tuesday following a year of preparation.

While the current administration under Sir Keir Starmer previously raised National Insurance for firms, the review suggests this increase did not drive the rise in young individuals not engaged in employment, education, or training, commonly known as Neets. Official statistics from the Office for National Statistics indicate there are nearly one million Neets aged 16 to 24 across the United Kingdom. Furthermore, the government allocates approximately 22 billion pounds annually to support economically inactive young people.

To address employment barriers, Milburn will recommend doubling the threshold at which businesses begin paying National Insurance for individuals aged 21 to 24, moving the limit from 5,000 pounds to 10,000 pounds. However, he specifies this adjustment should only occur when fiscal conditions permit. Research from the Resolution Foundation indicates that an immediate across-the-board elimination of National Insurance for this age group would cost 5.1 billion pounds, an expense deemed inefficient given the nation's current financial standing.

The review also tackles the welfare system, proposing that individuals under 25 should no longer be eligible to claim the health component of Universal Credit or personal independence payment. Additionally, Milburn advocates for a legal guarantee ensuring access to employment, training, or support, with benefits potentially revoked for those who decline assistance. He emphasizes that skill development initiatives yield little benefit if local job markets lack open positions for young participants.

Business owners have highlighted severe financial pressures regarding youth employment. Collette Osborne, a salon owner in Nottingham, described feeling constrained by mounting employment costs, including minimum wage adjustments and National Insurance, which forced her to reduce her workforce from eight apprentices to none. Meanwhile, political responses to the upcoming findings vary, with shadow work and pensions secretary Helen Whately arguing that the government should simply reduce taxation.

Why it matters

The upcoming findings could reshape youth employment policy and welfare spending across the United Kingdom by altering how businesses absorb hiring costs and how young people access state support. The recommendations directly affect retail, hospitality, and small business owners struggling with high operational expenses, while also introducing stricter welfare requirements for young adults.