Business leaders across Yorkshire are calling on Chancellor John Healey to cut employer National Insurance contributions for under-25s in his first Budget on 28 October, arguing the move would help address what one chamber of commerce called a "youth unemployment crisis".
West & North Yorkshire Chamber of Commerce, which represents 5,000 employers in the region, said a reduction in employer National Insurance (NI) for under-25s would help tackle the "youth unemployment crisis". The Chancellor has refused to rule out tax increases, saying government borrowing costs were at "historic highs".
Some businesses say they are still recovering from the increase in employer NI contributions announced in Labour's first Budget in 2024. Aqila Choudhry, managing director of Leeds-based care provider Love in Care, said the 2024 rise "really hit everyone as it was not expected and the impact is still being felt". Businesses "desperately need no more tax rises", she said, and backed the chamber's call for a cut in NI for under-25s, saying it would help young people not in education, employment or training.
Ken Murray, principal of York College, wants further education colleges to be able to claim a rebate on VAT, which he said would address funding disparities with academies and free schools. Sixth-form colleges providing free education to students aged 16 to 18 cannot currently reclaim VAT through the government's rebate scheme. He also suggested more flexibility around ring-fenced funding for free courses, noting that uptake was "really low".
Martin Greenhow, who runs bars in Harrogate, Leeds and Sheffield, said the hospitality sector had "been reeling since Covid", with Fridays down 30% on pre-Covid numbers. The NI increase for employers was "a bitter pill" that "directly led to us making people unemployed", he said. He called for changes to income tax thresholds, action on business rates and a reduction in VAT for hospitality.
The Chancellor's options are limited by Labour's 2024 manifesto pledge not to increase income tax, National Insurance and VAT. In September, he said his "defining mission" was "growth, good growth in every postcode".
Analysis
Why This Matters
- The 28 October Budget will set the tax and spending direction for UK businesses, and employer National Insurance is a direct cost for every firm with staff.
- Youth unemployment and the number of young people not in education, employment or training remain live concerns, and employers argue tax policy can help.
- The Chancellor has refused to rule out tax rises, so the outcome will signal how the government balances its growth message against fiscal constraints.
Background
The BBC report focuses on Yorkshire voices in the run-up to the Chancellor's first Budget. Businesses say they are still feeling the effects of the increase in employer National Insurance contributions introduced in 2024, which they describe as an unexpected shock. The West & North Yorkshire Chamber of Commerce argues that cutting employer NI for under-25s would tackle youth unemployment. Labour's 2024 manifesto committed not to increase income tax, National Insurance and VAT, the three largest revenue raisers, while the Chancellor has said borrowing costs are at "historic highs".
Key Perspectives
West & North Yorkshire Chamber of Commerce: Represents 5,000 employers and says cutting employer NI for under-25s would help address the "youth unemployment crisis".
Employers such as Aqila Choudhry: Say businesses are still struggling after the 2024 NI increase and "desperately need no more tax rises". She backs the under-25 NI cut.
Further education and hospitality voices: York College principal Ken Murray wants VAT rebates for sixth-form colleges and more flexible funding. Bar owner Martin Greenhow wants income tax threshold changes, business rates action and a VAT cut for hospitality, saying the sector is still below pre-Covid levels.
Critics/Skeptics: The Chancellor has not endorsed these calls and has refused to rule out tax increases, citing "historic highs" in borrowing costs. Any tax cut would also narrow the revenue base at a time when the government says it is under fiscal pressure, and the manifesto pledges limit where money can be raised.
What to Watch
- Whether the Chancellor announces any change to employer National Insurance for under-25s in the Budget on 28 October.
- Any movement on VAT treatment for sixth-form colleges or hospitality.
- How the government responds to the broader argument that tax policy is holding back hiring and consumer spending.