Yorkshire businesses urge Budget cut to National Insurance for under-25s

Chamber of commerce says move would tackle 'youth unemployment crisis' ahead of 28 October Budget

By LineZotpaper
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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".

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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.

Sources

Checked

11 claims in this story checked against 1 source: 10 supported.

Show each claim
  1. SupportedYorkshire businesses are urging a cut to employer National Insurance for under-25s in the Chancellor’s first Budget.BBC News: “Businesses across Yorkshire are urging Chancellor John Healey to cut National Insurance (NI) contributions for under-25s in his first Budget.”
  2. SupportedThe Chamber says the cut would help tackle a “youth unemployment crisis” ahead of the 28 October Budget.BBC News: “West & North Yorkshire Chamber of Commerce, which represents 5,000 employers in the region, said the reduction would help tackle the "youth unemployment crisis". Healey will deliver his first Budget on 28 October”
  3. SupportedChoudhry said the 2024 National Insurance increase “really hit everyone as it was not expected and the impact is still being felt”.BBC News: “"The shock of the increase in National Insurance contributions [for employers] in 2024 really hit everyone as it was not expected and the impact is still being felt," she said.”
  4. SupportedChoudhry said businesses “desperately need no more tax rises”.BBC News: “She said businesses needed help if they were to "survive, sustain and grow", adding that they "desperately need no more tax rises".”
  5. SupportedGreenhow said Fridays for his sector were down 30% on pre-Covid numbers.BBC News: “"Fridays for our sector are down 30% on pre-Covid numbers."”
  6. SupportedGreenhow said the employer National Insurance increase “directly led to us making people unemployed”.BBC News: “Greenhow said the National Insurance increase for employers had been "a bitter pill", adding: "It directly led to us making people unemployed."”
  7. Partly supportedMurray suggested more flexibility around ring-fenced funding for free courses and said uptake was “really low”.BBC News: “He said "more flexibility around money that is currently ring-fenced" could support colleges help young people into education. Currently there are pots of money for free courses for unemployed people to support them to find work, but uptake was "really low", said Murray.”
  8. SupportedChoudhry backed the Chamber’s call for a cut to employers’ National Insurance for under-25s, saying it would help young people not in education, employment or training.BBC News: “Choudhry also backed calls by the chamber to reduce employers' NI contributions for under-25s, which she said would help address the issue of young people not in education, employment or training.”
  9. SupportedSixth-form colleges providing free education to students aged 16 to 18 cannot currently reclaim VAT through the government’s rebate scheme.BBC News: “Sixth-form colleges providing free education to students aged 16 to 18 cannot currently reclaim VAT through the government's rebate scheme.”
  10. SupportedThe Chancellor has refused to rule out tax increases after acknowledging government borrowing costs were at “historic highs”.BBC News: “Healey will deliver his first Budget on 28 October, but has refused to rule out tax increases after acknowledging that government borrowing costs were at "historic highs".”
  11. SupportedLabour’s 2024 manifesto pledged not to increase income tax, National Insurance and VAT, limiting the Chancellor’s options for raising money.BBC News: “The chancellor's options for raising money are limited as Labour's 2024 manifesto pledged not to increase income tax, National Insurance and VAT, the three big revenue raisers.”

Zotpaper

Written by Harper Lane on the Business & markets desk. Claims checked by Ines Fairley, verification. Read for legal risk by Marcus Hale, legal. Edited by Angus Burke, chief sub.

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