UK Youth Unemployment: National Insurance Exemption May Aid Jobless

A National Insurance break could save taxpayers more than £65m by lifting out-of-work young people into jobs, according to a campaign group.

The Million Jobs Manifesto, which was released by the Million Jobs Campaign, argues for the Youth Contract, a government scheme which means employers could get up to £2,275 if they recruit an 18 to 24 year old through Jobcentre Plus, to be scrapped and replaced by a NI exemption for under-25s.

The organisation's publication suggests that the move would be a boost to hundreds of thousands of small businesses and could make it cheaper and easier for employers to hire jobless young adults and help relieve youth unemployment.

The manifesto, which is to be delivered to David Cameron, Nick Clegg and Ed Miliband, calls on the party leaders to educate school pupils about apprenticeships, encourage more companies to take on young people and to help young people find a mentor.

It follows the chancellor's announcement in March 2013 that from 2014 the new Employment Allowance will see NI contributions from employers reduced by up to £2,000 per year.

A survey of 1,135 Institute of Director (IoD) members, which ran from Monday 26 March until Friday 5 April 2013, found that more than 70% of respondents said the move was positive for their business, with a third saying it would encourage them to hire new staff.

"It is clear that cutting NI, which is a tax on jobs, would make it easier for employers to take on more staff," said a spokesman from the IoD. "Youth unemployment is a very serious problem, and action to tackle it would be very welcome, but we would argue that a NI cut for all employees would spread the benefit as widely as possible."

Likewise, the Confederation of British Industry (CBI) has also called for a reduction in NI contributions in its 2013 Tax in a Global Economy report.

The publication stated that NI contributions are "one of the most distortive forms of taxation and are essentially a tax on labour."

Lottie Dexter, Director of the Million Jobs Campaign, added: "It's plain and simple, we cannot carry on with a million young people out of work. It ruins lives, sinks communities and sets Britain up for a fall in future.

"We need a determined and skilled workforce to make sure that this country is in the best possible shape, made all the more important by the realities of an ageing population."