Andy Burnham National Insurance shake-up on table after MPs warning

Andy Burnham has been urged to slash taxes for under-25s in a bid to address the country's unemployment crisis. The Prime Minister has been advised that firms should only be required to pay National Insurance contributions on the wages of employees aged 25 and over.

The work and pensions committee stated there was overwhelming evidence that a 25bn raid on employer NICs had contributed to a worsening youth unemployment crisis. Rachel Reeves, the former Chancellor, is widely regarded as the architect of the raid. During Sir Keir Starmer's premiership, Reeves increased the tax rate to 15 per cent and reduced the pay threshold at which it takes effect from 9,100 per year to 5,000.

The impact on young people has been significant. They have been disproportionately affected by slower recruitment which can then inhibit their future career progression as they struggle to secure their first job, MPs cautioned in a report released on Wednesday.

Debbie Abrahams, the Labour MP and chairman of the committee, said young people were demoralised by the experience of unemployment. Young people face an uphill struggle in current conditions to get that critical work experience, she said. Efforts to give young people the best chance to live independently will be in vain if there are too few jobs to go to.

Rachel Reeves has since been succeeded by Chancellor John Healey, who was appointed to Number 11 Downing Street on Monday as part of Burnham's first reshuffle. In a challenging environment, businesses need help to meet rising employment costs. Reducing employer's NICs for under-25s will enable them to take a chance on talented young people.

Alan Vallance, the ICAEW's chief executive, said: The choices of previous administrations have left businesses facing burdens that stifle growth, diminish confidence and discourage investment. If the new Government is serious about growth, it must create the conditions for businesses to invest, hire and expand.