Reversing UK employment tax rises ‘would do little to help young people find jobs’
Resolution Foundation calls for extra funding for apprenticeships and increase in number of youth support grantsBritish firms to get £3,000 for every long-term jobless youngster th
By The Guardian
Reversing UK employment tax rises would do little to help young people find jobs, according to the Resolution Foundation. The leading thinktank said an in-depth study showed that cutting employers’ national insurance contributions (NICs) and reducing the minimum wage for under-21s would have only a limited effect on youth employment.
The Resolution Foundation published its analysis on Monday, June 29, 2026, in response to calls from business groups to reverse recent employment tax increases. The study found that scrapping employer NICs for under-25s would cost £5.1 billion but create just 38,000 additional jobs for young people, at a wasteful ratio of £132,000 per job.
It also noted that the vast majority of under-21s attract no employer NICs anyway, meaning repealing them would have an underwhelming effect on youth employment. Instead, the Resolution Foundation called for targeted subsidies rather than expensive tax breaks.
It recommended scaling up the Youth Jobs Grant, which offers firms £3,000 to hire an 18-24-year-old who has been on Universal Credit for six months or more. The foundation said quadrupling the grant to 80,000 annual places could create 11,200 additional jobs a year.
The analysis also warned that reversing the recent convergence between youth and adult minimum wage rates would have only a limited effect on employment, adding just 15,000 young people to the workforce while imposing a large cost on living standards. It said 230,000 16-20 year olds that firms already pay the prevailing rate would miss out on £379 million a year.
The Resolution Foundation urged ministers to reject calls to reverse employment tax increases as a way to boost jobs for young people. It said the government should instead focus on extra funding for apprenticeships and increasing the number of youth support grants.
The foundation also recommended reforming the Growth and Skills levy so that it supports young people who would benefit from it the most. Firms have a critical role in hiring Britain out of its NEETs crisis, but targeted subsidies are the most cost-effective way to support employers to get young people into work, according to the new Resolution Foundation analysis.
The schemes are currently too small to significantly reduce Britain’s NEET rate, but scaling them up could make a meaningful difference. The recent convergence between youth and adult minimum wage rates has prompted calls from some to reverse these changes, but the analysis finds this would not be a cost-effective way to boost youth employment.
The Foundation warned that the Government should pause its convergence with the National Living Wage until youth unemployment begins to fall. Cutting Employer NICs is not the answer, the Resolution Foundation said.
Instead, the Government should scale up its most cost-effective programmes: more Youth Jobs Grants, a broader Jobs Guarantee, and reforming the Growth and Skills levy. Reaching for employer tax cuts to resolve this doesn’t add up, the foundation concluded.