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Milburn Report to Propose NI Cut for Under-25s to Boost Youth Employment

A new report by Alan Milburn will recommend gradually lowering National Insurance (NI) paid by businesses for workers aged 21-24 to encourage job creation for young people. The report, due Tuesday, also suggests changes to benefits for under-25s.

  • The Milburn report will suggest reducing NI costs over five years for 21-24 year olds, initially in retail and hospitality.
  • The report will also recommend that under-25s should no longer claim the health element of Universal Credit or Personal Independence Payment (PIP).
  • Work and Pensions Secretary Pat McFadden announced an extension to the subsidised jobs guarantee scheme for 18-24 year olds on Universal Credit.

A major review of youth unemployment, led by former Labour minister Alan Milburn, is set to propose that National Insurance (NI) paid by businesses for workers aged under 25 should be gradually reduced. The report, due to be published on Tuesday, will suggest lowering NI costs over five years for individuals aged 21 to 24, beginning with the retail and hospitality sectors.

Milburn's report will also recommend that under-25s should no longer be eligible to claim the health element of UK-wide Universal Credit or Personal Independence Payment (PIP), the main disability benefit in England and Wales. He will also call for a legal guarantee of a job, training, or employment support, with potential benefit loss for those who refuse help.

The former health secretary is expected to recommend doubling the threshold at which businesses start paying NI for 21 to 24-year-olds from £5,000 to £10,000, but only "when fiscal conditions allow." Research by the Resolution Foundation indicates that immediately eliminating NI for this age group would cost £5.1 billion.

Separately, Work and Pensions Secretary Pat McFadden announced on Sunday that the government will extend its subsidised jobs guarantee scheme for 18 to 24-year-olds claiming Universal Credit. Eligibility will be reduced from 18 months to 12 months on benefits, and the scheme will be available in England, Scotland, and Wales, aiming to help over 90,000 young people into work by March 2029.

Why this matters: The proposed changes could impact employment opportunities for young people and alter the benefits landscape for under-25s.

What this means for you: If you are a business owner, changes to National Insurance contributions for younger employees could affect your employment costs. If you are under 25 and claiming benefits, proposed changes to Universal Credit and PIP eligibility may affect you.

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