Retailers are urging Chancellor John Healey to reverse some national insurance reforms implemented by his predecessor, Rachel Reeves, to combat the youth joblessness crisis. The British Retail Consortium (BRC), representing major retailers like Tesco and Sainsbury's, has written to the Chancellor, advocating for a reduction in what they describe as "soaring employment costs."
At the 2024 Budget, then-Chancellor Reeves increased employer national insurance contributions (NICs) to 15% and lowered the tax threshold from £9,100 to £5,000. These changes, according to the BRC, have burdened retailers with over £2.3bn in additional costs. Furthermore, recent increases to the national minimum wage have added another £4.1bn to the sector's expenses.
The BRC has proposed that Chancellor Healey raise the NICs threshold back to £6,000 at next month's Budget. This move, they argue, would incentivise retailers to hire more young people, addressing the crisis of youth unemployment, with nearly 1 million young people in the UK currently not in employment, education, or training (Neet).
Helen Dickinson, BRC chief executive, stated that "The Chancellor can turn the tide on unemployment and tackle the Neets crisis that is robbing a generation of young people of opportunity." The retail sector has reportedly shed 115,000 jobs over the past two years, despite nearly a quarter of young people starting their careers in the sector.
The BRC's letter also called for broader tax cuts to stimulate investment, including reducing retailers' energy bills and exempting all shops from the high-value business rates multiplier. Chancellor Healey and Andy Burnham have indicated they will provide more details at the upcoming Budget.