Cut national insurance for under-25s to create jobs, Milburn report to say

National Insurance (NI) paid by businesses on workers aged under 25 should be gradually lowered to encourage companies to create jobs for young people, a major review of youth unemployment will say.A report by former Labour minister Alan Milburn will suggest the government should reduce NI costs over five years for people aged between 21 and 24 years old, starting in retail and hospitality.Under Sir Keir Starmer, the government raised NI for firms. Milburn will say the number of young people not in employment, education or training - known as Neets - was not started by the NI rise.But shadow work and pensions secretary, Helen Whately, said the government should "just stop doing the taxing".The independent report, which has been in the works for a year and will be published on Tuesday, will also make recommendations on reducing the UK's benefits bill.Milburn has said the government spends £22bn a year supporting young people who are economically inactive. There are nearly one million so-called Neets aged between 16 and 24 in the UK, according to data from the Office for National Statistics.He will recommend that under-25s should no longer be able to claim the health element of UK-wide Universal Credit or personal independence payment (Pip), which is the main disability benefit in England and Wales.Milburn wants the government to provide a legal guarantee of a job, training or employment support. Those who refuse to take up help could lose their benefits.Milburn is also expected to say that helping young people develop skills is pointless if there are no jobs available for them.The former health secretary will recommend doubling the threshold at which businesses start paying NI for 21 to 24-year-olds from £5,000 to £10,000.But he will say this should only be done "when fiscal conditions allow".Immediately axing NI for 21 to 24-year-olds would cost £5.1bn, according to research by the Resolution Foundation, a left-leaning think tank.Milburn is set to say that given the UK's fiscal position, an immediate across-the-board cut in employer NI is not the best use of several billions of pounds of public money.She said she has had parents so desperate for their children to find employment at her salons that some have even offered to pay their wages. "I'm inundated with applications - and I mean inundated - which is heartbreaking because I can't take them on," she said.Osborne does not feel she is getting help to offer jobs to youngsters. "I feel like the government's foot is firmly on my neck," she said. "They promise breathing space. I feel suffocated, suffocated by employment costs."Milburn told the BBC's Sunday with Laura Kuenssberg programme he agreed with a recent move by Chancellor John Healey to slow down the equalisation of the national minimum wage across age groups. Labour had pledged in its manifesto to remove "discriminatory age bands" and close the gap between adult minimum wages and pay for 18 to 20-year-olds.But in his Budget, Healey said pay for that age group would rise from £10.85 to £11.27 an hour in April next year while people aged 21 and over will see their wages increase from £12.71 to £13.21."I understand why because nobody wants to see young workers on poverty pay," Milburn said, but he said it "imposed a lot of costs on [the] government"."I think we have got to look very carefully at the convergence issue," he said.Milburn said he supported the government subsidising wages to encourage businesses to take on young workers. "Because young people today are walking into the workplace often with a mental health problem, ADHD or anxiety, if you're a small business that's a cost that you've got to absorb," he said."The state has a responsibility to help them with that."On Sunday, Work and Pensions Secretary Pat McFadden said the government would extend its subsidised jobs guarantee scheme for 18 to 24-year-olds who are claiming Universal Credit. People who have been on benefits for 12 months will be eligible, down from 18 months and the scheme would be available for people in England, Scotland and Wales.