I blame Labour tax rise for trapping young people on benefits… says Labour mayor

Rachel Reeves’s decision to increase national insurance contributions (NICs) for employers “disincentivised” businesses from hiring young people, a Labour mayor has said. Richard Parker, Mayor of the West Midlands, suggested that the former Chancellor’s policy under Sir Keir Starmer’s government may have contributed to the crisis in young people not being in employment, education or training, or Neets. Shorts In an interview with The i Paper, Parker said the decision to raise the employer national insurance rate from 13.8 per cent to 15 per cent was a “disincentive to employers” to hire young people – at a time more than a million are now out of work. New Labour-era former minister Alan Milburn, who has been carrying out an independent review of youth unemployment, said a “whole system failure” across welfare, education and health has left young people permanently “detached” from the world of work. His final report is due this autumn, in which he is expected to propose overhauling the system to get young people into work and drive down the benefits bill. It comes as The i Paper revealed that seven of the top 10 constituencies with young people claiming unemployment benefits are in the West Midlands, while the remaining three are in Yorkshire and the Humber, according to data from the Office for National Statistics. The Birmingham suburb of Erdington has the highest rate, with 16.2 per cent of young people claiming unemployment benefits – three times as high as the national average, at 5.7 per cent. Parker said the Department for Work and Pensions was “failing” young people, with job centres providing inadequate support and smaller businesses unable to take on young trainees and apprentices. Criticising his own Government’s policy to increase employer NICs, he said: “It might be difficult for the new prime minister to turn that on its head, given where we are fiscally, but I do think at a time when we need to get more young people into work… that did act as a disincentive in some parts of this region. “I know it’s tougher for smaller businesses, but there is also a need for businesses to take on and support the training of young people. We’ve all got responsibility for the next generation.” Asked whether the decision has fueled the Neet crisis, Parker said the situation is not “black and white” as there are several long-term factors involved, but that it “certainly didn’t help alleviate some of the challenges we face today”. The mayor said a young person’s first job in retail or hospitality is the “most important one”, but challenges facing those sectors, including the NIC rise, have made it “more difficult for young people to get into those sectors”. “That additional cost at a time when some sectors like hospitality were struggling already, and retail in particular, acted as a disincentive,” he added. It comes as Andy Burnham has promised to shift devolved power to regional mayors, enabling them to retain a portion of locally raised income tax and business rates, allowing them to make their own decisions about how to address local issues. Parker said he would use his devolved mayoral powers to implement employment hubs in “every major town centre” and provide training programmes that were linked with the region’s “growth sectors” such as construction, logistics and life sciences. A Government spokesperson said: “The smallest businesses are protected from NI changes by an increase in the Employment Allowance from £5,000 to £10,500, and we continue to ensure generous reliefs for hiring young people and apprentices. By the end of the decade, around 900,000 employers are expected to pay no employer NICs because of the increased allowance. “Our £2.5bn youth guarantee will deliver a million opportunities across the country, ensuring every young person has the chance to earn or learn. Our apprenticeship reforms will reverse the 40 per cent fall in starts among young people over the last decade, while Alan Milburn’s review is investigating the wider barriers stopping young people from getting into work.”