Calls to cut employer National Insurance contributions for under-25s

Calls to reduce employer National Insurance contributions for under-25s

Aqila Choudhry, who runs a care company in Leeds, said businesses "desperately need no more tax rises"

Businesses across Yorkshire are calling on Chancellor John Healey to cut National Insurance (NI) contributions for under-25s in his first Budget.

West & North Yorkshire Chamber of Commerce, which represents 5,000 employers in the region, said the move would help address the "youth unemployment crisis".

Healey is due to deliver his first Budget on 28 October, but he has declined to rule out tax rises after saying government borrowing costs were at "historic highs".

Some businesses have told the BBC they are still feeling the effects of the "shock" rise in employers' NI contributions in 2024 and are hoping for tax reliefs.

Aqila Choudhry, managing director of Leeds-based care home provider Love in Care, said businesses had already been under pressure from rising costs over the past decade, and that Labour's first Budget in 2024 had made matters worse.

"The shock of the increase in National Insurance contributions [for employers] in 2024 really hit everyone as it was not expected and the impact is still being felt," she said.

She said businesses needed support if they were to "survive, sustain and grow", adding that they "desperately need no more tax rises".

Choudhry also supported the chamber's call to cut employers' NI contributions for under-25s, saying it would help tackle the number of young people not in education, employment or training.

Principal of York College, Ken Murray, would like the chancellor to allow colleges to claim a rebate on VAT

Ken Murray, principal of York College, also wants more support for young people entering the labour market.

He would like further education colleges to be able to claim a rebate on VAT, saying this would help close funding gaps between them and academies and free schools.

Sixth-form colleges offering free education to students aged 16 to 18 are currently unable to reclaim VAT through the government's rebate scheme.

"We could spend more money on young people so they can do what they need to do in the community and make sure we are challenging those not in education, employment or training and get them onto high-quality jobs," said Murray.

He said "more flexibility around money that is currently ring-fenced" could help colleges support young people into education.

At present, there are funds for free courses for unemployed people to help them find work, but uptake was "really low", said Murray.

"If people are in employment and they're trying to upskill that is really tricky for us to find funding, so the free courses for jobs money could maybe be spent helping people do that," he said.

Martin Greenhow runs bars across Yorkshire and said the hospitality sector had "been reeling since Covid"

Meanwhile, Martin Greenhow, who runs bars in Harrogate, Leeds and Sheffield, said the hospitality sector had "been reeling since Covid".

"People's behaviour changed, they're working from home, they're not socialising in the same way," he said.

"Fridays for our sector are down 30% on pre-Covid numbers."

Greenhow said the increase in National Insurance for employers had been "a bitter pill", adding: "It directly led to us making people unemployed."

He believes the government should alter income tax thresholds so people have more money left to spend in businesses such as pubs, restaurants, cafes and shops.

"People don't have the money in their pocket they once did and if they don't have it they can't spend it with us in hospitality or in retail," he said.

Greenhow also called for action on business rates and said he was "desperately hopeful" the government would cut VAT for the hospitality sector.

"That reduction doesn't just line people's pockets, it allows businesses to survive that are going under, it allows others to expand and make investment and employ more people, meaning fewer people claiming benefits," he said.

The chancellor's options for raising money are limited because Labour's 2024 manifesto pledged not to increase income tax, National Insurance and VAT, the three major revenue raisers.

In a speech in September, he said: "My defining mission as chancellor is growth, good growth in every postcode.

"And I've set out today the way this government will set about it: more devolution, more public leadership and control, more investment, more innovation, more jobs."