The Conservatives pledged to halve the tax businesses pay on employees in their early 20s as the UK’s main opposition party seeks to restore its reputation for economic competence and tackle a rise in joblessness among young people.
The party said Tuesday that it would halve the main rate of employer national insurance (NI) that firms currently pay for workers aged 21 to 24 to 7.5%. The policy comes at a cost of £2.3 billion ($3.1 billion) a year and will save companies an average of £1,545 per young person employed, it said in an emailed statement. The Tories promised to spell out how they will pay for the plan on Wednesday.
“We need to do this because youth unemployment has skyrocketed,” Conservative leader Kemi Badenoch told BBC TV. “There’s a graduate recruitment crisis, and if young people don’t get a job early, that impacts their lifetime earnings.”
With just under three years to go before the deadline for the next general election, Badenoch is trying to rebuild her party from the rout in 2024, its worst ever defeat. That includes rolling out plans for deregulation and tax cuts as she also seeks to restore its brand as the self-styled party of business.
At the root of the Tory plan is an attempt to get to grips with youth unemployment that’s risen in recent years to its highest rate in over a decade and above the European Union average for the first time. In the second quarter of 2026, some 981,000 16- to 24-year-olds were not in education, employment or training, in what’s become known as a NEET crisis.
The Tory proposal also opens a clear divide with the governing Labour Party, which in April 2025 raised the headline rate of employer NI to 15% from 13.8%, a policy that was announced in October 2024, in the party’s first budget after returning to office.
Badenoch told the BBC she’d like to cut NI tax for all workers, but had to prioritize young people with the savings she had identified. “If I could afford to cut it for everybody, I promise you that I would,” she said.
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Employers currently pay no national insurance for all but the highest paid workers under 21. Earnings above £50,270 a year for those aged 21 to 24 will still be subject to the 15% employer national insurance rate, the Tories said.
In July, Parliament’s cross-party Work and Pensions Committee said there was “overwhelming evidence” from businesses that rising employment costs including as a result of Labour’s NI increase, were reducing job opportunities, with young people “disproportionately impacted” by the tax increases. It called for an NI cut, in order to tackle the “travesty” of youth unemployment.
As well as opposing the NI move in 2025, businesses have criticized Labour’s increase to the youth minimum wage and the party’s Employment Rights Act, which gave employees more rights and included measures such as stronger restrictions on dismissals.
The government is live to the issue, and has commissioned a review by former cabinet minister Alan Milburn on the issue of NEETS, which is due to report imminently. Last month, Bloomberg reported ministers are considering scaling back planned increases to the youth minimum wage due to concerns the policy is hurting employment rates. That’s also a recommendation Milburn has signaled he could make.
In her round of interviews on Tuesday, Badenoch hinted that she will announce a pledge to scrap inheritance tax in her party conference speech tomorrow, telling Sky: “Why don’t we wait tomorrow and let people hear what I think about it.” She described maintaining the pension triple lock, which Prime Minister Andy Burnham plans to change, as a Conservative policy, but told ITV “there are very respectable arguments on both sides” of the debate.
Badenoch also told GB News she was worried the US “think that we’re not a serious country,” after it moved its B-1 bombers out of the RAF Fairford air base. And she called on Burnham to release documents relating to his interactions with Manchester City Football Club and the United Arab Emirates, after the club was found guilty in a financial probe.
“I was very surprised at the way he waded in on this subject,” Badenoch told be BBC. The government should not be “getting involved in football and tinkering with it. Let the fans and the clubs run themselves properly.”