Boris Johnson has called for a cut in National Insurance contributions from employers. Demos argued for a similar change way back in March in our pamphlet The Forgotten Half.

Our proposal is slightly different. We argue for a cut to employers’ NI contributions when they hire workers under 25, with a tapered reduction from 21 so as not to create a cliff edge between 25 and 26 year-olds. This policy would not only hopefully see a boost to growth (as Boris wants to see) but would provide a targeted subsidy of job creation (real jobs) for young people at a time when youth unemployment is very high. Germany has a similar policy (an NI reduction for creating new jobs) permanently in place.

It’s a simple policy, being implemented entirely through the existing tax system.  We raised the recommendation at the Treasury when submitting evidence to the growth strategy. We’ll see what happens in the autumn with the launch of the Growth Review.

It would be good if the Treasury could work out the costs to such a proposal – when Demos tried to do it we hit a brick wall around up-to-date figures that HMT would be able to find their way through. I would wager the policy could well be cost neutral; as young people get jobs they come off benefits, spend money in the economy and so on. And we also know that there are considerable costs over the long-term to sustained periods of unemployment for young people.

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