Key facts
- Retailers are urging Chancellor John Healey to reverse national insurance reforms to tackle youth unemployment.
- The British Retail Consortium (BRC) stated that employer national insurance contributions were hiked to 15% and the threshold lowered in the 2024 Budget.
- These changes, along with minimum wage hikes, have cost the retail sector over £6bn in extra hiring costs.
- The BRC proposes raising the national insurance contributions threshold to £6,000 to encourage hiring of young people.
- Nearly 1 million young people in the UK are not in employment, education, or training (Neet).
- The retail sector has lost 115,000 jobs in the past two years.
Retailers have urged Chancellor John Healey to reverse national insurance reforms implemented by his predecessor, Rachel Reeves, in an effort to combat the youth joblessness crisis. The British Retail Consortium (BRC), representing major retailers like Tesco and Sainsbury's, stated that the previous government's hike in employer national insurance contributions (NICs) to 15% and the reduction of the payment threshold from £9,100 to £5,000 have burdened the sector with over £2.3 billion in additional costs. Combined with recent increases in the national minimum wage, these changes have resulted in total extra hiring costs exceeding £6 billion for retailers.
The BRC is advocating for the NICs threshold to be raised to £6,000 in the upcoming Budget to incentivize retailers to hire more young people. The UK is currently facing a crisis of youth unemployment, with nearly one million individuals not in employment, education, or training (Neet).
BRC chief executive Helen Dickinson emphasized that retail has historically served as a crucial entry point into the workforce for young people, providing them with essential skills and confidence. She noted that the disproportionate impact of NICs changes on the retail sector, coupled with soaring employment costs, is making it increasingly difficult for businesses to offer entry-level positions.
In addition to the NICs reform, retailers are also preparing for new government regulations on zero-hour contracts, which Lord Wolfson, CEO of Next, has warned could hinder the company's ability to offer more hours to staff. The BRC's letter also includes calls for broader tax reductions to stimulate investment, specifically suggesting cuts to retailers' energy bills and exemption from the high-value business rates multiplier.
Separately, a group of retailers including Primark, Morrisons, and Tesco have contacted Andy Burnham to oppose a potential increase in the business rates multiplier for large high street companies. The Prime Minister has indicated a commitment to easing the business rates burden for the hospitality sector, and the Retail Jobs Alliance has highlighted the importance of retail stores in revitalizing high streets.