Contribution
My Lords, Amendments 9, 10 and 11 concern young people, and I thank the noble Baroness, Lady Neville-Rolfe, for adding her name to the former.
In previous groups of amendments, we discussed economic forecasting and the estimates made by the Government and the OBR, which the noble Lord, Lord Eatwell, referenced, and some of the predictions that surround this policy. The predictions estimate that, in aggregate, 50,000 jobs may be lost. These three amendments concern hundreds of thousands of young people—actual real people; they are not in aggregate in any way. They are a particularly vulnerable part of the current employment market, because hundreds of thousands of young people are not in work, and the numbers are getting worse.
Last summer, 870,000 young people aged 18 to 24 were not in employment, education or training. To give a sense of proportion to the number of 870,000, it is more than one whole cohort. Most of us in this Room were born in much larger cohorts, but the cohort sizes for people in their 20s are around 700,000. The number of NEETs in that group—people who are currently not in employment—is more than one whole cohort’s worth, and that is the age group that should otherwise be in secondary or higher education. Unemployment, which is obviously measured differently, is already running at 12% for people in their 20s. So we are talking about an exceptionally vulnerable group of people in the population, who are currently struggling to enter the market for jobs and who need either part-time work or a first job; they are not doing too well. This policy is coming in at a time when there is a very large number of very vulnerable young people.
Amendment 9 seeks to ensure that individuals under the age of 21 will continue to pay the current national insurance rate of 13.8%. This amendment inserts a provision into the Social Security Contributions and Benefits Act 1992 defining a “specified employer” as one who employs individuals aged under 21 at the start of the tax year. This is a useful and proactive measure for two key reasons. First, it supports employers in taking on young workers without an additional financial burden. Secondly, it helps young people gain the experience they need to start their careers, thus addressing the long-term challenges they face in the job market. Before I move to Amendment 10, bear in mind that this amendment concerns people who are 21 and under. I ask noble Lords to pause for a second to reflect on that part of the population. We are asking for a little caution in approaching people who are 21 and under, who are often looking for their first job.
Amendment 10 extends the benefit to those who are under the age of 25, further strengthening this approach. Under this amendment, employers would pay a reduced rate of 13.8% for employees under 25, while the standard 15% rate would apply to employees above this age. The reduced national insurance rate lowers the overall cost of employing younger workers, making it more affordable for businesses to offer opportunities to this age group. This is especially important for small and medium-sized enterprises, which may have limited resources and may not have been able to participate in various apprenticeship schemes. By extending this financial benefit, we would help to create more opportunities for young people, while also supporting businesses that are committed to developing the next generation of workers. Again, I ask noble Lords to pause to reflect that we are talking about people who are 25 and under, and to consider the essential intergenerational unfairness of landing this tax rise on people in this age group.
The third amendment, Amendment 11, extends the beneficial approach even further by including young adults under the age of 28. Under this amendment, employers would pay a reduced national insurance rate of 13.8% for employees under the age of 28, while the standard rate of 15% would apply to all those above that age. In supporting Amendment 11, we are not just addressing youth unemployment but making a statement about the importance of providing young people with the opportunity to gain the experience that they need to build a successful career and contribute meaningfully to the economy.