The government has rejected a recommendation from MPs to extend employer National Insurance relief to all workers under the age of 25, as businesses and parliamentarians raise concerns about the cost of recruiting young people.
The decision was set out in the government's response to the House of Commons Work and Pensions Committee report on youth employment, education and training, published on 15 October 2026.
What did MPs propose?
The cross-party committee recommended extending the existing National Insurance Upper Secondary Threshold to all employees under 25. Under the proposal, employers would not pay Class 1 employer National Insurance on earnings up to £50,270 a year for those workers.
Current relief generally applies to employees under 21 and qualifying apprentices under 25, on earnings up to that threshold. For other employees, employer contributions normally apply above a substantially lower earnings threshold.
Why did ministers reject the proposal?
In its formal response, the government declined to accept the committee's recommendation, pointing to decisions on taxation and spending required to protect the public finances and fund public services.
The rejection concerns this specific proposed extension. It does not amount to a commitment that the Chancellor will make no other changes to employer National Insurance at the forthcoming Budget.
Concerns about youth recruitment
In its July report, the committee described evidence from employers that higher employment costs were restricting recruitment and training opportunities for young people. It cited Resolution Foundation analysis estimating that removing employer National Insurance for under-25s could increase youth employment by around 38,000, at an estimated fiscal cost of £5.1 billion. These are modelled estimates, not observed outcomes.
Conservative leader Kemi Badenoch has separately proposed halving employer National Insurance for workers aged 21 to 24. That proposal differs from the committee's recommendation to extend the existing relief.
What happens next?
The government's response arrives ahead of the 28 October Budget, when ministers may set out further tax and employment measures. The parliamentary committee's recommendation has not been adopted, and any future policy change would require a separate announcement.