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2013 Autumn Statement: NICs for under-21s

06 Dec 2013

‘We are going to abolish the jobs tax on young people under the age of 21,’ said George Osborne in his Autumn Statement. The Government estimates that this will have a beneficial effect on 1.5m jobs, saving £500 where the employee earns £12,000 pa and £1,000 where they earn £16,000 pa.

Speaking optimistically, the Chancellor forecast that overall unemployment would fall to 5.6% by 2015, from the current 7.6%. But John Philpott, director of the Jobs Economist consultancy, said the move ‘may create a disincentive to hire young people aged between 21 and 24’.

Lizzie Crowley, head of youth unemployment programmes at think-tank The Work Foundation, said,  ‘Tackling failures in our system of careers advice and guidance would have a much greater impact than scrapping employer NICs for under-21s. This policy is unlikely to encourage a significant number of employers to take on more young people’.

Director General of the British Chambers of Commerce, John Longworth, found it more encouraging, commenting, ‘This measure will encourage many businesses to take on young people, as it will help reduce risk and cover the costs of the additional training that under-21s so often require in the workplace’. But he also expressed concerns about keeping young people in employment after they cross the age limit.

With experts on both sides of the fence, the actual impact of this measure may only be known when it comes into force in 2015.