Minister says NI hike helps people back to work

The skills minister defended Labour’s policy on taxing business despite saying there is potentially a ‘lost generation’ of young workers.

During a visit to the Black Country Skills Shop in Brierley Hill on June 29, Baroness Jacqui Smith saw how the centre, run by Dudley College of Technology, provides support and education for job seekers.

The number of young people not in work, education or training (NEET) in Dudley borough is 3.52 percent, slightly higher than the national average while nine percent of young peoples’ status is not known.

Baroness Smith said: “We’re determined to tackle this potential for a lost generation of young people who don’t have a chance to earn and learn.

“That’s why the £2.5bn that we are investing in the Youth Guarantee, as of today in terms of the Jobs Grant, as of the autumn in terms of the Jobs Guarantee, which will be everywhere across the country.”

Speaking on the same day that Prime Minister in waiting, Andy Burnham, outlined his vision for Britain, the former Home Secretary was not willing to speculate on tax reductions for employers to encourage them to hire more young people.

Baroness Smith said: “One of the things employers quite often say to me is people being ill, people being on waiting lists, is one of the things that prevents them from getting into work and is a burden for an employer.

“That’s why the National Insurance contribution rise was to fund the National Health Service, to bring down waiting lists.”

In the 2024 budget Labour increased employers National Insurance contributions from 13.8 percent to 15 percent.

The Conservatives say the increase is a tax on jobs and holding business back.

On the website Conservative Home, shadow Chancellor of the Exchequer, Mel Stride MP, said: “Labour have sent the tax burden soaring to a record high. As a result, firms have put investment and hiring on hold, and the economy has faltered.  

“We have set out plans to abolish business rates for thousands of shops and hospitality businesses, and introduce a First Job Bonus, a £5,000 tax cut for young people when they first enter work.” 

Baroness Smith was asked by the Local Democracy Reporting Service if National Insurance should stay at its current level.

She said: “Certainly there was a good reason why we raised National Insurance contributions, that was in order to fund the health service which all of us need and which, when it’s not there and when you are sitting on a waiting list, you can’t get into work.”