7 days ago

Former Health Secretary Wes Streeting has suggested cutting employers' National Insurance (NI) could be a way to incentivise businesses to hire more young people.

In an interview with the Sunday Times, he also said some new North Sea drilling for oil and gas should be allowed as it would raise more tax.

Since quitting the cabinet just over a fortnight ago, Streeting has been distancing himself from policies pursued by Sir Keir Starmer's government.

The former minister, who says he will challenge Sir Keir in any Labour leadership contest, has already said the UK's future lies "one day back in the European Union", and called for what he described as a "wealth tax".

Now Streeting has floated the idea of a "targeted" cut to National Insurance to tackle youth joblessness.

It follows the publication this week of the review by Alan Milburn into the rising number of young people not in education, employment or training, known as NEETS.

"We have to make it easier for business to employ young people and for businesses to take that risk on someone," Streeting told the Sunday Times.

"I think we should be thinking actively about how to incentivise, whether that's through targeted reduction in employers' National Insurance or other kinds of recruitment and retention incentives," he said.

Labour's first budget after winning the 2024 election hiked taxes with the specific aim of investing in public services.

The measure aimed to raise £25 billion a year. The National Health Service, which Streeting oversaw until he quit earlier this month, was one of the principal beneficiaries.

But while Streeting has floated lowering employers' NI he did not, in his remarks to the newspaper, suggest any cuts to NHS spending.

During his review, Milburn said employers had told him Labour's policies of increasing NI and the minimum wage had disincentivised them from hiring young people.

But, he said, the Low Pay Commission which has been monitoring the situation "has concluded that there isn't one straightforward impact" on youth employment rates from the tax and wage increases.

The NEET problem was not triggered two years ago, Milburn said. "It's been going on since time immemorial."

Sir Keir's government points out that many young people are already exempt from NI, as employers do not pay NI if their workers are under 21 years old unless that person earns more than £50,000 a year.

And it says it has made it a priority of implementing the "biggest youth employment reforms in a generation" to help half a million young people find work.

New measures such as a "youth jobs grants" will give £3,000 to employers for every person aged 18 to 24 that they take on who has been on benefits and looking for a job for six months or more.

Responding to Streeting's NI suggestions, Work and Pensions Secretary Pat McFadden told the BBC that "any tax break in this system will cost and has to be paid for".

"Business will always raise its costs with us whether it's national insurance or anything else," he said in an interview with Laura Kuenssberg.

"But if it only came down to decisions taken in the last year or two, this wouldn't be a problem which has been on the rise for years."

Streeting, meanwhile, has also sought to differentiate himself from Sir Keir over the issue of whether new drilling for oil and gas should be allowed in the North Sea.

Labour's 2024 manifesto said "we will not issue new licences to explore new fields because they will not take a penny off bills, cannot make us energy secure, and will only accelerate the worsening climate crisis".

The Conservatives and Reform UK have been pressuring Sir Keir to approve more drilling, saying it is "reckless" that the country is not making use of its own resources at a time when the Iran war has sent energy prices higher.

The Energy Secretary Ed Miliband has been considering whether to allow drilling in two fields, Jackdaw and Rosebank, where applications had already been submitted before Labour took office and so, it could be argued, are not 'new' projects.

Streeting indicated to the Sunday Times he is in favour of new licences and the government should approve them. "Yes. I think that's probably where Ed will get to. When he makes a decision, I'd be surprised if that wasn't the case".

"The granting of those licences will not necessarily translate into cheaper bills, but it will translate into higher tax receipts," he added.

Sir Keir's clear view is that oil and gas will continue to be extracted from the North Sea and used in the UK whatever happens with these licences.

But, to have cheaper bills and secure energy supplies in future, he says the country needs to transition towards renewable sources including solar and wind power backed by nuclear generation.