Top business executives across the country have urged the Labour government to introduce a tax relief for training young people not in employment, education or training (Neet).
In a joint letter to Chancellor Rachel Reeves signed by over 125 business leaders including senior figures at Toyota and JCB, the government was urged to take urgent action on Neets to prevent the risk of “confining Britain’s young people to the scrapheap”.
Labour ministers were told firms need more support to help solve the UK’s worklessness crisis, with the number of young people considered to be Neets standing at 923,000 at the end of March this year.
A tax relief on training and skills likely to allow businesses to help reduce inactivity levels in the UK, business leaders argued.
“A direct and accessible skills tax relief would act as a fiscal incentive enabling
businesses to invest in training young people,” the letter read.
“Whilst there are a number of options for implementing a skills tax relief, this would help employers cover the costs of their spending on accredited training like apprenticeships, vocational courses, and boot camps, helping make training young people more affordable.”
Georgiana Bristol, chief executive of the Jobs Foundation, said extra costs on firms had prevented them from investing in training.
“We are not short of young people with ambition,” Bristol said.
“We are short of clear routes into real work. A skills tax relief could give businesses the tools to offer that hope.”
Clothing manufacturer and charity leader Christopher Nieper, who wrote the letter in partnership with the Jobs Foundation, said the cost of Neets to productivity and in welfare payments was “unsustainable”.
Labour keen to take on the Neets
The letter comes as Rachel Reeves labelled the growing number of young Neets a “crisis” while Keir Starmer has also said the UK should not accept having a million young people out of work.
“None of us should accept a system that operates like that. It is broken and needs to be mended,” Starmer told the Liaison Committee last month.
“All the evidence is that if you are on benefits and out of work at that young age, the likelihood of ever getting into good, well-paid, secure employment goes down for the rest of your life.”
The Centre for Social Justice has called for a 40 per cent tax credit for employers hiring and training young people to incentivise investment, with over £23bn to be gained for the Treasury by reducing Neets and lowering welfare costs.
But the Labour government has so far faced problems in reducing inactivity as its welfare reforms worth £5bn in savings faced opposition from Labour backbenchers due to concerns disability payments would not be made to people unable to work.
Tax reliefs for businesses may have to be levelled against the risks to the public finances, with Reeves expected to raise as much as £30bn in taxes to plug a fiscal hole.