Burnham urged to reverse employer National Insurance rise as 167,000 jobs lost

The London Chamber of Commerce has called on Prime Minister Andy Burnham to reverse the increase in employer National Insurance contributions introduced under his predecessor's chancellor, arguing it has damaged hiring. The demand was made in a Budget submission to the Government, which has invited proposals from key organisations and sector leaders ahead of Mr Burnham's first Budget. The Chamber said reversing the rise is the clearest signal the Chancellor could send that the Government wants employers to hire, according to britbrief.co.uk.

The measure was announced by then-chancellor Rachel Reeves in the 2024 Autumn Budget and took effect on 6 April 2025. Employer NICs rose from 13.8% to 15%, while the secondary threshold at which employers begin paying fell from £9,100 to £5,000 a year, drawing more staff into liability. According to the Centre for Policy Studies, that raised employer NICs for minimum wage employees from £1,617 to £2,583. Ms Reeves argued at the time that she had avoided breaching Labour's manifesto pledge not to raise National Insurance by targeting employers rather than workers.

The Chamber said the rise amounted to a direct tax on employment, charged on hiring rather than profit. Employee jobs fell by 167,000 between October 2024 and April 2025, a decline larger than the Office for Budget Responsibility's own expectation that the measure would reduce labour supply by around 50,000. The Chamber said entry-level and part-time roles had clearly been affected, feeding the national NEET crisis the Government is trying to tackle.

Polling cited in the submission found that 74% of business leaders surveyed said reversing the increase would have a positive impact, with 56% saying they would be more likely to invest if it were reversed. The Chamber also urged the Government to scrap employer NICs entirely when hiring young people who have been out of education, employment or training for a year or more, up to the age of 25. It argued that such candidates carry the highest perceived risk and training cost, and that the forthcoming Employment Rights Act risks making their hiring unviable for many businesses, especially SMEs.

Mr Burnham is weeks away from overseeing his first Budget with new Chancellor John Healey, in which he is expected to confirm the delivery of several Reeves policies, including the cut to Cash ISAs and a special tax exemption for state pensioners. The Chamber's submission argues that removing NICs for long-term unemployed young people would target support at the group whose exclusion from work carries the highest long-term social and fiscal cost, and could pay for itself if it moves a young person from welfare into sustained employment.