Labour under fire as youth unemployment heads towards 18 per cent

Labour was last night urged to cut taxes on jobs amid warnings youth unemployment is heading towards 18 per cent for the first time in more than a decade.

In a bleak report that fuelled fears of a ‘lost generation’, the British Chambers of Commerce said it expects the jobless rate among 16 to 24-year-olds to rise from the current level of 16.2 per cent to 17.9 per cent by spring next year.

That would be the highest level since early 2014 and add another 79,000 to the army of youngsters unable to find a job – taking the total to over 800,000.

The BCC warned overall unemployment is heading for a 12-year high of 5.5 per cent as the economy slows to a crawl with growth of just 0.9 per cent this year and 1 per cent in 2027.

The grim forecast came just days after official figures showed there are now one million Neets – not in education, employment or training – aged 16 to 24.

And it follows last week’s long-awaited report by former Labour cabinet minister Alan Milburn that warned Britain faces a ‘lost generation’ of jobless youngsters without major reform.

Critics have warned that higher taxes on business – including an increase in national insurance contributions (NICs) – as well as inflation-busting hikes to the minimum wage for younger workers have priced them out of jobs.

The BCC demanded ‘bolder action to tackle those at risk’ before they join the swelling ranks of Neets – including better careers education and training as well as ‘reducing costs for employers’.

Hospitality bosses are now calling for the national insurance hike to be reversed – warning it ‘actively penalises job creation’.

Labour is also under pressure to abandon plans to equalise minimum wage rates for younger and older workers.

Tory business spokesman Andrew Griffith said: ‘Lower growth, higher inflation and youth unemployment hitting 18 per cent is not what the doctor ordered for the UK economy. In fact, the only thing growing seems to be more bad news.

‘The government must not be a bystander but must reverse some of the tax hikes and red tape that are killing jobs for young people and damaging growth.’

Vicky Pryce, chairman of the BCC economic advisory council, warned the UK faces a ‘fragile and uncertain global environment’ with the developed world at risk of recession as war rages in the Middle East.

‘Firms need greater certainty and stability to unlock investment and growth,’ she said. ‘That means urgent action to ease cost pressures, support trade and help businesses recruit and retain talent in an increasingly challenging environment.’

And BCC economist David Bharier added: ‘With youth unemployment approaching 18 per cent by mid-2027, the UK risks weakening the skills pipeline it needs for the next economy.’

David McDowall, chief executive of Stonegate Group, which has more than 4,500 sites and owns chains including Slug & Lettuce and Be At One, said the rise in national insurance contributions paid by employers has increased the cost of every ‘entry level’ role at the company by £1,200.

‘The hospitality sector has traditionally been at the forefront of creating jobs for young people and giving them their first step onto the career ladder,’ he said.

‘Today’s youth unemployment figures are a stark reminder of what happens when government policy actively penalises this job creation.

‘If the Government is serious about reversing this rise in youth unemployment, it must first review its own policy decisions. We don’t lack the desire to hire young people; we lack the economic breathing room to do so.

‘I implore the Chancellor to reverse the increase in NICs to give our sector, and the wider UK High Street, the support it needs to reinvigorate youth employment.’

Jonathan Neame, chief executive of Shepherd Neame, Britain’s oldest brewer, said: ‘Day by day we are seeing the impact of this bad policy and it’s only going to get worse.’