Alan Milburn: UK government lacks funds to scrap youth national insurance contributions

LIVERPOOL, England — Chancellor John Healey doesn’t have the cash to scrap employer national insurance contributions for young people, the U.K. government’s youth employment adviser Alan Milburn said Tuesday.

Speaking in the POLITICO pub at the Labour Party conference, the former Cabinet minister rejected a call from MPs on parliament’s work and pensions committee to cut employer national insurance contributions for under 25s in a bid to tackle mass youth unemployment.

“The problem is it’ll cost you £5.1 billion,” Milburn said when asked about the proposal to cut the tax on earnings paid by workers and employers. “If somebody’s got £5.1 billion pounds, it isn’t John Healey, so we’ve got a problem.” It would “not be an effective use of public money” because of the “deadweight cost,” he added.

Milburn — who published a report in May warning the number of young people not in work or education could hit 1.25 million by the early 2030s without urgent action — is currently drawing up recommendations for ministers to address the crisis.

“In six months time, this is going to feel much more like a manifesto for change,” he said.

The former health secretary — who was chair of the Social Mobility Commission between 2012 and 2017 — also warned that young people from working class backgrounds face greater barriers to opportunity today.

Reflecting on his own journey from growing up on a council estate to sitting around the Cabinet table, Milburn said he has reached the “pretty depressing conclusion” that it seems “less likely rather than more likely” to happen today.

“It is one of the reasons why we’ve got to deal with this challenge,” he said. “Life shouldn’t have to rely on luck; it should rely on opportunity.”