Labour’s Jobs Tax Leaves Young Britons on the Scrapheap as Youth Unemployment Set to Top 800,000

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The number of young people out of work in Britain is on course to smash through 800,000 within months, a stark verdict on the damage Rachel Reeves’s tax-and-spend agenda has inflicted on the job prospects of the next generation.

According to fresh analysis from the British Chambers of Commerce (BCC), unemployment among 16 to 24-year-olds is set to climb to 17.6 per cent by 2027, a level not seen since 2014, back when Britain was still climbing out of the last Labour recession.

The BCC expects the headline count of jobless young people to swell by a further 60,000 or so over the next 15 months, taking the total to roughly 815,000.

The figures lay bare the human cost of decisions taken in Westminster. Since the Chancellor’s National Insurance raid on employers took effect in April last year, businesses have been squeezed hard, and it is Britain’s school leavers and graduates who are paying the price. Retail and hospitality firms, sectors that have traditionally offered young people their first foothold in work, have slashed the number of vacancies on offer. Official statistics already put youth joblessness at 16.2 per cent in the three months to June, and the trajectory is only heading one way.

It is not only the jobs tax doing the damage. Ministers have repeatedly pushed through above-inflation hikes to the minimum wage, a policy that sounds generous on paper but which, combined with higher employer National Insurance bills, has made businesses far warier of taking a chance on inexperienced young workers.

The wider labour market picture is little better. The BCC expects overall unemployment to peak at 5.4 per cent next year, which would be the worst reading since 2015, up from the current 4.9 per cent. On the BCC’s numbers, some 128,000 additional people will find themselves out of work by 2027.

Speaking to the Telegraph, Vicky Pryce, who chairs the BCC’s economic advisory council, painted a gloomy picture of an economy losing momentum, warning that the promising early months of 2026 are fading fast and that businesses, small firms especially, are now grappling with persistent inflation, weak exports and rising unemployment all at once, against the backdrop of the Iran war.

Adding to the gloom, separate research from jobs site Indeed found that apprenticeship places have collapsed by around 31 per cent since their post-pandemic high in 2023, as employers, hit by rising staff costs, think twice before taking on junior recruits. That is an uncomfortable backdrop for Sir Keir Starmer’s government, given Prime Minister Andy Burnham’s recent pledge to put technical training on a par with university degrees, promising that a hard hat would be valued as much as a graduation cap.

The BCC is now urging the Chancellor to use next month’s Budget to widen the exemption from employer National Insurance contributions to cover all workers under 25, arguing this would ease the cost burden on firms and encourage them to start hiring young people again. At present, that NICs exemption only applies to under-21s and apprentices under 25 earning below £50,270.

Shevaun Haviland, the BCC’s director general, said the Budget offered ministers a chance to bring down the cost of doing business while supporting skills and productivity, an opportunity, critics will say, that Labour has so far failed to grasp.

A Department for Work and Pensions spokesman defended the government’s record, pointing to a £2.5 billion package aimed at creating half a million opportunities to earn or learn, including 50,000 new youth apprenticeships, alongside the existing NICs exemptions and hiring incentives worth up to £8,000 for taking on an eligible young person. Whether that will be enough to reverse the damage already done remains to be seen, with the government’s own Milburn review into youth worklessness not due to report until the autumn.

For now, it is Britain’s young people footing the bill for Labour’s economic mismanagement, left competing for a shrinking pool of jobs while ministers promise reviews and reforms yet to materialise.