Support young people by backing the businesses that hire them
More than a million young people in Britain are not in education, employment or training. Yet Alan Milburn’s interim review into youth inactivity found that 84 per cent of them want a job or training, and put the annual cost of the crisis at up to £125 billion. The problem is not a generation unwilling to work. It is a system struggling to help them get started.
This week’s Budget offered some recognition of the pressures facing businesses. Business rates relief for smaller retail, hospitality and leisure firms is welcome, particularly in sectors that provide many young people with their first job. But the Budget did not extend employer National Insurance relief, leaving a central concern about the cost of hiring unresolved.
As Milburn finalises his review, ministers must address both sides of the equation. Young people need support to enter work, and businesses need the capacity to employ them. Willingness to hire is not the same as being able to afford it.
For a small business, taking on a school or college leaver means committing far more than a salary. Someone must explain the job, supervise their work, correct mistakes and build their confidence. This is not an argument against hiring young people, but a reflection of what investing in them involves.
In a ten-person firm, a senior employee spending a day a week supporting a new starter means less time serving customers or bringing in business. The choice may not be between hiring a young person and someone more experienced. It may be between hiring and not hiring at all.
Large employers can spread those responsibilities across managers, HR teams and established training programmes. Smaller firms often have no such infrastructure. The owner organising payroll may also be winning new clients, managing staff and keeping the accounts in order.
As an employer of record, Legends acts as the legal employer for staff working for other businesses, handling their payroll, tax, benefits and compliance. We employ more than 1,000 people on behalf of hundreds of firms, including 207 UK small and medium-sized businesses. We see the thought and effort that growing a team demands.
Almost every conversation with a UK employer now starts with cost, and few expect that pressure to ease. When the numbers do not work, businesses delay expansion, automate tasks or decide to manage without another employee. A role requiring months of training becomes harder to justify when the business needs an immediate return. Young people can lose out before they have had a chance to show what they can do.
The Budget confirmed a further 3.9 per cent increase in minimum wage rates from April 2027. Better pay matters, and young people need jobs that offer a decent living. But ministers must also recognise what rising wage bills mean for the smaller businesses they are asking to create those opportunities. Relief on premises costs is helpful; it is not the same as reducing the cost of taking on another person.
Employer National Insurance relief already covers most earnings for employees under 21 and apprentices under 25. That protection matters. But it does not cover every young person entering work, particularly those aged 21 to 24 who are not apprentices. Nor does it meet the time and supervision costs involved in helping an inexperienced recruit become productive.
The Government has also announced hiring bonuses worth £3,000 for recruiting young people who have been out of work for six months, alongside £2,000 bonuses for small and medium-sized businesses taking on young apprentices. These are practical steps that recognise employers have a role to play, and costs to meet.
The question is whether that support translates into jobs that last. A hiring incentive can help a business make the initial decision, but keeping someone employed depends on what follows: training, supervision and steady development.
Support must be straightforward enough for a small employer to use and designed around that longer-term outcome. Getting someone through a course or into a short placement is not the same as helping them build a career.
Success means a young person staying in work, developing skills and becoming someone their employer can increasingly rely on. For businesses, that is the return on investing in an inexperienced recruit. For young people, it is the opportunity to gain confidence, earn independently and build a working life.
The next stage of the Milburn review is expected in November, with the Government promising a response by the end of the year. That response must connect its ambitions for young people with the practical realities facing those who could employ them.
Ministers should look at where existing incentives leave gaps, how smaller firms can access help with training and supervision, and whether the administrative demands of support schemes discourage the very employers they are intended to reach.
Supporting employers to train and retain young people is not a giveaway to business. It is an investment in the jobs on which any credible plan to reduce youth inactivity depends.
The Budget has set the immediate conditions in which businesses will make their hiring decisions. Ministers should judge their response to Milburn by a straightforward question: will it make a business more likely to offer a young person a lasting job?
Preparing young people for work matters. Making sure there is a first job for them matters just as much.
Alex Fenton is Group CEO of The Legends Agency, an offshoring recruitment firm specialising in South African talent. He is also Partner at finance broker Funding Bay/FBX Capital.
