CBI Calls For Tax Incentives

by Robert Lee, Tax-News.com, London

01 November 2011

The Confederation of British Industry (CBI) has called on the government to introduce a new tax incentive to encourage companies to take on young unemployed people, as part of a package of measures aimed at boosting employment across the UK.

The CBI has launched a new report titled 'Action for Jobs: how to get the UK working'. One of the key measures called for is the new Young Britain Credit worth GBP1,500 for firms taking on an unemployed person aged between 16 and 24 years. This would cover the first year's National Insurance (social security contributions) for employers and cost GBP150m a year, a sum which the CBI says is affordable within the context of the government's deficit reduction plans.

Other proposals include: creating around 450 business ambassadors, one for each local area, to strengthen links between schools and businesses using successful schemes that build long-term partnerships; introducing a comprehensive "readiness for work" assessment for every unemployed person; and suspending, rather than completely cancelling benefits when someone initially takes a job to reduce the perceived risk of taking a short-term post.

CBI Director-General, John Cridland stated that: "With unemployment rising, particularly among young people, now is the time for action for jobs. The good news is that even in these challenging times businesses are creating jobs, but all too often the unemployed, particularly our young people, are not best placed to get them. We need businesses, schools and the government working together to make sure young people are able to shine in the jobs market."

The CBI's recommendations are based on extensive research with businesses, academics, charities, unions and unemployed people across the UK. They follow the publication earlier this year of in-depth CBI analysis on the state of the labour market. This revealed deep-seated structural problems, including long-term unemployment and skills shortages that predate the recession.

In addition to the Young Britain Credit, the CBI is recommending the freezing of the youth National Minimum Wage rates, which as a percentage of median wages for the age group are higher than the equivalent level for adults investing in courses that help bridge the gap between school and apprenticeships to allow 16-18 year-old school leavers that lack the appropriate skills to take up training opportunities.

Mr Cridland added that: "The Government needs to make it as attractive as possible for firms to take a gamble on a young less experienced candidate. Our proposal for a Young Britain Credit is a cost-effective way of incentivising companies to recruit jobless young people, and would give them that all-important foothold on the jobs ladder."

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