Some 300,000 hospitality jobs a year for young people are at risk unless NI burden is reduced, Labour warned

John Healey has been warned that 300,000 hospitality jobs a year for young people are at risk unless the National Insurance (NI) burden is reduced at the Budget.

Trade body UK Hospitality said the sector has lost 100,000 jobs in the past two years after previous Chancellor Rachel Reeves hiked employer NI and said Mr Healey must act now to ease the pain.

It comes after Tory leader Kemi Badenoch this week pledged to boost businesses by halving the NI contributions paid by firms for employing workers under 25.

Businesses such as hotels, pubs, bars and restaurants were stunned when Ms Reeves announced a £25 billion NI raid in her first Budget in 2024. Retailers were also badly hit.

The raid saw the rate of employer NI raised from 13.8 per cent to 15 per cent and – more significantly – slashed the salary threshold at which the tax is due from £9,100 to £5,000.

That meant many of the low-paid or part-time workers that hospitality firms and retailers traditionally rely on became much more expensive for them to employ.

Labour's NI hike has created £5 billion in extra costs for the hospitality sector

It has been widely blamed for a slump in hiring across much of the economy. 

In a new intervention ahead of the Budget, UK Hospitality said while the industry currently provides 300,000 job starts for 16 to 24-year-olds every year, its capacity to do so would be 'further eroded without action to reduce the sector's tax burden'.

It is calling for the government to ease the NI burden by progressively increasing the salary threshold for employer NI to £10,000 by the end of the Parliament.

UK Hospitality chief executive Allen Simpson said: 'Hospitality has always been the nation's biggest creator of jobs for young people. A third of all first jobs for under-25s are in hospitality.

'That job creation superpower has been put in jeopardy over the past two years, with hospitality hit by more than £5 billion in extra costs.

'Without action, our already-stretched ability to provide those job starts for young people will be put at risk. We've already seen enough jobs and opportunities lost, and we don't want to see any more.'

Mr Simpson added that cutting the cost of employment could help the 'NEETs crisis' – a reference to those aged 16 to 24 classed as not in education, employment or training who now number nearly a million.

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