Budget warning from REC: Government plans to tackle the NEETs crisis will go nowhere if the Chancellor does not cut employment costs

The Chancellor must urgently cut National Insurance Contributions at the Budget, says the Recruitment and Employment Confederation (REC).

Ahead of the Budget this month, the REC says the Chancellor must make it easier, not harder, for employers to take a chance on new hires, invest in skills and create the jobs needed for higher economic growth next year.

Without changes to National Insurance, businesses will not go through with hiring and investment plans at the speed or scale needed to get the growth the government has promised. Employer confidence is fragile, with the REC’s most recent Jobs Outlook report showing surveyed employers’ confidence in making hiring and investment decisions in negative territory since mid-2025; and their confidence in the economy has sat in negative territory since autumn 2021. With the labour market showing signs of stabilisation in recent months, the government has an opportunity to use the Budget to back pro-work and pro-growth policies.

While reports suggest ministers are considering reducing the cost of hiring young people, employers need action to reduce the overall cost of hiring if the government wants to unlock growth across the economy.

Maxine Bligh, REC Interim Chief Executive, said:

“The Chancellor must take bold action and cut employment costs to drive job creation. Higher employer National Insurance costs, rising wage bills and increasing regulation are making employers too cautious about hiring. Cuts to employer National Insurance Contributions (NICs), as well as restoring the NICs threshold, would provide immediate support.”

The REC is also concerned that the proposed guaranteed hours measures are a gamble too far, risking one of the UK's greatest economic strengths – the flexible labour market.

Maxine Bligh said:

“The Chancellor does not need to look far for solutions to get more people into work: the £40 billion recruitment sector and a flexible labour market already help nearly 900,000 temporary and contract workers into work each day. We hope Budget measures reflect an understanding of the needs of the flexible labour market because it is one of our greatest economic strengths and key to achieving better than anticipated economic growth next year.

“That is why the government’s guaranteed hours gamble is so risky. It would bury employers in cost and complexity, making it harder to hire and reducing opportunities for workers seeking choice over how and when they choose to work. Ministers should work with us on a compromise that will not damage agency work.

“Recruiters support the government’s focus on helping more of the nearly one million young people not in education, employment or training, into work. After all, flexible and entry-level opportunities can play an important role in helping young people enter the workforce. To help employment businesses fulfil their role in addressing this issue, we hope to see more routes for temporary workers to access skills and training. We want to see a wide range of short courses within the Growth and Skills Levy and for Skills England to better demonstrate their understanding of the needs of agency workers.”

Notes to editors

JobsOutlook: Employer confidence rises but remains fragile ahead of Budget, says REC, September 2026