UK business leaders call on Labour to introduce skills tax relief for training Neets

More than 125 top business leaders from across the UK have written to Chancellor Rachel Reeves urging the government to introduce a tax relief scheme to support companies that invest in training young people not in employment, education or training (Neets).

Senior executives from companies including Toyota, JCB, and leading manufacturers signed the open letter, warning that without urgent action, Britain faces the risk of “confining a generation to the scrapheap”.

The number of 16–24-year-olds in the UK classed as Neets hit 923,000 at the end of March 2024, according to official figures. Business leaders say targeted support is needed to tackle the country’s youth worklessness crisis and to make training more viable for employers already facing rising costs.

“A direct and accessible skills tax relief would act as a fiscal incentive, enabling businesses to invest in training young people,” the letter states.

They propose the relief could help cover costs of accredited training programmes, including apprenticeships, vocational courses, and skills bootcamps—all of which are seen as vital in reducing youth inactivity and bridging the UK’s growing skills gap.

Georgiana Bristol, chief executive of the Jobs Foundation, said the current cost burden on firms was preventing them from offering training to young people, despite widespread willingness to do so.

“We are not short of young people with ambition. We are short of clear routes into real work,” she said. “A skills tax relief could give businesses the tools to offer that hope.”

Christopher Nieper, clothing manufacturer and co-author of the letter, said the cost of Neet-related inactivity—both in lost productivity and welfare spending—was now “unsustainable”.

The Centre for Social Justice has proposed a 40% tax credit for businesses hiring and training Neets, estimating it could unlock up to £23 billion in savings for the Treasury through reduced benefit costs and increased tax revenues.

The business intervention comes as both Prime Minister Keir Starmer and Chancellor Reeves acknowledge the scale of the problem.

“None of us should accept a system that operates like that,” Starmer told MPs at the Liaison Committee last month. “It is broken and needs to be mended.”

Reeves has described the scale of youth unemployment as a “crisis”, but faces opposition within her own party over broader welfare reforms, particularly around disability benefits and cuts to support for those unable to work.

While the Treasury is reportedly aiming to raise £30 billion through tax reforms to fill a fiscal hole, ministers may now have to weigh that against the economic gains of reducing youth unemployment.

The call for a skills-led tax incentive reflects a wider shift in thinking, with businesses now being seen as key delivery partners in tackling social and economic inactivity—rather than relying solely on state welfare systems.

Supporters argue that investing in vocational upskilling and early career development is not just a social good, but an economic imperative in a tight labour market.

Whether Labour’s new government will heed the call remains to be seen. But with youth unemployment nearing the one million mark, pressure is mounting for bold and immediate intervention.

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UK business leaders call on Labour to introduce skills tax relief for training Neets