UKHospitality has warned Chancellor John Healey that failing to restore the National Insurance Contributions threshold to £10,000 could put 300,000 annual job starts for young people at risk.

The threshold was reduced from £9,100 to £5,000 in Rachel Reeves's 2024 Budget. UKHospitality says the change has cost hospitality employers more than £5 billion in additional employment costs over the past two years and contributed to 100,000 job losses across the sector. Without a reversal, the body projects that 300,000 more young people could fall outside education, employment or training — the cohort known as Neets.

What is UKHospitality asking for?

In its #Budget26 campaign, the trade body has set out four asks of the government. It wants Healey to:

• Progressively raise the NIC threshold to £10,000 over the remainder of this Parliament
• Halve VAT in the sector to 10% to give businesses headroom to invest, hire and keep prices down
• Reform business rates
• Replace tourist taxes with tourism bonuses linked to destinations' growth

The campaign frames the upcoming Budget as "the first Budget under the new Prime Minister," signalling an expectation of policy reset.

Why does the threshold change hit young workers hardest?

The 2024 reduction disproportionately raised the cost of employing part-time and flexible workers, according to UKHospitality — categories that dominate entry-level hospitality roles. The sector accounts for roughly a third of all first jobs for under-25s in the UK and about 300,000 job starts each year.

What has the sector lost so far?

UKHospitality chief executive Allen Simpson placed the cumulative damage at more than £5bn in extra costs over two years, with 100,000 roles lost and a tax burden he described as "double that of a bank."

He 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. We create around 300,000 job starts each and every year.

"That job creation superpower has been put in jeopardy over the past two years, with hospitality hit by more than £5bn in extra costs. The result? 100,000 jobs lost and a tax burden double that of a bank.

"The first Budget under the new Prime Minister should be a moment for change. Put the last two years behind us and move forward by backing hospitality to deliver jobs in every postcode."

What is the warning for hiring pipelines?

Simpson said the sector's ability to absorb young job starters has already narrowed.

"Without action, our already-stretched ability to provide those job starts for young people will be put at risk," he said. "We've already seen enough jobs and opportunities lost, and we don't want to see any more. It's time to cut the cost of employment, let hospitality hire again and allow us to help solve the Neets crisis."

What should HR teams track next?

HR leaders in hospitality, retail, leisure and other sectors reliant on part-time and entry-level hiring should monitor whether the Chancellor's first Budget signals a reversal of the 2024 threshold cut or introduces targeted relief for younger workers.

Any movement would reshape payroll cost modelling, rota planning and onboarding capacity for the 2026/27 financial year.

The next Budget will test whether the government treats the threshold cut as a structural revenue measure or a lever it is willing to adjust in response to youth employment data.