First, I thank hon. Members for welcoming the proposal. I am grateful to the hon. Member for Birmingham, Ladywood (Shabana Mahmood) for describing it as a good one. I will respond to some of her specific questions and then deal, as she did, with the area of contention, to the extent that one exists.
On part-time workers, it is right to say that employers of staff earning below the secondary threshold of £148 per week—which applies to a lot of part-time staff—will not be affected directly by this change. It is worth pointing out, however, that some employers may at present be discouraged from increasing the hours of an under 21-year-old because they may then have to pay employers’ national insurance contributions. To that extent, the proposal may well help those part-time workers who want to extend their hours, because it will increase the incentives for their employers to do so. That will also enable an employer with both part-time and full-time employees to connect the work of the two groups.
Similarly, there is no direct interaction with the employment allowance. Obviously, the measure will reduce the national insurance contributions bill of a number of employers, which may allow the employer’s allowance to spread further: the £2,000 would be just as valuable to the employer, but it would contribute more to reducing their total NICs bill. I think that is a fair point to make.
The hon. Lady asked about the interaction with university numbers, which we have said we will increase. Again, I do not think there is a direct interaction. The Government are trying to do everything we can for young people with regard to increasing choices, providing more university places and creating a good environment with more jobs for them. If the hon. Lady is worried about graduates over the age of 21 hitting the labour market, the point I would make is that extending the policy to those under 22 or 23 would be significantly more expensive, which must be taken into consideration in the light of the pressures on the public finances. Overall, we think the package is a good one.
On youth unemployment generally, I touched on a number of measures earlier, and my hon. Friend the Member for Braintree (Mr Newmark) mentioned some that we are taking, such as the Work programme, and which should be recognised. In case it has escaped the notice of the hon. Member for Birmingham, Ladywood, youth unemployment in her constituency has fallen by 15.6% in the past 12 months, and we have ambitions to take it down even further.
I thank my hon. Friend the Member for Braintree for his work on the Million Jobs campaign and, indeed, on this policy. He certainly contributed to the policy process for the autumn statement, and I thank him for all his efforts.
To turn to the areas of contention, my hon. Friend the Member for Bedford (Richard Fuller) referred to a certain pattern: first, the Labour party goes into the general election advocating an increase in employer’s national insurance contributions and then, following the election, every time this Government come forward with policies to reduce employer’s national insurance contributions, it complains that we are not bold enough
and that we should go further and faster. I must say that his characterisation of that as a flip-flop is entirely accurate.
In relation to our not making the change now, I have set out the reasons for that. Attempting to deliver it a year earlier, in April 2014, would increase the administrative cost not just to HMRC, but to business. Rushing the measure through in that manner would be likely to lead to cost, confusion and the failure of many employers to take it up. Payroll companies need time to update their software and employers need time to download it, and such a time frame would put the policy at risk. Does the hon. Member for Birmingham, Ladywood really think that, with 18 months to run in this Parliament, the Government prefer to introduce the measure in April 2015, rather than in April 2014? If we could possibly introduce it safely in April 2014, we would, but we can do it in April 2015. That is absolutely the right thing to do, and we will not jeopardise that policy.
Finally, the hon. Lady asked about progress on the employment allowance. HMRC has been in discussions with various interested parties over many months. There is ongoing engagement with relevant groups, including software providers, on the draft employer guidance, with a view to making it available on the HMRC website in the new year. HMRC will also target communications to key interested groups, and use its publications and products to build further awareness in February and March. We believe that that is all on track.
I welcome the support for the policy. I understand why the hon. Lady asks why we should not make the change in April 2014, although given that her party has at no point advocated getting rid of employer’s NICs for under-21s, it would be slightly strange for her to push the matter to a vote. There are good practical reasons why we cannot do it, much though we would like to, so I will be disappointed if she presses her amendment to a Division. None the less, I welcome the support given to the measure, and I am proud that the Government are taking real steps to deal with youth unemployment.
Question put and agreed to.
Clause accordingly read a Second time.
Amendment proposed to new clause 3: (a) at end insert—
‘(13) The Treasury shall publish a review of the level of youth unemployment as at December 2013 and the effect on the level of youth unemployment if the amendments made in this section were required to be brought into force on 6 April 2014.’.—(Shabana Mahmood.)
Question put, That the amendment be made.