UK Business Leader Urges Tax Reform to Combat Youth Unemployment

A prominent UK business leader has urged the government to reform business taxes, specifically business rates, to address a growing crisis of youth unemployment. Mark Allan, chief executive of shopping centre owner Landsec, described the increasing number of young people not in education, employment, or training (NEETs) as a "catastrophe in slow motion for our economy."

Allan advocates for a significant overhaul of the business rates system, which is based on a property's value. He proposes replacing it with a tax on commercial rents, arguing that this would provide businesses, particularly those in the retail, hospitality, and leisure sectors, with the capacity to create more entry-level jobs. These sectors traditionally offer numerous opportunities for young people but have been disproportionately affected by rising employment costs and the current business rates burden.

"If we want to see more young people entering work, we must reduce the burden on the sectors most likely to employ them so that they can invest and recruit with confidence," Allan wrote. He stressed that addressing the NEET crisis requires more than just focusing on skills and education; businesses must also have the financial capacity to hire.

Allan pointed to increased employer National Insurance contributions and minimum wage hikes as factors that have raised the cost of hiring. He suggested that a tax based on actual rents paid, rather than an estimated property value, would be simpler, more transparent, and directly linked to economic activity. This approach would also lower tax burdens in areas with lower rents, potentially directing investment to areas that need it most.

His proposal also aligns with the government's aim for greater fiscal devolution, potentially allowing mayors to set local business rates within national parameters. Allan acknowledged that his proposal does not solve all issues with the current system but argued it is a more viable alternative than others currently discussed.

"It's time for a rethink, starting from first principles," Allan stated. "If ministers are serious about supporting young people, they must give the businesses most likely to offer them their first job room to invest. Reforming business rates would be a practical place to begin."

Nearly one million young people aged 16 to 24 are currently classified as NEETs. Allan's comments come as the high street and hospitality sectors continue to grapple with economic pressures, including previous business rates reforms that have led to increased bills for many companies.