Former Health Secretary Wes Streeting has proposed cutting employers’ National Insurance contributions and approving new North Sea oil and gas licenses as central elements of his emerging platform for a Labour leadership challenge. In a Sunday Times interview published May 31, Streeting argued that targeted fiscal adjustments could help address the rising number of young people not in education, employment, or training.
The proposals follow Streeting’s resignation from the cabinet earlier this month, after which he began publicly distancing himself from policies enacted by Prime Minister Keir Starmer’s government. Streeting, who has pledged to challenge the prime minister in a leadership contest, previously called for the U.K. to eventually rejoin the European Union and advocated for a wealth tax.
Streeting told the Sunday Times that policymakers must lower financial barriers for companies looking to hire younger demographics. “We have to make it easier for business to employ young people and for businesses to take that risk on someone,” he said. “I think we should be thinking actively about how to incentivise, whether that’s through targeted reduction in employers’ National Insurance or other kinds of recruitment and retention incentives,” he said.
The recommendations contrast with Labour’s first budget after winning the 2024 general election, which increased the employer National Insurance rate from 13.8% to 15% and lowered the application threshold from £9,100 to £5,000. The government projected the changes would generate £25 billion annually to fund public services, including the National Health Service that Streeting led until his departure. Streeting did not suggest reducing health care funding to finance the proposed employer contribution cuts.
Work and Pensions Secretary Pat McFadden pushed back against the tax reduction proposals in a separate BBC interview, emphasizing that revenue shortfalls require offsetting measures. “Any tax break in this system will cost and has to be paid for,” McFadden said. He noted that youth unemployment patterns reflect long-term structural issues rather than recent policy shifts. “But if it only came down to decisions taken in the last year or two, this wouldn’t be a problem which has been on the rise for years,” he said.
The Starmer administration pointed out that employers are already exempt from National Insurance contributions for workers under 21 who earn up to £50,000 annually. The government also highlighted its youth employment reform agenda, including a grant program that provides £3,000 to businesses that hire 18- to 24-year-olds who have been on benefits for at least six months.
Streeting’s economic comments followed an independent review by Alan Milburn that examined youth unemployment trends. Milburn reported that employers cited recent tax and minimum wage increases as hiring deterrents, though the government’s Low Pay Commission reported that it “has concluded that there isn’t one straightforward impact” from those policy changes on employment rates. Milburn noted the employment gap predates current administration policies. “It’s been going on since time immemorial,” he said.
On energy policy, Streeting broke with Labour’s 2024 manifesto commitment to halt new North Sea exploration permits. Energy Secretary Ed Miliband is currently reviewing permit applications for the Jackdaw and Rosebank fields, which were submitted before Labour took office. Streeting signaled support for moving the applications forward.
“Yes. I think that’s probably where Ed will get to. When he makes a decision, I’d be surprised if that wasn’t the case,” Streeting said. “The granting of those licences will not necessarily translate into cheaper bills, but it will translate into higher tax receipts,” he added.
The Conservative Party and Reform UK have increased pressure on the Starmer government to approve new drilling operations, arguing that the ongoing conflict in Iran has driven up global energy prices. The prime minister has maintained that while existing oil and gas operations will continue, long-term energy security and affordable utility rates depend on transitioning to wind, solar, and nuclear generation.