These are tough times for young people looking to make a start in life. Latest figures show youth unemployment is higher than the EU average for the first time. Many graduates are submitting hundreds of applications and still not finding a job. 700,000 young people have a degree but are on benefits instead of the higher paid job they expected when they started out.
It is vital politicians help those who want to get a good education and job. For too many today are not getting a fair deal. That’s why the Conservative Party has launched our New Deal for Young People. It’s a three point plan to begin to address the unfairness facing many and support those who want to make the most of opportunities and achieve their potential.
First, we will scrap the extra 3 per cent above inflation that young people pay on Plan 2 student loans issued from 2012-23. This charge means loans can grow so fast that even if you are paying off the appropriate amount every month what you owe continues to grow. The people who lose out most are the middle earners and those from poorer backgrounds. Low earners may never repay their loans, and higher earners can repay quicker and avoid the interest loading up. This change will help get graduates off the debt treadmill.
It is a fair point to make that this system was introduced under the last government. Intended to be progressive, we recognise instead it has ended up as a system where students who do get a job after graduating end up repaying far more than they borrowed to subsidise those who don’t. We got it wrong and have a plan to fix it. However, the Prime Minister and Chancellor are even making the situation worse by freezing the threshold at which people being to pay back their loans. Dragging more of a young person’s salary into repayments.
Second, we would introduce an Apprenticeship Guarantee by lifting the ceiling on funding for apprenticeships for 18-21 year olds, ensuring employers have fully funded access to training and college places for every apprentice they recruit. This would help 100,000 extra young people into work every year. The recent Apprenticeship Fair in the Corn Exchange just underlines the huge range of opportunities on offer.
To encourage employers to get involved there would be a £5,000 Business Rebate for Investment in Training and Skills (BRITS) incentive for every British young person they take on.
Finally, to help people who work hard and do the right thing we would bring in a First Job Bonus – a £5,000 tax cut when you start earning, including on an apprenticeship. That could go towards a deposit on a first home, or savings for later in life.
As a fiscally responsible party it is essential to set out how these policies would be paid for – not for us the back of a fag packet promises that do not hold up under scrutiny. So, these policies would be paid for through savings from not funding low value degree courses that don’t deliver for students or the taxpayer.
Too many people feel things are not working for them. We need to act to restore the link between doing the right thing and rewards. By cutting student loan interest, boosting apprenticeships, and helping build up savings, we are doing just that.
Next week the Chancellor has the opportunity in her Spring Statement to adopt these policies, rather than continuing to load tax and costs on employers that is driving unemployment up. Let’s hope she takes it.
