It’s tough out there at the moment if you’re a young person starting out in life. Youth unemployment in the UK is higher than it is in Europe. Many graduates are finding there are no jobs to match the expectations they had when they took a degree. And many who do have jobs despair at high taxes and student loan debts that get bigger every year, despite the repayments coming out of their monthly payslip.
The Conservative Party must be the party for those people who want to go out and get a good education, a decent job — who do all the right things. At the moment those people are getting a raw deal.
Too many young people are ending up out of work and on benefits — and young workers are paying for it. If we are honest, there are also too many going to university and getting degrees that are not worth what they paid for them. They end up never repaying their student loans and that ends up being subsidised by those who do, through usurious rates of interest.
That is why we have set out our New Deal for Young People. It’s a three-point plan to begin to address the unfairness many face, to give hope to those aspirational youngsters who want to get on in life.
I made clear in my speech to our party conference last year that I wanted to get debt off the backs of young people. So we will scrap the above-inflation interest rates that many graduates are facing.
Some will say — and it is a fair point — that this was the system the Conservatives created in government. The objective of expanding opportunities for university education was a laudable one but we have to be honest and say that it has been taken to an undesirable extreme. We will never restore faith in our party if we pretend everything we did in government was perfect. The system was set up to be progressive but it ended up with students who do get a good job after graduation repaying far more than they borrowed to subsidise those who don’t. That is not right.
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The people who lose out the most are middle earners and those from poorer backgrounds. Low earners may never repay, very high earners repay quickly and do not accrue much interest. Those with well-off parents have their fees paid upfront or take out less in maintenance loans.
We can afford to cut those interest rates because of the reforms that the shadow education secretary, Laura Trott, announced last year, to stop funding degrees that are terrible value for money, both for the students and for the taxpayer.
Of course, that also requires a proper alternative for those people who don’t go to university. University places are not capped but there is a limited funding pot for apprenticeships. That puts a ceiling on how many apprenticeships the government will fund the training costs for, even when there is a employer willing to take them on. This is despite the fact that some apprenticeships have consistently better employment outcomes and earning potential than many degrees.
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That is why, using the remainder of the savings from our university reforms, we have brought forward our Apprenticeship Guarantee, lifting the ceiling on funding and giving employers certainty that there will be funding available for taking on more apprentices.
We would go even further than that. Some employers are reluctant to take on apprentices who might leave to join a competitor. Indeed many may prefer to bring in workers from abroad. But we need to make sure we are training up young British workers, not relying on immigration. So we would also introduce the Business Rebate for Investment in Training and Skills (Brits). It’s a policy I proposed in 2024 during the party leadership campaign. We would give employers an incentive of up to £5,000 for every 18 to 21-year-old apprentice they take on, as long as they are a British citizen — effectively a tax credit for investing in our young people.
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Finally, we have to show people the value of lower taxes for rewarding work and aspiration. So we would also bring in the First Job Bonus: a £5,000 tax cut when you start earning (and yes, that includes an apprenticeship). That could go towards a deposit on a first home, or savings for the life they have ahead of them. Again, it’s a policy I floated during the leadership campaign. We have to show hard-working young people that the Conservatives are on their side.
It’s not enough to just talk about Conservative values — aspiration, opportunity, low taxes, a good education, rewarding hard work. We have to demonstrate those values in what we are offering our country.
Sir Mel Stride is the shadow chancellor of the exchequer