Labour’s quiet betrayal of young people

By all accounts Jake Tucker is one of the lucky ones. Three years out of university, the 24-year-old has a well-paid corporate job at an accounting firm.

His success seems a rarity at a time when youth unemployment has surgedto over 15pc, graduate job postings are down 33pc in the year to June, and almost one million people aged between 16 and 24 are neither employed nor in education.

Yet, Tucker doesn’t feel remotely lucky.

Rachel Reeves’s Budget has doomed middle-earners such as himself to pay 40pc tax for the remainder of the decade while making sure to extract even more out of his student loan debt by freezing the repayment threshold for three years between 2027 and 2030.

“Freezing income tax thresholds is probably the biggest thing that went against me in the Budget,” he says.

The measure, which will see tax bands frozen at their 2021 level until 2031, will drag around one million workers into becoming higher-rate taxpayers.

If the higher-rate threshold of £50,270 had risen in line with inflation, the 40pc tax rate would stand at £70,370 in 2031, according to the Office for Budget Responsibility.

Tucker says: “As a young person in a corporate environment who is trying to build a life by progressing through the ranks, there is less incentive to earn and make that step up because making that step comes with a far harder squeeze.

“You are damaging, potentially even breaking, the connection between [the idea] that the harder you work and the more that you contribute to the country, the better your life gets.”

He adds: “What the Government underestimates is that the work you do does get harder as you progress through your career. As you make those progressions, you are making sacrifices.

“Whether that’s working longer hours, dealing with extra stress, having to make big decisions, these are all taxing things on the individual.

“There is always going to be a decision people have to make as to the sacrifices they are making and what they get from it. So if you don’t reward that work, how are you going to motivate people because that ultimately affects the tax receipts the Government collects.”

Starmer went back on his promise

Things aren’t much better for the cohort directly behind Tucker: today’s university students.

When standing to be Labour leader in 2020, Sir Keir Starmer vowed to scrap tuition fees. Three years later, after a screeching about-turn, Sir Keir instead said the “current system was unfair” for students and a “Labour government would change it”.

What that change looked like in reality was increasing tuition fees to £9,535 within the first three months of coming into government and then announcing that fees will rise with inflation every year from 2026.

It means annual tuition fees could near £11,000 by the end of the parliament.

Recent graduates have also not escaped Labour’s solutions to an “unfair system” that needed fixing. Those on “Plan 2” loans, which includes anyone who started their courses between September 2012 and July 2023, currently pay 9pc on earnings over £28,470.

This levy recognises that for those graduates where having a university degree led to higher earnings, they pay back into the system for the benefit it provided.

However, Reeves used her Budget to announce the repayment threshold will remain frozen for three years from 2027 at £29,385.

It means by 2030, graduates on a minimum-wage job will be just £400 shy of the student loan repayment threshold.

Amira Campbell, president of the National Union of Students, says the Government is not delivering for young people.

The 23-year-old University of Birmingham graduate says: “We are talking about a government that once said they would get rid of tuition fees.

“They have not only not done that, but raised them two years in a row with a promise to continue raising them year on year.”

However Campbell thinks there are “various glimmers of real care for young people” within some policies.

“You’ve got the reintroduction of maintenance grants, the uplift of maintenance loans in line with inflation and the promise of votes at 16 – and that extension of the vote needs to be our opportunity to turn around and say here are the consequences when you fail to deliver for young people.”

She adds that the Government’s efforts to raise the minimum wage for under-21s to close the gap between age-tiered wage gaps is another positive policy.

However, Joanna Marchong, of the Adam Smith Institute, says it is this policy in particular which has perversely punished young people when it comes to finding a job.

Research by the free market think-tank found nearly half of young people think their quality of life is poor or very poor. It comes as analysis of HMRC data found half of all job losses since Labour came to power are among those under 25.

Marchong says Reeves’s decision to increase the minimum wage for under-18s (from £7.55 to £8 an hour) and those aged between 18 and 20 (from £10 to £10.85) would only worsen youth unemployment figures.

“For many people aged between 16 and 18, this will be their first job and their first experience. They have few skills so businesses will need to train them while knowing they are unlikely to stay for long periods of time. So all you’ve done by hiking their wage is remove the cost benefit for a business to give them that chance.

“It’s the second successive year of minimum wage rises for young people but just putting up the number doesn’t actually lead to an increase in well-paid jobs for them.

“Businesses just won’t take the risk especially after they were forced to pay more in National Insurance.”

A similar conclusion was reached by the Left-leaning think tank, the Resolution Foundation, which warned Reeves ahead of the Budget that sharp increases to youth minimum wage risked “young people being priced out of entry into the labour market”.

Youth exodus

Many young people have reached the same conclusion and are heading for the exit door. A net 110,000 British people aged 16 to 34 emigrated in the year to March, according to the Office for National Statistics.

Maxwell Marlow, the 26-year-old director of policy for The Yimby Initiative, can divide his friends into three camps: those “stuck” living in four or five-bedroom flatshares, those living with their parents and those leaving Britain.

He says: “People moving abroad is a huge issue. I was speaking to a friend of mine who is at a leaving party every week. Every single week. The problem is there is very little keeping them here.

“Building in cities where most young people want to live and work has completely come to a halt. In the first three quarters of the year there were only 3,248 private housing constructions started in London. That’s set against a target of 88,000.”

Marlow says the fundamental problem is that Labour was not ready to govern.

“I’ve sat on calls with Labour MPs and they are dying to get building but the planning reforms don’t go far enough,” he says.

“They said they would build 1.5 million homes in England but they won’t come close to this. I anticipate they will hit 1.1 million across Britain.”

He adds: “If you look at the Budget... how many things are actually addressed at young people?

“I think what the Government has forgotten is that young people does not mean ‘children’. They can point to free breakfast clubs and free childcare but that’s not affecting young people.”

While young people flee Britain, it’s older people who are quietly returning. The ONS found a net increase of 7,000 British nationals aged between 55 to 64 years in the year to March. For the over-65s, the figure stood at 11,000.

You will struggle to find people who claim to be happy following Reeves’s £30bn tax-raising Budget but, surprisingly, it is perhaps the older generation who were best shielded.

The state pension will rise by 4.8pc next April to £241.30 per week.

While that means the full state pension will rise above the personal allowance in 2027, Reeves has been quick to announce a carve out so that people who rely solely on the state pension won’t pay income tax.

A much-criticised cut to the cash Isa allowance from £20,000 to £12,000 will also not apply to those aged 65 and over following widespread opposition since the plans were first trailed earlier this year.

It all comes after the Government walked back on its decision to cut the winter fuel payment in June which means 75pc of pensioners will continue to receive the benefit.

However Tucker is not interested in starting an intergenerational war. He also doesn’t want to be part of the tens of thousands of young people who are leaving Britain.

“I am really grateful for what people in the past, both in my family and the British people more widely have done to build this country up.

“There’s a sense of guilt I would feel to run away from something. I would hate to go abroad and watch Britain on a slow and steady decline.

“I feel a level of responsibility to try and improve the state of this country but I do worry Labour is taking advantage of that loyalty.”

[Source: Daily Telegraph]