Budget 2015: how young people lose out

George Osborne’s budget has been tough on young Britons, with changes to universal credit deducting benefits faster as they earn more

George Osborne’s budget has made a bad situation worse for the nation’s young people – unless, that is, they are poised to inherit their grandparents’ £1m home and will benefit from a higher inheritance tax threshold. Without access to this tax break, they are sliding backwards.

Tax credits

Young families on low incomes are expected to be among the worst affected by changes to universal credit that will deduct benefits faster as they earn more. It will cost 3m families an average of £1,000 a year, according to the Institute for Fiscal Studies. Thirteen million families will lose an average of £5 a week as a result of extending the freeze in working-age benefits, tax credits and the local housing allowance, until 2020.

Employment

The largest increase in unemployment between 2008 and 2013 was among 18- to 24-year-olds, with 210,000 more out of work. The latest figures show there were 475,000 unemployed 16- to 24-year-olds in April, (excluding people in full-time education). This was down 85,000 on the previous year, but it is still an unemployment rate of 13.7% – more than double the 5.5% average.

Minimum wage

George Osborne’s new “national living wage” will only apply to those over 25 years old. That leaves younger people on the original, much lower, minimum wage. From October, the minimum wage will be set at £6.70, compared with the £7.20 “living wage” that takes effect in April 2016. The rate for 18- to 20-year-olds will be £5.30 an hour, the rate for 16- to 17-year-olds will be £3.87 an hour and the apprentice rate £3.30 an hour.

University fees

In 2012, the government forced students into a new loan scheme to be repaid through a graduate tax. Fees tripled to £9,000 a year and the maintenance loan was means-tested to target students from poorer families. More than 500,000 students in England received the £3,387 maintenance grant last year, costing £1.6bn. This grant will now be another loan, of up to £8,200 a year. Student debt: £51,000 after three years.

Housing

Anyone aged between 18 and 21 will no longer be automatically able to claim housing benefit under the new rules. The exclusion of young renters from any state support comes as young earners are increasingly locked out of home ownership as a result of soaring prices. The average age of a first-time buyer has rocketed from 29 to 38 over the last decade.

Education

Further education colleges face some of the biggest cuts in the comprehensive spending review due in the autumn. Prof Alison Wolf, author of the Wolf review of vocational education, said the further education sector, which provides the bulk of the UK’s post-secondary training, faces possible collapse and the loss of a valuable source of technicians and mechanics. She welcomed the apprenticeship levy.

Source http://www.theguardian.com/society/2015/jul/10/budget-2015-how-young-people-lose-out