Conservatives set out New Deal for Young People

• As the Conservatives are changing, under Kemi Badenoch's leadership, the party sets out New Deal for Young People - a plan for younger voters who have been neglected for too long - building on our Stamp Duty Offer from Conference.
• This includes scrapping real interest on Plan 2 Student Loans, saving graduates tens of thousands of pounds.
• 100,000 more 18–21 year olds in apprenticeships by funding their training and supporting employers with up to £5,000 for each 18–21-year-old apprentice they take on who is a British citizen.
• First Job Bonus will let young people keep the first £5,000 of National Insurance they would have paid when starting their first job
• New Deal funded by ending rip-off low-value university degrees

The Conservative Party have today [Sunday 22^nd February] set out their New Deal for Young People – a new plan to support young people and demonstrating the new direction of the Party under Kemi Badenoch's leadership.

Labour are presiding over record levels of youth unemployment, the lowest graduate recruitment levels ever and a conveyor belt of young people going straight from education to welfare – with 700,000 graduates now on benefits.

The system clearly isn't working, and that is why the Conservatives are setting out their New Deal to fix it.

Firstly, we will abolish real interest rates on Plan 2 Student Loans. This will ensure student loan balances will never rise faster than RPI inflation. This will benefit millions of English undergraduates who started courses between 2012/13 and 2022/23. 

Plan 2 loan graduates have seen the balance they owe rise for years, even while repayments are made – with the IFS estimating that the average Plan 2 Graduate needs to earn £66,000 a year just to keep pace with the interest.

This leads to an endless cycle of debt for too many whilst the taxpayer has to pick up the tab for those who are never able to fully repay their balance and write off their loans.

Indicatively, a doctor in 2029 with £80,000 of student debt will save £58,000 in lifetime repayments and clear their loans, while a graduate with £40,000 of student debt on a salary of £50,000 would save £26,000 in lifetime repayments - and would clear their loan five years faster than under the current system.

Secondly, we will put an end to low-value “debt-trap” degrees and give young people proper choice at 18 by making apprenticeships a real alternative to university by helping 100,000 more young people into apprenticeships every year.

We will lift the cap on apprenticeship funding for 18–21 year-olds, introducing an Apprenticeships Guarantee so employers seeking to take on young apprentices can access funded training.

Alongside this, we will provide employers up to £5,000 through the BRITS scheme (Business Rebate for Investment in Training and Skills) for each 18–21-year-old apprentice they take on who is a British citizen.

This will open up more high-quality apprenticeship opportunities and ensure we are training up British young people rather than filling skills gaps by bringing in workers from abroad.

It also comes as Labour have slashed access to the highest-level apprenticeships since taking office, restricting how employers can spend the Apprenticeship Levy.

Thirdly, we will directly encourage young people into work with our First Job Bonus. This will mean the first £5,000 of National Insurance paid by any British citizen starting their first full time equivalent job will be placed into a personal savings account instead, earmarked for a first-home deposit or future savings.  

This New Deal will be funded through delivering savings from cutting rip-off university places and low-value degrees that end up saddling the public finances with additional debt that individuals cannot repay.

Bold action is needed to restore fairness to the system and ensure young people get the best possible opportunities.

That is why the Conservatives are also calling on Labour to adopt these proposals now - with Rachel Reeves having an opportunity to take action at the Spring Statement.

Kemi Badenoch MP, Leader of the Conservative Party, said: 

“Britain's young people are facing a worse deal under Labour. Youth unemployment is at its highest level in a decade, graduate recruitment is at the lowest level on record, and too many are going straight from education to welfare. Leaving university has become a moment of despair. Not just for young people but their parents too. This is why we're launching a New Deal for Young People: a step-by-step plan to fix what Labour is making worse and it starts with the student loans system.

“In particular, the Plan 2 student loans are an unfair debt trap: millions of graduates are doing the right thing, paying every month, yet watching the balance they owe growing bigger because interest piles on faster than repayments.

“If Labour had any sense, Rachel Reeves would act now and use her Spring Statement to adopt this plan.”

Laura Trott MP, Shadow Education Secretary, said:

“Too many young people are being sold a promise that simply isn't being kept. They are told that if they work hard and go to university they will get ahead, yet too often they leave with large debts, weak job prospects and student loan balances that keep rising even while they repay. That is punishing aspiration, and it is not right. That is why we will end real interest on Plan 2 student loans, so graduates are no longer trapped by debts that grow faster than they can repay them.

“But we also need to give young people a proper offer at 18. The old divide between university and apprenticeships is breaking down and that is a good thing. That's why we are acting to encourage more businesses to take on young people, because when a company opens its doors to an apprentice, it isn't just hiring, it is giving someone their start in life. Our £5,000 incentive recognises that contribution, and we know incentives like this work because they have increased apprenticeship starts before.

“Young people deserve a far better deal than they are getting under Labour, with youth unemployment rising and opportunities shrinking. Labour should be ashamed.”

ENDS

Notes to Editors:  

Our Plan for Young People has three points: 

1. We would abolish real interest rates on Plan 2 Student Loans. We would reduce the interest paid on Plan 2 Student Loans so it is no more than RPI inflation. This would mean no more real interest would be paid. This would benefit English undergraduate students who started courses between 2012/13 to 2022/23. 

1. We would introduce our Apprenticeships Guarantee. We would lift the funding cap for apprenticeships for 18–21-year-olds, ensuring employers have fully funded access to training and college places for every eligible apprentice they recruit, helping 100,000 extra young people into work every year. To encourage more employers to take on 18–21-year-olds we would introduce the Business Rebate for Investment in Training and Skills (BRITS) scheme, providing a new incentive of up to £5,000 for businesses to take on 18–21-year-old apprentices, provided they are British Citizens, lowering the cost of hiring and training young people.  

1. We would introduce our First Job Bonus. We want to support employers and employees, which is why – alongside our £5,000 BRITS scheme – we would introduce a £5,000 tax cut for young people. Under our First Job Bonus, the first £5,000 of National Insurance paid by any British citizen starting their first job will be placed into a personal savings account – earmarked for a first home deposit or future savings. 

Our student loan plan will save Plan 2 borrowers tens of thousands of pounds: 

• Indicatively, a doctor in 2029 with £80,000 of student debt will save £58,000 in lifetime repayments and clear their loans. Our analysis shows this doctor will also pay off their debt six years faster than under the current system, where their loan balance will be written off 30 years after their graduation. Post 2029, their total repayments would be £108,229 under our policy, compared with £166,238 under the status quo. We have modelled a doctor who started making Plan 2 repayments in April 2023 and has a salary of £70,000 in 2029, with an outstanding student loan balance of £80,000 at that time. Other assumptions include annual income growth and RPI in line with the OBR's long-term projections, and no repayment threshold freezes beyond existing Government policy. 
• Using the same model, a graduate with £40,000 of student debt on a salary of £50,000 would save £26,000 in lifetime repayments, and would clear their loan five years faster than under the current system.

Youth unemployment is rising: 

• The 16-24 youth unemployment rate is 15.9 per cent, up 2.5 percentage points on Labour's watch. The unemployment rate for 16 and over reached 5.2 per cent in October to December 2025, up from 4.2 per cent at the election. Additionally, the 16-24 unemployment rate was 16.1 per cent in September to November 2025, up from 13.4 in April to June 2024 when the Conservatives left office.¹ Youth (15-24) unemployment in the eurozone was 14.8% in September 2024 and remained at that level in September 2025. But youth unemployment in the UK increased from 14 to 16% over the same period (OECD Data Explorer, Monthly Unemployment Statistics, link; ONS, Labour market overview, UK: February 2026, 17 February 2026, link; ONS, Unemployment rate: UK: All: Aged 16-24, 20 January 2026, link). 

Too many young people are leaving university saddled with debt and facing poor employment prospects: 

• Many graduates are not getting a return from going to university. Analysis by the Institute of Fiscal Studies found that ‘total returns [on going to university] will be negative for around 30 per cent of both men and women'. As a result, many graduates earn so little they never repay fully their student loans, leaving the taxpayer to cover nearly £8 billion in debt for students in England every year (IFS, The impact of undergraduates degrees on lifelong earnings, 27 February 2020, link; OBR, Economic and Fiscal Outlook, 27 November 2025, link). 

• Case Study: Anne. Anne, an office worker who graduated in 2014 and works four days a week after having a child, told us: “I have been working part time, and the amount I owe is going up faster than I can pay it off. I do go in there to look at it, but it is so depressing I just don't think about it. I owe them more money now than I did ten years ago, despite the fact that I have been working and paying almost all that time.” Anne is just one of millions of examples. 

Demand for apprenticeships outstrips supply, reducing opportunities for young people: 

• Young people want to do apprenticeships – but places are limited. Around 40 per cent of young people who register with UCAS – 400,000 people – report they would be interested in apprenticeships. However, only 90,000 18–21-year-olds are starting an apprenticeship each year². This compares to around 470,000 new starts on first degrees for students from England each year (HESA, HE student enrolments by level of study 2019/20 to 2023/24, link; Hansard, UIN 105368, 4 February 2026, link).  

• This is because apprenticeship funding is capped and increasingly directed towards older workers. While higher education places are uncapped, apprenticeship spending is capped and has been fully spent out in recent years. Between 2017, when the Apprenticeship Levy was introduced, and 2024/25, total spending rose by more than a third in real terms, yet participation among 18–21-year-olds fell as funding shifted towards older age groups. Starts among 18–21-year-olds declined from 118,070 in 2017-18 to 90,680 in 2024-25 (Hansard, UIN 105368, 4 February 2026, link).  

Labour: 

• Labour's Jobs Tax, National Living Wage hike and Employment Rights Bill have ‘dampened employment demand for labour', reducing opportunities for young people. Alex Hall-Chen, Principal Policy Advisor for Employment at the Institute of Directors, said ‘increasing employer's National Insurance Contributions, above-inflation increases to the National Living Wage, and the Employment Rights Act have all severely dampened employer demand for labour' (IoD, Press Release, 20 January 2026, link).  

• Despite being elected as leader of the Labour Party on a pledge to scrap tuition fees, Keir Starmer's Government has hiked tuition fees for the first time in eight years and frozen repayment thresholds, declaring a war on students. In the run up to the 2024 General Election, the Education Secretary promised, ‘Graduates, you will pay less under a Labour government', adding that ‘the government could reduce the monthly repayments for every single new graduate...a month-on-month tax cut for graduates... For young graduates, this will give them breathing space at the start of their working lives'. But in government, Labour did the opposite after tuition fees had been frozen for seven years, Labour increased tuition fees by 3.1 per cent to £9,535 – a decision labelled ‘morally wrong' by university chiefs. Labour also froze loan repayment thresholds at the 2025 Budget, an effective tax rise on graduates which Martin Lewis described as ‘not a moral thing' to do. Universities didn't even see the benefit and the higher fees from this increase were cancelled out by higher National Insurance contributions – one broken promise cancelling out another (The Guardian, 3 February 2026, link; The Daily Mail, 4 November 2024, link; Bridget Phillipson, Article, 2 June, 2023, link; The Daily Mail, 4 November 2024, link).  

• Labour are failing young people. The latest data shows under-19 starts fell 4.1 per cent in the first quarter of 2025/26 as compared to the previous year, while the rise in total starts of 7.7 per cent were driven by over 25s. The proportion of apprenticeships allocated to under-25s is now at its lowest rate for five years. The Government's promise of 'tilting apprenticeships more towards young people as a matter of policy' is clearly not being delivered – not least because of the Treasury's Skills Tax. An estimated £800 million intended for training was allocated for non-skills spending instead last year. 

Liberal Democrats: 

• The Liberal Democrats would abolish the apprenticeship levy, resulting in less funding available for apprenticeships. The Liberal Democrats' 2024 manifesto pledged to replace the apprenticeship levy, which the Conservatives set up in 2017 to ‘put employers in the driving seat for developing new apprenticeship standards to meet the skills they need' (Liberal Democrats, For A Fair Deal, 8 June 2024, link). 

Reform: 

• Reform wants millions of young people to work as tradesmen, not find jobs in the modern economy. Reform's Skills spokesperson said that the party wants 50 per cent of young people to go into the trades – ten times as many as today, and 22 times more than the number of many young people in process, plant and machining jobs. This is also simply impossible to deliver – requiring 2,000 new people joining trades every working day for the next five years. 

• Reform UK are fiscally irresponsible, risking higher youth unemployment.  Reform UK are fiscally irresponsible – the independent Institute for Fiscal Studies said the sums in their last manifesto ‘did not add up' and their February 2026 pubs plan contained a £10.5 billion black hole. Combined with their commitment to cut taxes, Reform UK's fantasy economics would result in economic chaos, reducing opportunities for young people and increasing youth unemployment (IFS, Press Release, 17 June 2024, link; Conservative Research Department Analysis, 4 February 2026, available upon request; The Express, 26 March 2025, link).