What the Budget Offers Under-25s, and What It Leaves Out

For an 18-to-20-year-old on the minimum wage, the Budget delivered a pay rise of 3.9% from next April, taking the hourly rate to £11.27. It is a real increase, but smaller than many young workers had been led to expect, and it comes with a reversal that matters as much as the number.

Chancellor John Healey, who has succeeded Labour's Rachel Reeves, changed course on how the minimum wage for young people is being raised. Labour had promised to scrap what it called discriminatory age bands, so that all adults would be entitled to the same minimum. This year, though, 18-to-20-year-olds get the same percentage increase as older workers, which leaves the gap in place. Over-20s will be paid at least £13.21 an hour.

The rise has a side effect for some 21-year-olds. Someone that age working full time on the minimum wage, who took out a student loan after 2023, will now earn enough to reach the £25,000 repayment threshold. Above it, they begin paying back 9% of their earnings.

On housing, the Budget introduced a "First Time Buyer Isa", due in 2029. Savers can build a deposit in it, with the government adding a 25% bonus on contributions of up to £4,000 a year. It replaces the Lifetime Isa, which has been criticised for harsh penalties on people buying homes above its £450,000 cap. That cap stays, but savers who make a withdrawal that doesn't qualify will lose only the government's contributions, not their own money. The penalty on withdrawals from existing Lifetime Isas will also be lowered.

The government had already announced a £4.7bn scheme in England called Your First Home, aiming to help 70,000 individuals and couples onto the property ladder. Buyers of new-build homes can put down a 2.5% deposit, and the government provides a loan worth 20% of the property's value. Eligible homes are capped at £110,000 outside London and £140,000 in the capital. The scheme is aimed at people without help from "the bank of mum and dad".

There was also a pilot of a "Young Entrepreneurs Allowance" in England. For the first year of a new business, the government will partly cover the founder's living costs, in an effort to level the field for young people without family money behind them. Details are thin: the only word so far is that it will be rolled out "shortly".

The gaps were more striking. More than a million 18-to-24-year-olds are not in employment, education or training, known as Neet. The chancellor acknowledged the scale of the problem but said solutions would not come yet. Ministers are waiting for recommendations from Alan Milburn, who has been examining why so many young people in the UK are Neet. He has warned that Britain is "at risk of a lost generation" and says a "round of ammunition" is needed rather than a silver bullet. Healey said in his speech that he refused to write young people off.

Student loans were the other omission, particularly Plan 2 loans taken out between 2012 and 2023, which many borrowers fear they will never clear. Despite expectations beforehand, no reform came. Chief Secretary to the Treasury Emma Reynolds told the BBC the repayment system is "under review", adding: "We inherited a system that is difficult and unfair on young people, but we weren't able to move on that today."

Milburn is due to make his recommendations later this year, and that report, along with any word on student loans, is where the next answers for under-25s are expected.