Andy Burnham considers income tax break to help young people onto property ladder

Andy Burnham is considering giving young people billions of pounds in tax breaks so they can save for house deposits as part of a major policy package aimed at helping Gen Z voters.

Allies of the future prime minister say one potential plan would include exempting young people from income tax for the first three years of full-time employment. This move, which could cost up to £3.5 billion, will give young people the chance to save money and help them qualify for a mortgage.

The “major offer” will also include buy-to-let rental assistance and the rollout of the successful Manchester public transport scheme, which offers free or discounted travel to 18 to 25-year-olds across England.

A Labor MP close to Mr Burnham said: Independent: “It will be an important offer that will help young people throughout their lives who are looking for education, employment, taxes, public transport, rent to buy.”

Another close ally who helped shape Mr Burnham’s policy said: “He discussed income tax exemption for the first three years of employment to help young people save for their mortgage deposit.

“It’s the kind of creative idea of ​​trying to figure out how we can do things differently, tackling problems that no one seems willing to solve.

“Obviously one of the problems with accessing mortgage loans is that many young people are not able to save for a deposit to get a loan. This could help ease the crunch.”

The move would come on top of Mr Burnham’s previously announced plans, which also include the biggest round of social housing construction since the Second World War.

But tax expert Dan Neidle warned the proposal could have serious pitfalls.

He said: “Parents will try to pass their earnings through their children to avoid having to pay income tax. Mr Burnham will also need to explain where he will raise the nearly £3.5bn the policy will cost.”

While Mr Burnham has been given good news that the impact of Donald Trump’s war in the Middle East has not hit the UK economy as hard as feared, he will come into office with little room for manoeuvre. Sir Keir Starmer, who announced his resignation last week, has left a £4.7bn gap in defense spending plans where money needs to be found.

Mr Burnham also pledged not to change Rachel Reeves’ borrowing rules and to honor Labor’s pledge in its 2024 election manifesto not to increase VAT, income tax or personal national insurance contributions. It faces a tax crackdown on companies that rely on large warehouses, such as Amazon.

Although specific policy details are yet to be finalised, the discussions make clear Mr Burnham’s desire to help tackle the UK’s generational wealth gap, with the so-called baby boom generation born in the wake of the Second World War holding most of the wealth and resources.

Experts discussed how Generation Z, especially those born between 1997 and 2012, “fell into the rent trap” and were unable to buy their own homes.

Approximately 74 percent of baby boomers own their own home, while less than 5 percent of Gen Zers own their own home.

The average age of a first-time homebuyer in the UK has risen to 34, according to Skipton Group’s annual home affordability index published in March.

Chief executive Stuart Haire warned that the results showed “the desire to own a home is becoming unattainable for many young adults, delaying independence and stability”.

The Tony Blair Institute has called for an end to the triple lock protection on state pensions (increased by the peak inflation rate or 2.5 per cent) to help redirect support for younger generations.

The TBI argued: “The UK’s state pension system was built for a different era. We cannot continue to pour money into a system that is increasingly unaffordable.”

Mr Burnham has not yet said whether he will stick to the triple lock on state pensions going forward.

He has also already made clear that he is prepared to break with previous Labor orthodoxy to tackle the problem of one million so-called NEETs (young people not in education, employment or training).

He told Andrew Marr on LBC on Thursday: “I will not advocate for an education system that is overly focused on the university route and does not move into technical qualifications for our young people.

“Too many young people are in grade 10 at school and they don’t see where school is taking them because the system is not focused on these young people.

“We need a balanced education system between academic and technical, and I think we need job placement at 16, job placement for 16 to 18-year-olds and a guarantee of apprenticeships for every 16 to 18-year-old who wants it.”

He argued that these reforms would also bring down welfare legislation more effectively than simply cutting or repealing it.

He said: “I’m not going to make drastic cuts to benefit levels that will push struggling people deeper into poverty.”

Allies also highlighted plans to roll out the Manchester public transport scheme across England.

In Manchester, since 2019, under the Our Pass scheme created by Mr Burnham, children aged 16 to 18 have been able to travel free on public transport if they buy a travel pass for a £10 administration fee.

Last year, it expanded the program to allow 18- to 25-year-olds to travel for half price.

The idea was to make it easier for them to get to interviews and travel to work. Mr Burnham has already complained about the cost of train tickets from the north-west to London for young job seekers.

He has previously highlighted that the highest return fares from Manchester to London are “always” £369.40, which is more expensive than return flights from Manchester to destinations such as India (£343), Jamaica (£345), Brazil (£325) or Ivory Coast (£319).

In his acceptance speech after winning the Makerfield by-election, Mr Burnham said: “To make life more affordable for people, we need to reduce water bills, energy bills and rail fares, just as we have reduced bus fares in Greater Manchester.”

He has already prepared a “Makerfield test” to change the situation to help those he says have previously been ignored.

He also vowed to end 40 years of orthodox economic policy aimed at “trickle-down” liberal economics, promising: “I will do things differently.”

Independent He went to Mr. Burnham’s office for further comment.