Chancellor John Healey's Budget contains a range of measures affecting millions of Londoners, from business rate relief to landlord taxes and energy bills. For young people in the capital, the announcement brings changes to student loans, wages, employment, housing and the cost of living.
Student loan threshold freeze
The income at which graduates must start repaying student loans is set to be frozen for three years, meaning many graduates will start making payments sooner and pay more each month. The interest rate on Plan 2 loans is higher than other plans, and many graduates have seen their debt rise even as they make repayments.
Money Saving Expert founder Martin Lewis criticised the Government for failing to act on what he called "a moral wrong." He told the BBC: "Many 18-year-olds were asked to sign contracts with the government about their student loans and the government is now retrospectively making those contractual terms worse." He described the freeze as a "moral breach" and a "breach of natural justice."
Minimum wage and employment
The minimum wage is set to rise by 3.9% for workers aged 18-20, the same increase as for those aged 21 and above, but the tiered system that pays younger workers less remains in place. The increase risks young people paying off their student loans sooner and at a higher rate, and creates fiscal drag as rising wages pull people into higher tax brackets with the personal allowance frozen through April 2031.
The ONS estimates there are as many as one million NEETs (not in education, employment or training) across the country. Lucy Mangan, Partner and Head of Tax Services at Menzies LLP, warned: "Leaving the National Insurance threshold at £5,000 and frozen until 2031 means every rise in the National Living Wage pushes up employer contributions on each salary, and with the Employment Rights Act set to restrict the flexible contracts that labour-intensive firms depend on, many employers won't gamble on entry-level roles at all."
Housing and savings
Mr Healey announced the Your First Home scheme, a £4.7 billion plan allowing people to buy a new-build home with a 2.5% deposit and a loan worth 20% of the property's value. According to the Treasury, the scheme could support the delivery of around 20,000 new homes.
An additional 2 percentage point increase in property income tax rates could, according to the OBR, lead to a "steady rise" in rent prices. Nouran Moustafa, financial advisor and founder at Roxton Wealth, said: "From April 2027, property income tax rates will rise to 24%, 44% and 49%. Some landlords may absorb those costs, but others could reconsider investing or selling their properties." He added that the 2.5% deposit will do little to "suddenly make London affordable."
The Your First Home scheme is an equity loan, interest-free for only the first five years. Sean Boyle, a 21-year-old Londoner, told the Standard: "I work full-time and try to put money aside every month, but it can feel like no matter how careful you are, the cost of living makes it difficult to get ahead."
Young Entrepreneurs Allowance and cost of living
Mr Healey introduced the "Young Entrepreneurs Allowance" to cover living costs for young people in the first year their business is launched. Dr Anand Verma, CEO and founder at ExpectAI, said the scheme would allow young people to "take their first steps into self-employment and turn their ideas into viable new businesses," but cautioned that rising energy bills, hiring costs and barriers to finance remain pressures.
The Budget will pay £100 to struggling households to help with energy bills, and tariffs on more than 100 supermarket products have been suspended. Alcohol duty will rise in line with RPI inflation at 3.9%, pushing the duty on a pint from 50p to 52p, a cost that could be passed onto consumers.
