As a 24 year old Conservative member and voter, I struggled to see what there was for people starting out in life in 2017 Conservative General Election Manifesto and, as became clear, other young people clearly felt the same – and by young I mean those below the age of 40 as well as those in the 18-24 age bracket (as the chart here shows).
Compassionate economic policy should be at the forefront of the Conservative agenda. The party must do more to reach out to those who form the backbone of the economy, support those who are “just about managing” (such as parents on low to middle incomes) and support those starting out in life (including students). I propose three ideas below that would do just that and they are as follows:
- a new ‘Help to Buy’ deposit scheme;
- a new tapered personal allowance system; and
- a grace period for the repayment of student debt.
A new help to buy deposit scheme: helping the hardworking get on in life
The Government offers a range of ‘Help to Buy Schemes’ aimed at helping people get on the housing ladder. But these schemes are not having the desired reach. Both the Help to Buy ISA and the Government’s Equity Loan offering are only of use to those who already have a deposit. The problem with these policies, therefore, is that they assume that people are in a position to fund a deposit. With rent costs, living costs (especially in light of higher levels of inflation) and, in some cases, student debts, it can be difficult for hard working people to save for a deposit and get on in life.
The Government can help those caught in the private rental ‘trap’ by introducing a Help to Buy Deposit Scheme. Under such a scheme, the Government could provide a loan for the deposit, rather than the mortgage itself. By way of example, this policy could be available for applicants that (i) have been living in privately rented accommodation for at least 36 months, (ii) possess a good credit score and (iii) are below the age of 30.
A pay rise for those who need and deserve it the most
There has been much discussion recently of the public sector pay cap; whether the National Living Wage is enough; and what further reforms could be undertaken to increase incomes for those who need it most.
Therefore, rather than simply increasing public sector pay, a better and more far-reaching alternative would be to increase the personal allowance by reallocating a higher percentage of the allowance to those earning the least from those earning the most under a tapered system. As the rules currently stand, anyone earning up to £100,000 is entitled to the full personal allowance of £11,500, with this amount reducing once income exceeds £100,000. The table below sets out an example of what a tapered personal allowance system could look like.
By slightly reducing the personal allowance available to top earners and reallocating to lower earners, this policy is likely to be a viable option. Such a policy would show that the Conservatives truly are the party of hard working people and will benefit those who earn the least the most.
An improved deal for students: A grace period for the repayment of student fees
One way to improve the deal on offer to students is to offer a grace period in relation to repayment of debt. Under such a grace period, students would only start repaying their debt after a set amount of years when they earn in excess of the threshold amount to start repaying (which currently stands at £21,000 for those on plan 2). A policy such as this would give students a chance to prepare financially for the future and with a greater number of people from disadvantaged backgrounds going to University, this policy would recognise this reality and allow all graduates the chance to prepare for their futures. In addition, thought could also be given to whether interest accrued throughout the period of study and the grace period itself could be written off, such as perhaps for specific types of degree or qualification.
There is an opportunity to seize the initiative from Labour on this topic in light of their recent floundering. We should continue to make the positive case for paying tuition fees but in doing so acknowledge that the system can and should provide a more financially appealing package to students (particularly those from less privileged backgrounds) without making unsustainable and unaffordable promises such as abolishing student fees.
Thinking along the lines of the policies outlined above could give the Party an opportunity to once again make the positive case for Conservative values – by supporting hard working people to ensure there is a future to look forward to.