Budget 2025: Impact on Graduates

Jim Shannon Excerpts

Tuesday 16th December 2025 Westminster Hall

[Jack Rankin (Windsor) (Con)]

I beg to move,

That this House has considered the impact of the Autumn Budget 2025 on graduates.

It is a pleasure to serve under your chairmanship, Mr Turner. I thank the Minister for taking time from his busy schedule to attend the debate today. I will start by painting a picture of two graduates at two different points in their lives—both taxed to death. Let us start with Nick, now 30. He has done all the right things. He got his GCSEs and A-levels, went to a Russell Group university, secured a place on a decent graduate scheme—in London and the south-east perhaps—and has even got himself a lovely girlfriend. Yet Labour’s most recent Budget will see his student loan repayments increase. His rent will go up. He will end up paying more tax because of the freeze on income tax thresholds. At work, his company is making redundancies and blaming rising employer’s national insurance. He cannot buy a house. His finances are pushed to the edge every month, yet a family on his road receiving benefits seem to enjoy the same quality of life without ever leaving the house.

The Centre for Social Justice found that someone would need pre-tax earnings of £71,000 a year to match the disposable income of a family with three children and receiving benefits. Even if Nick earns more, as a headline figure, than someone on benefits, he faces so many extra costs—for commuting, council tax, rent and suits for work—that his disposable income will end up being very similar to, if not less than, that of someone who sits at home. In my view, Nick has every right to feel aggrieved. Writing in the Telegraph at the weekend, I estimated that a young person earning £40,000 a year and renting in my constituency is left with less than £500 a month in disposable income after reasonable expenses.

Then there is Henry, or Henrietta—a high earner, not rich yet—who is perhaps slightly older, and might have excelled working in engineering or a tech start-up. Yes, they may have more disposable income, but often they are still far from financially free. We are seeing a bubble in the data for younger professionals earning just under £100,000, because crossing that threshold, for a parent of two, could well mean a £20,000 tax hit due to the high income child benefit charge and the withdrawal of child support.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman for bringing this debate to the House. The plan 2 student loan repayment threshold was frozen until 2030 under new announcements in the Budget. That means that graduates begin repaying sooner, but it is also almost like a hidden tax on career incomes, whereby students will pay more over their working life even if their earnings stay the same. Does he agree that for many students, who could be paying up to £40,000 in student debt, there could be a significant impact on their early month-to-month salary, which could put people off attending university and pursuing their academic dreams?

[Jack Rankin]

I intend to get to the implications of plan 2 loans—both the freeze in the threshold for repayment and the freezing of the interest rates in a falling-interest-rates environment. I think the hon. Gentleman will find in the Budget papers that that raises about as much money as the mansion tax does, for example. I think that is deeply unfair.

More broadly, what is the incentive structure here? Are we not punishing some of our most productive people? Of course many people across the country have it worse, but the point is that Nick, Henry or Henrietta should not have to apologise for striving and being ambitious. After all, it is their tax money that is used to prop up the welfare state, whether that involves benefits, pensions or housing illegal migrants. But they are the lucky ones; we now have about 1 million young people not in work, education or training. Worse still, we have 400,000 graduates claiming out-of-work benefits.

I hear from graduates in my constituency who have applied for hundreds of jobs but get rejected or hear nothing at all. At the end of 2024, the Institute of Student Employers found that, on average, organisations were receiving 140 applications per job.