The budget verdict: thanks for the ‘millennial railcard’ but owning our own home one day would be nice

This Wednesday the Chancellor of Exchequer Philip Hammond (AKA spreadsheet Phil) gave his annual budget. With the Resolution Foundation saying millennials are the first generation in modern times to be worse off than their parents, it seemed promising that within the budget the word ‘young’ was mentioned nine times. Phillip even said ‘young people…rightly feel concerned about their future prospects’ and went on to say ‘I want young people to grow up with that same sense of boundless opportunity’.

So what was offered to young people yesterday?

  • The ‘millennial railcard’
  • Increase in ‘the living wage’
  • 300,000 new homes every year by 2025
  • Abolishment of Stamp Duty Land Tax for first time buyers
  • Rise in the tax threshold

Okay… that doesn’t sound too bad: money off the train, increased pay, building of new homes, a decreased overall cost of owning your first home. But in reality the budget does little to tackle the growing inequality in our society, the housing crisis, the stagnant wages, the lack of affordable housing, the increased burden of debt on our young people, the increasing average age of first time buyers and the general lack of prosperity for our young people.

My break down of the budget:

The millennial railcard

The railcard is basically a discount voucher for people aged 16-25 and if you get one (for £30) you get a third off rail fares. In the budget the government announced they will extend this to 30 year olds. However it is good to extent the age for the railcard, it is important to note that the railcard can only be used during off-peak times and you cannot apply the discount on a season ticket. So young people commuting to college, university or work at the normal time (between 7-9am) will not be able to get the discount. So in reality this railcard offers little to most young people and is not massive saving it’s been presented as. But don’t worry; I’ve got an idea… Why don’t we renationalise the railways? Young Labour supports a real national railway service which offers an efficient service at a decent price (unlike the privatised railways we currently have). There would be no need for a third off rail fares as be train fares would be cheaper (at all times not just during off-peak times!).

Increase in the income tax threshold

The budget announced the income tax threshold will rise by £350, meaning previously workers had to earn £11,500 before paying income tax, but as of April 2018 earn up to £11,850 before being taxed for Income Tax – a £350 increase. So if you are earning £11,750 you will no longer have to pay any income tax in April 2018. The Daily Mail said those on an income between £12,000 to £45,000 will gain £101.04 a year through the changes to income tax and the national insurance contributions. This is hardly life changing and in relation to owning a home hardly helps towards the deposit of a home which is estimated to be an average of £50,144 in the South East. The Chancellor did not talk his previous promise to increase the thresholds for basic rate income tax to £12,500 by 2020, another Conservative promise shelfed I wonder?

The “National Living Wage”

I use quotation marks when talking about the “National Living Wage” because it is not a true living wage. A living wage is defined as “the minimum income necessary for a worker to meet their basic needs” now I have done the maths and can tell you that £7.50 is not a living wage.

The Living Wage Foundation through extensive research indicated the real living wage should be £8.75 and £10.20 in London. What did the government offer in the budget? £7.83. It is also worth mentioning the “National Living Wage” does not apply to young people. If you are between 21-24 years old it is £7.38 per hour, if you are between 18-20 years old your new “living wage” is £5.90 per hour, if you are under 18 your new “living wage” is £4.20 per hour and if you are an apprentice your new “living wage” is £3.70 per hour.

So young people get a bad deal, they don’t even get this “National Living Wage” but at least you can look forward to a £7.83 minimum wage once you’re 25… that’s going to ensure you have a good quality of life with proper housing, isn’t it? Well, the maths is rather scary. The average rent for a one bedroom property in Reading is £829pcm, and the average rent for a room in a house share is £569pcm. If you earn £7.83 and work 40 hours a week (the recent increase in tax threshold did not go far enough to mean you don’t pay Income Tax by the way) you earn £1,125 a month after tax and live in house share, based on the averages in UK, this is what your monthly budget looks like: after rent you are left with £296 for the month (this assumes by the way that all your household bills are included in rent such as council tax, utility bills and Wi-Fi). To get to work you may need to get a bus, a 30 day ticket with Reading Buses will cost you £61. So you are now left with £235 a month. If you spend £20 a week on your weekly food shop you are then left with £155 for the month. The average phone bill is £27 a month, leaving you with £128. If you own a car, the average monthly cost for insurance, tax, petrol, MOT and maintenance is £153.67 (note that is based on insurance being £40 a month which is not the case usually for young drivers). So yeah, for the average person the “National Living Wage” isn’t a real living wage and with housing benefits slashed for young people between 18-21 it’s no wonder graduates are moving back in with their parents because they cannot afford the cost of living.

The Low Pay Commission in their 2017 report said: ‘the impact on earnings may be less positive if employers introduce of extend the use of youth rates in order to offset the cost of the National Minimal Wage’ – what did the government do to address this? Young people are often exploited because they are low paid workers. It makes no sense for a young person doing the same job as another to get paid less.


The changes to Stamp Duty Land Tax has dominated the media. When buying a home you have to pay something called SDLT which many argue is a burden on top of the deposit and legal fees required to buy a home. The government announced that for people buying their first home, if it is £300,000 or under they will not have to pay SDLT, if the home is between £300,000 to £500,000 they will get a discounted SDLT rate.

This is a move in right direction but is not enough to ensure young people get on the housing market. The Office for Budget Responsibility argues “the main gainers from this policy are people who already own property” and that housing prices shall increase because of this move. This so called pledge to ‘want young people to grow up with that same sense of boundless opportunity’ doesn’t even come close. The average first time buyers are 25-35 years old and have an average income of £35,000. 18 to 21 year olds have an average wage of £10,200 and 22 to 29 year olds have an average wage of £20,900 so tell me Mr Hammond, how does your Stamp Duty Tax help young people get on the housing market? The Daily Mail reports that young people in the South East are set to save £3,948, but how does a young person get to the point to buy a home anyhow? According to Halifax the average deposit for first time buyers in the South East is £50,144. If a young person saved £200 a month (sounds like a fair amount right?) towards a one bedroom flat in Reading (averaging at £234,871) with a 10% deposit (£23,487.10) it would take a young person nearly 10 years to save for a deposit.

So when young people have Phillip Hammond offering a railcard to young people, which can only be used during off-peak times, to get you a third off a train ticket, it is both laughable and insulting and does nothing to solve intergenerational inequality.

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