Budget 2021: What you need to know about how it will affect young people


10th March 2021

COVID’s economic impact has been disproportionately felt by younger people, many of whom were already in difficult circumstances when the crisis landed.

Of the 730,000 people who have lost their jobs in the past year, nearly two thirds are under the age of 24. Renters within this age demographic are twice as likely as any other group to have built up large rent debts to landlords. The Institute of Fiscal Studies has estimated that successive lockdowns will lead to school-aged children earning £40,000 less over the course of their lifetime compared to previous generations.

Amid this crisis, the government’s 2021 Budget was an opportunity to improve young people’s economic prospects. But unfortunately, while there are some government new bits of government expenditure that will help young people, there were also areas where more could be done.

What went well for young people


18–24 year-olds are  more likely to have been furloughed than older age groups. Consequently, many in that age group will benefit from the extension of the furlough scheme to the end of September. Young people are also much more likely to claim out-of-work benefits, making them particular beneficiaries of the £20 weekly increase in Universal Credit. The extension of the National Living Wage to 23 year-olds will slightly boost the earnings of some young people. These increases in income are modest but for many young people living in, or on the edge of poverty, the slight uplift to their incomes may well be helpful.


After devastating drops in enrolment, the government has increased incentives for businesses to offer apprenticeships. The bonus for hiring apprentices will double to £3,000 which, in principle, will increase the number of places for young people. However, there is no incentive for firms to target those apprenticeships at young people and there is a risk of young people being squeezed out of the apprenticeship market by older candidates who are often better qualified.

The Budget’s £18,000 grant to all hospitality and leisure businesses may also benefit young people. As 16-24 year-olds are more likely to work in these sectors, they may experience a sudden swell in employment opportunities.

Public Services

While there’s nothing new in the Budget for schools, the government did draw attention to previously announced initiatives. In particular,  the government reaffirmed its commitment to investing a further £2.8 billion in education between now and 2023. Nearly all of this will go towards previously announced support for pupil catch-up, such as the recovery premium and summer schools. With the Department for Education one of the few government departments explicitly protected from cuts, this commitment could be considered a net positive for young people in school.

What could have gone better for young people

Towns Fund

The £1 billion committed to the Towns Fund has already attracted controversy for being targeted largely at provincial areas which fall within Conservative MP’s constituencies. Whether or not this is political ‘pork barrelling’, it has the unintended consequence of diverting funds away from young people.

As with many Conservative seats, communities targeted for the Towns Fund have a relatively low proportion of young people. The young are more likely to live in inner-city areas, which explicitly fall outside the remit of the Towns Fund. For some groups, these urban areas are as economically deprived as any provincial town – over 40% of children in east London grow up in poverty. The available evidence from the London borough of Newham strongly suggests that COVID has compounded this deprivation. Nonetheless, the new Budget has no money earmarked to help such urban areas.

With these considerations in mind, the government should go further in helping young people through a Fund specifically for young people in poverty, independent of their location in the country.


Despite Rishi Sunak’s rhetoric about turning “generation rent” into “generation buy”, the new budget may make access to housing even more difficult for young first-time buyers.

The Mortgage Guarantee Scheme, increasing the availability of mortgages that require only a 5% deposit, is intended to dovetail with the extension of the Stamp Duty holiday to make buying a house easier for “generation rent”. However, there is a reasonable chance that this pair of policies will rapidly drive up demand for houses, leading to inflated prices. Time will tell how the market responds, but if the latter scenario plays out then young people are destined to remain as “generation rent”.

Young people living away from home are most likely to live in rented accommodation. The Budget omits any support for private renters. Young renters are also twice as likely as any other age cohort to be in COVID-induced rent debt to their landlord. The average individual debt works out to £500 and reports suggest that landlords are already issuing eviction notices despite the government’s pledges. Young people are at risk of abrupt relocation or worse, homelessness.

To better support young potential homebuyers, the government should limit access to the Mortgage Guarantee scheme. By working with the Financial Conduct Authority, the scheme could be made available only to young people. This may stymie house price inflation as well as directly supporting home ownership for young people. Equally, the government should consider extending an eviction amnesty for 6 months after the easing of lockdown to give young people some runway to get back on their feet economically. More radically, as total rent arrears are estimated to come to only £375 million, the government should consider a complete rent debt clearance initiative.

Public Spending

The Resolution Foundation believes that there will be a fall in government expenditure of at least £2.8 billion. While the Department for Education is insulated from these cuts, services young people rely on outside of school are likely to be hit hard. Between 2009 and 2020, this included heavy cuts to the Home Office, Transport, Justice and the budget of Local Councils – all vital in supporting some of the country’s most vulnerable young people.

While the government has tried to offset some of these concerns with ongoing capital investment, this initiative will likely end in a significant underspend. It also fails to resolve the real problem: government departments, hobbled by a decade of austerity, trying to meet high demand for services they provide. This would further deepen the financial devastation experienced by organisations such as CAMHS and Youth Offending teams across the country.

After a year of sacrifice to safeguard the health of older generations, the government needs to make young people a priority for support. This could include an internal review of services within each department, with the aim of identifying those that young people disproportionately depend on. This could be delivered by, or with support from the National Audit Office. Department funding could then be awarded on agreement that these services are protected from any cuts by that Department.


John Maynard Keynes, perhaps the most prominent economist of the 20th century, once remarked that the purpose of government is to do what businesses cannot do. The past decade has shown us that we cannot rely on businesses alone to fix the major economic crises facing young people. The government will need to step up if it is to avoid creating a new ‘lost generation’.

This will involve extending further support to young people beyond education – including support with jobs, housing and other services. It is vital that we, as a sector, take every opportunity to remind the government of its responsibility to young people. It’s equally vital that we remind society at large of the risks of shirking this responsibility.