Under-25s Get a 3.9% Wage Rise and a New Buyer ISA — But No Loan Fix

Workers aged 18 to 20 on the minimum wage will see pay rise 3.9% from next April, to £11.27 an hour — while the over-20s floor climbs to £13.21, keeping the age gap intact.

That's the sharpest concrete number in Wednesday's Budget for the under-25s, but it's not the only one. From a new savings account with a 25% government bonus to a pilot allowance for young founders, the chancellor's package touches pay, housing, jobs, student debt and entrepreneurship. Here's what actually changed — and what didn't.

What happened to the minimum wage for young workers?

The 3.9% uplift for 18-to-20 year-olds is real money, but it's less than many expected. The chancellor reversed course on how his Labour predecessor, Rachel Reeves, had been uprating the youth minimum wage. Labour had promised to scrap "discriminatory age bands" and equalise the minimum wage for everyone over 18. That hasn't happened.

The result: 18-to-20 year-olds move to £11.27 an hour, while workers over 20 must be paid at least £13.21. The disparity stays.

One side effect caught by economist Ben Zaranko: a 21-year-old working full time on the minimum wage who took out a student loan after 2023 will now earn above the £25,000 repayment threshold — and start paying back 9% of earnings above it. A pay rise, in effect, triggers loan repayments.

How does the Budget help first-time buyers?

The headline is a "First Time Buyer Isa," launching in 2029. Savers build a deposit, and the government tops up contributions of up to £4,000 a year with a 25% bonus.

It replaces the Lifetime Isa, criticised for harsh penalties on anyone buying a home above the £450,000 cap. The cap will remain under the new account, but savers won't lose their own money when making withdrawals. Penalties on withdrawals from existing Lifetime Isas will also be lowered.

The Budget also builds on the previously announced £4.7bn "Your First Home" scheme for England, which aims to help 70,000 individuals and couples buy. It lets people purchase a new-build with just a 2.5% deposit and provides a loan worth 20% of the property's value. The loan is capped at £110,000 outside London and £140,000 in the capital — targeted squarely at buyers without help from "the bank of mum and dad."

Was there anything for the million young people not in work or study?

Not yet. More than a million 18-to-24 year-olds are not in employment, education or training (Neet), and the chancellor acknowledged the scale of the crisis — but said solutions would not come in this Budget.

Ministers are waiting on recommendations from Alan Milburn, who has been investigating why so many young people are Neet in the UK. Milburn has warned Britain is "at risk of a lost generation" and said the crisis needs "a round of ammunition" rather than a silver bullet. His recommendations land later this year.

What about Plan 2 student loans?

Nothing, despite expectations the Budget might act. Borrowers on the controversial Plan 2 loans, taken out between 2012 and 2023, face repayment terms many fear they will never fully pay off.

Chief Secretary to the Treasury Emma Reynolds said after the statement that the loan repayment system is "under review."

"We inherited a system that is difficult and unfair on young people, but we weren't able to move on that today," she told the BBC.

What is the Young Entrepreneurs Allowance?

The one genuinely new idea for young founders: a "Young Entrepreneurs Allowance," piloted in England. The government will partly cover living costs for the first year a new business is operating. The chancellor's aim is to level the playing field for young people with bright ideas but without family money behind them.

Details are thin — the government says only that the scheme will be rolled out "shortly."

The pattern across the Budget is clear: money for wages and housing now, answers on jobs and student debt deferred to later this year.