Announcing the commitment at the Conservative Party conference today, Shadow Chancellor Mel Stride said the “first job bonus” would be funded by welfare cuts of £23bn.
He said these cuts would be “laser focused” on supporting aspiring young people.
Stride said: “We will introduce something called the ‘first job bonus’. When someone takes their first job, the first £5,000 they pay in National Insurance won’t go to the taxman, it will go towards a deposit on their first home or it will go towards savings for their later life.
“For a working couple, that means £10,000. Helping them buy a home, build a family, save for the future – that is the Conservative dream.”
Stride said the Conservative Party would always be one of “fiscal responsibility”, adding that it would bring back the two-child benefit cap, restrict migrants from claiming benefits and lower spending on foreign aid.
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Not a transformative move
Nick Mendes, mortgage technical manager at John Charcol, said: “A £5,000 rebate would be welcome, but it is not transformative. In most regions, it would comfortably cover conveyancing, valuation and moving costs, with a little left for the deposit. In London and much of the South East, where deposits are many multiples of that figure, it is unlikely to change behaviour in a meaningful way.
“The design will be critical. If National Insurance contributions are diverted into a dedicated account and released only on purchase, it could encourage saving discipline, but the benefit would feel distant for those early in their careers. Lenders will also need clarity on whether the rebate counts towards the cash deposit, whether it can be combined with a Lifetime ISA (LISA), and how it is treated if someone changes jobs or has breaks in employment.”
Mendes said timing was also important, as making the money available at the start of full-time work would be more beneficial than drip-feeding it over several years.
He also said a flat £5,000 was “simple but blunt”, due to “sharp regional differences in affordability”.
Mendes added: “A cap or taper linked to local prices or income multiples would do more in high-cost areas without over-subsidising lower-cost ones. There is also a fairness angle. If past National Insurance contributions do not count, savers who have already been working for some time could feel penalised.
“For impact, the scheme also needs to work cleanly alongside other support. If it can be combined with LISA bonuses and straightforward lender incentives such as cashback or fee-free products, the help with upfront costs is more meaningful. If it replaces existing reliefs or adds complexity, the benefit will quickly shrink.”
Sarah Coles, head of personal finance atHargreaves Lansdown, said the idea raised more questions than answers.
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Coles added: “If this was paid into a Lifetime ISA it could mean a real boost for buyers. It could fund the first year of a LISA – so essentially a £4,000 payment plus a £1,000 bonus. Homebuyers could then make the most of their LISA by continuing to contribute in subsequent years. They would have the choice to save or invest this money, so that those who expect to be saving for a property for more than five years have the opportunity to benefit from far better growth opportunities available from investment – and those putting money aside for retirement could benefit from investment growth over the decades.
“The proposal illustrates a clear shift, to win back the votes of younger people. It should provide food for thought for policymakers considering initiatives to encourage young people to save and invest for their future.”
She said reports suggested that this would be paid into a savings accounts or a kind of ISA, but the LISA had not been specifically named.
“If this was intended to replace the LISA, it would raise real questions,” Coles said.
She added: “Would people be able to continue paying in and receiving additional bonuses from the government along the way? The LISA has the potential to pay tens of thousands of pounds in bonuses, and losing this would be a real blow. Would people continue to be able to both save and invest? If the Lifetime ISA fell by the wayside with the launch of this scheme it could mean reducing the options available for property deposits to grow. It could punish those who expected to put away smaller sums over longer periods – including those on lower incomes.
“There’s also the question of whether a National Insurance rebate would mean young people no longer earn years of National Insurance contributions towards their state pension. They need to build up 35 years’ worth of contributions to qualify for the full state pension. Any plans that could eat into this risk, leaving people on a lower income retirement – so they pay the price for this rebate for the rest of their life.”
