Young people in UK need a government-backed ‘offsetting’ scheme to prevent ‘Generation Debt’

Millions of young people in Britain face being consigned to ‘Generation Debt’ unless the UK comes up with real financial innovation, says a leading UK banker who works with young people.

Jim Spowart, the founder of Peopleschampion.com, said: “I believe the Government has to do something drastic and very soon - or this is going to be a serious long-term, generational problem. It is absolutely nuts, that young people with student debts are having to pay six times their salary to get on the property ladder.”

Mr Spowart pointed out that university heads are now predicting that tuition fees in England and Wales are rising to £10,000 a year in some case. One university vice-chancellor said that families must save much more for their children’s higher education.

“Our young people are being consigned to Generation Debt. How can a young person afford to pay off student fees and loan and then buy a home?”

“I am urging the Government to sit up and take this more seriously. The Treasury has been happy to take its share of stamp duty and other costs from the housing boom, now the Chancellor of the Exchequer needs to do something long term?

“I’m proposing a national scheme that aids first-time buyers perhaps over their first five years in a new home. This has to be linked to pensions and savings through a government-approved National Offsetting Scheme. Immediate remedial action needs to be taken. I believe a lot of this should be funded from the banks and financial institution who have been making very large profits.”

“We really need some heavyweight political leadership on this fundamental matter. Every week we hear about human rights and prejudice in society. Perhaps those politicians who have their mortgage fees paid for by the taxpayer can't see what is happening around the country. The cost of further education and housing is relegating the forthcoming generation to debt and despondency.”

Mr Spowart believes there are ways to prevent this if the Government puts in place schemes which insist that the banks do a great deal more to help young people with better financial products and assistance.

“It is patently wrong that some young first-time buyers are jumping onto the property ladder with mortgages five or six times their salary. Now some critics will point out that when I ran a bank I allowed people to have high multiples of salary - and I did. But this was for higher income people who could afford the repayments as their salaries increased.”

“Young people are optimistic by nature and think that they will be earning larger wages later on in life - but for the majority of people this is not the reality. Most people have a gentle income curve throughout their working lives. So siddling people with huge, difficult-to-manage debts too early in life is just stacking up trouble for the future.”

Mr Spowart, who is chairman of the Young Scots finance committee, proposes a National Offsetting Scheme supported by all banks and financial service companies.

“This would be a national scheme for young people where their mortgage can be offset by pension contributions and tax-efficient savings, perhaps with contributions from the government.”

Mr Spowart’s Peopleschampion.com, which has already campaigned against excessive interest rates on credit cards, feels that financial security is one of most important aspects of modern life.

“More people worry about money and where it is coming from than anything else. The Government needs to start tackling this as an absolute priority. This is a long-term issue that has profound implications for our nation.”

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