Create a £5,000 First Job Bonus: calculation note

Central fiscal result

+£1.5bn - Net fiscal impact in 2028-29

Low case: +£0.5bn. High case: +£4.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Model £5,000 payment for qualifying first-job entrants.
• Central case assumes 300,000 recipients in 2028-29.
• Baseline has no equivalent universal first-job payment.
• Excludes employer-side apprenticeship subsidies.

Affected population

• Affected population is young first-job entrants, not all employees.
• Central recipient count is 300,000; high case 800,000.
• Indirect exposure includes employers hiring young workers.
• Eligibility for students and part-time jobs is unspecified.

Gross impact

• Central cost: 300,000 recipients x £5,000 = £1.5bn.
• No tax offset is scored if payment is tax-free.
• Low case assumes tight targeting; high case broad eligibility.
• Employment additionality is described, not booked as saving.

Fiscal build-up, central case

• First Job Bonus payments: +£1.5bn
• Administration and fraud control: +£0.1bn
• Tax receipts from extra work: -£0.1bn
• Benefit savings from extra work: £0.0bn

Central net impact: +£1.5bn in 2028-29.

Behaviour and pass-through

• Low case assumes tight targeting and low take-up.
• Central case assumes 300,000 claims and limited additionality.
• High case assumes broad eligibility and high take-up.
• Sustained-employment conditions reduce fraud but delay support.
• No macro productivity gain is assumed.

Phasing

• 2026-27: +£0.3bn. Preparation or partial implementation.
• 2027-28: +£1.2bn. Main ramp-up year.
• 2028-29: +£1.5bn. Target-year central estimate.
• 2029-30: +£1.5bn. Continuation at steady-state assumptions.

Main source groups

• Conservative Party, "Conservatives pledge to cut student loan interest" (2026): Used to define the pledge wording, policy scope and implementation scenario being modelled.
• Office for Budget Responsibility, "Economic and fiscal outlook: March 2026" (2026): The OBR forecast sets the macro, borrowing and receipts baseline used for broad fiscal context; prevents treating tax cuts or spending changes as self-financing.
• Department for Education, "Apprenticeships, academic year 2025/26" (2026): Apprenticeship starts reached 226,620 in August-January 2025-26, with under-19s 23.6% of starts; anchors the scale of a 100,000-place expansion.
• Card, Kluve and Weber, "What Works? A Meta Analysis of Active Labor Market Program Evaluations" (Journal of the European Economic Association, 2018): Training and activation programmes vary widely; impacts are often stronger over medium horizons than immediately; relevant where savings rely on moving claimants into sustained work.
• Chetty, "Moral Hazard versus Liquidity and Optimal Unemployment Insurance" (Journal of Political Economy, 2008): Unemployment insurance affects job search through both liquidity support and work incentives; shows welfare cuts can raise search pressure but also remove useful income smoothing.
• Conservative Party, "Our Plan for Britain" (2026): Used to define the pledge wording, policy scope and implementation scenario being modelled.