LONDON — Britain’s graduates helped Keir Starmer’s Labour Party win power. Now they’re on the warpath. Soaring interest rates have left a cohort of voters in their 20s and early 30s — the first to be hit by an early 2010s overhaul of university funding — with spiraling student loan debts, and frustrated at sizable monthly repayments not touching the sides of what they owe. Chancellor Rachel Reeves delivers a tricky economic update Tuesday under pressure to act, and with opposition politicians — aware of bubbling rage among young professionals seeing their pay vanish — jumping on the bandwagon to offer friendlier options. Labour MPs are nervous too.  They are facing a real electoral threat from the left-wing populist Green Party, which has backed the complete abolition of university of tuition fees, and is open to student debt forgiveness. This generation of graduates is “the bedrock of Labour support,” Labour MP Chris Curtis, a former pollster and graduate on the controversial loan plan, said. He chairs the Labour Growth Group, which is campaigning on the issue. “There’s a worry about losing them” if financial pressures remain, he said. With Starmer’s place as prime minister under pressure, the row could also become a talking point in a future leadership contest. Wes Streeting, Starmer’s ambitious health secretary, said the “clearly rumbling” debate is “worth having.” In a sign of growing recognition of the problem, Starmer last week told MPs he would “look at ways” to make the student loans system in England “fairer.” Labour’s landslide majority in 2024 was built on support from graduates. A YouGov mega poll conducted after the 2024 general election found 42 percent of people with a degree or higher qualification backed Labour — compared to 18 percent for the rival Tories.  “It’s a ticking time bomb waiting to happen,” said Toby Whelton, a senior researcher at the Intergenerational Foundation, added. Graduates have been picked on “as the path of the least political resistance” by politicians, he argued. LEARN THE HARD WAY  This specific student loan problem dates back to 2012, when university tuition fees — introduced just a few years prior — soared to £9,000-a-year under the Conservative-Liberal Democrat coalition. The move was aimed at compensating for huge cuts to state funding for academic institutions. Maintenance grants for the poorest students were replaced with repayable loans in 2016.  Wes Streeting, Starmer’s ambitious health secretary, said the “clearly rumbling” debate is “worth having.” | Ian Forsyth/Getty Images Under the terms of these loans — known as “plan two,” and issued between 2012 and 2023 — students agreed to repay 9 percent of their salary over a threshold set by the Treasury. The terms of the deal last 30 years before any remaining arrears are wiped. (A different plan has been put in place since 2023.) With the interest rate on the loan tied to the retail price index (RPI) —seen as a poor measure of inflation by some analysts— graduate debts have been climbing at a time when wage growth has slowed and living costs are shooting up. Reeves’ decision last fall to keep the repayment threshold frozen at £29,385 for three years until 2030 was the final straw, and appears to have mobilized influential campaigners behind the plight of graduates. The Times newspaper launched an End the Graduate Rip-Off campaign, and the popular consumer finance journalist Martin Lewis has made it a cause, questioning the morality of the freeze. “It’s a complete mess,” said National Union of Students (NUS) Vice President for Higher Education Alex Stanley, whose members recently held a protest outside parliament dressed as sharks. “The fault initially may not be theirs, but the responsibility is absolutely now theirs,” he said of the Labour government, arguing the backlash poses an “opportunity as much as it is a threat” to Starmer.  “We’ve got a system that is costing students so much money that it risks putting off prospective students,” he warned.  “This is a very real burden on young people when it comes to the cost of living,” says Curtis. The repayments are a “deep cause of the economic insecurity that many younger graduates are facing” as they try buying their first home, he adds. Curtis supports a graduate tax, where university leavers would pay extra tax when they start earning with lower repayments, but in the near-term at least wants ministers to increase the threshold for loan repayments. ALTERNATIVE GRAD SCHEME Labour’s opponents on the right and left of British politics spy an opportunity. Green leader Zack Polanski — whose party won a seismic by-election in Greater Manchester last Thursday — said the system is “deeply unjust,” and treats “the costs of education as a private debt rather than a public investment.” Reeves’ decision last fall to keep the repayment threshold frozen at £29,385 for three years until 2030 was the final straw. | Jack Taylor/Getty Images He backs abolishing tuition fees and reversing repayment freezes, claiming “young people have been let down time and time again by governments who have chased the votes of older voters.”  Polanski told POLITICO in a statement he is open to debt forgiveness in the longer term, but admits “it’s a really complex issue, and we’d need to look carefully at how it would be funded.” Labour’s Curtis is skeptical the rival Greens have the answer, however. “People in this country aren’t idiots,” he said. “When these populist parties try to make arguments that one side of the balance sheet doesn’t have to add up to the other, voters … will realize that promises are being made that can’t be kept.”  A U-turn would not be cost-free for taxpayers. Last month, the Institute for Fiscal Studies calculated that increasing the repayment threshold in line with average earnings growth each year (as the centrist Lib Dems have proposed) would cost taxpayers around £3 billion just for graduates who started courses in 2022/23. Totally writing off existing student debts would cost tens of billions of pounds. Starmer has moved away from former Labour Prime Minister Tony Blair’s ambition for 50 percent of young people to attend university, pivoting to a target of two-thirds doing apprenticeships, higher training or going to university.  Labour will also be well aware of the problems former U.S. President Joe Biden encountered in Republican states and the Supreme Court over his student loan relief program, which would have canceled hundreds of billions of dollars in student loans. AGE OLD PROBLEM  The opposition Conservatives are backing changes too. “It’s an infuriating situation,” Tory leader Kemi Badenoch wrote in the Sunday Telegraph. “You’re paying money back, but every time you look at the outstanding amount, it’s rising. It just isn’t fair.”  The Tories have pledged to scrap additional interest applied to some student loans, and fund it by scrapping “dead end university courses.”   Tory MP David Reed, who is also in the graduate cohort hit by the student loan trap, argues women are being particularly hard hit when they temporarily leave the workplace. They are unable to make repayments, but the high interest rates mean their loan balance continues to rise. “The rules are technically the same for everyone,” Reed said. “But because women are still far more likely to take time out to raise children, the impact falls disproportionately on them.” “It’s an infuriating situation,” Tory leader Kemi Badenoch wrote in the Sunday Telegraph. “You’re paying money back, but every time you look at the outstanding amount, it’s rising. It just isn’t fair.” | Jeff J. Mitchell/Getty Images Nigel Farage’s Reform UK will address the issue at a press conference Wednesday. The party’s Treasury spokesperson Robert Jenrick has previously said interest rates are far too high. A U.K. government spokesperson said: “The student finance system protects lower-earning graduates, with repayments determined by incomes and outstanding loans and interest being cancelled at the end of repayment terms.” The spokeperson pointed out ministers are reintroducing targeted maintenance grants. Reeves argues government efforts to lower inflation will lower Bank of England interest rates, helping graduates. But with a powerful constituency calling for action, that position may struggle to hold. It is unacceptable for governments to “milk young people dry” to fund older generations’ benefits, Whelton, the Intergenerational Foundation researcher, argues. “As graduates on plan two systems get older [and] go into positions of influence and power, we will see more of a backlash,” he adds. “They will be [an] increasing voting constituency that can sway elections.”

U.K. Chancellor Rachel Reeves’ bid to revive the London Stock Exchange via a mammoth advertising campaign could cost the City of London £120 million, according to confidential documents seen by POLITICO. Some smaller financial services companies are already pushing back at the price and considering pulling out of the Treasury-initiated plan to get British savers to put their cash savings into stocks and shares. According to confidential documents prepared by the Investment Association on the campaign’s funding structure and direction ahead of an initial meeting on Monday, marketing services agency WPP will propose three scenarios for the campaign which would cost between £15 million and £40 million per year. These costs include agency fees, production fees, including creating a “hero” film to promote savers owning a slice of British companies, social media content, the purchase of TV slots and digital ads. There are also variable costs such as the number of delivery channels used and how many “bursts” of advertisement activity the group decides to do throughout the year to make savers aware of the benefits of retail investing, the documents show.  These core campaign costs will be funded entirely by firms that are steering group members which will have to sign a three-year commitment, the IA wrote in the documents. The group — which is led by the IA and chaired by the CEO of Barclays Private Bank and Wealth Management, Sasha Wiggins — is made up of a mix of smaller and larger firms and banks, including NatWest, Barclays, HSBC, Lloyds Banking Group, AJ Bell, Hargreaves Lansdown, Vanguard, Robinhood UK, Schroders and the London Stock Exchange.  Two directors at smaller and medium-sized investment houses, granted anonymity to speak freely, voiced concerns about the “proportionality” of the costs, telling POLITICO they have yet to decide whether to take part as a result.  The IA, Treasury and WPP have been contacted for comment. Despite pushing for the campaign, the Treasury will not be involved in its funding. Reeves announced in July the “hearts and minds” campaign, inspired by the 1986 “Tell Sid” ad drive that was launched after the privatization of British Gas when Margaret Thatcher was prime minister. The plan was first reported by POLITICO. The Financial Conduct Authority and Money and Pensions Service will play an advisory role in the campaign, and the Treasury will play an observer role, with new City Minister Lucy Rigby invited to speak briefly at the group’s first meeting on Monday, according to the campaign documents.   U.K. Chancellor Rachel Reeves’ bid to revive the London Stock Exchange via a mammoth advertising campaign could cost the City of London £120 million. | Carl Court/Getty Images Reeves — battling uninspiring U.K. economic performance — told a City of London audience in July that “for too long, we have presented investment in too negative a light, quick to warn people of the risks, without giving proper weight to the benefits.” Her plan came as the LSE — once the pride of Britain’s powerhouse City of London financial district — continues to suffer from a decline in listings and low trading volumes in recent years, with high-profile companies instead choosing to float in the U.S. While cash-rich savers may be tempted by future advertisements and government figures, which have told consumers their money could earn £9,000 more in 20 years’ time based on a £2,000 investment in stocks and shares rather than cash, they may also be put off by recent warnings that the stock market appears to be in a bubble state. Analysts and economists warn in particular of stocks of companies in the technology and artificial intelligence sphere, with valuations that appear similar to the 2000 dotcom crash. SIZE-BASED FEES The IA is proposing two scenarios to charge firms based on size, with those with under 1,000 staff being asked to pay £250,000 or £500,000 as a first-year contribution, and firms with staff numbers above 10,000 either £1 million or £2 million.  Medium-sized firms with between 1,001 and 9,999 staff members could pay between £500,000 and £1 million. Firms are also being asked to stump up thousands to cover membership and legal costs.  However, the total costs may change depending on what firms agree to pay and what agency is chosen ahead of the multi-year campaign starting next April, with the IA cautioning in the documents that the “diversity of channels and the frequency of activities across these platforms will significantly influence the overall cost of the campaign.”  One senior executive, who is part of the 22-member steering group, said that the total figure is likely to be less than £40 million a year ahead of a final decision on the campaign costs and funding model on Monday. Although WPP is the only agency presenting on Monday, the group has opted for an open competitive pitch, POLITICO was told by an individual with knowledge of the process, so other agencies will present in the coming months unless WPP’s current pitch is approved by the steering group.  The group will meet no less than four times annually and will act as the principal decision-making body for the campaign, the documents show. Discussions will focus on “laying the groundwork for sustained behavioural change” and “normalise investing as a routine part of financial planning.”  “This is a long-term effort, spanning multiple years and relying on consistent messaging, trust-building, and engagement across various segments of the population,” the IA wrote.  “This campaign will not be a commercial initiative, it is intended as an educational campaign to improve awareness and encourage more people in the UK to invest.”