Labour leadership election: Owen Smith pledges to scrap tuition fees

'[Young people] have been given a rotten deal and we must turn this around'

Under Mr Smith's proposals graduates would pay a top up tax of between 1 and 2 per cent (Ben Birchall/PA )

Owen Smith has called for university tuition fees to be abolished and replaced with a graduate tax.

The Labour leadership candidate also wants to dramatically reform apprenticeships, promising a guarantee of living-wage paying internships for 18-year-olds.

Under his proposals, graduates would pay a top up tax of between 1 and 2 per cent, a system that, in real terms, would be very similar to the current system of salary linked fee repayment on graduation.

Mr Smith speaking at an event at Nottingham University, told students: "Young people have been let down time and time again by this Government. Our failure to give the next generation the best start in life possible is the great scandal of our time.

"The promise that each generation stood a chance of doing better than the generation before has been shattered. Young people today are more likely to be unemployed, less likely to have an apprenticeship, more indebted and less likely to own their own home. They have been given a rotten deal and we must turn this around.

"If I am elected Labour leader, I'll offer young people a better deal — scrapping tuition fees, guaranteeing apprenticeships paid at the living wage and giving them a helping hand on to the property ladder. This is the start in life every young person deserves."

Under Mr Smith's plan, graduates would pay the additional tax on income above £15,000 for a specified period — possibly around 25 years after leaving university. The policy could also include a higher rate above 1 to 2 per cent for graduates in the top tax bracket.

The guaranteed apprenticeship would be available to people with level three qualifications — the equivalent of two A-level passes — and would last for a minimum of two years. The schemes would include at least one day a week of off-the-job learning as well as the on-the-job training. Doubling the apprenticeship levy paid by large firms from 0.5 per cent to 1 per cent would fund the policy.

Paid traineeships would be offered to students who do not have the grades to access Mr Smith's new apprenticeship schemes and would effectively replace the current lower-level apprenticeships.

Mr Smith is also launching a new home building scheme specifically linked to young people. It would involve building 50,000 "first homes" a year, available for rent to under-30s at 80 per cent of the local rate, with the remaining 20 per cent going into a savings scheme for a deposit to buy the home outright.

At the end of the tenancy of between five to eight years, the tenant could buy the property, with the savings covering the deposit for a mortgage.