‘Young people are doing everything right – so why are we shutting them out?’

When we talk about opportunity, we often focus on education, employment and housing. But in my Westminster Hall debate on financial inclusion that took place earlier this year, I argued that there is another barrier holding too many young people back that receives far less attention: financial exclusion.

Millions of young adults are being locked out of opportunity because the system is failing them.

Financial inclusion affects whether a young person can get to work, afford to study, recover from a financial shock or plan confidently for their future. It is clear to me that for too many young people, the financial system is not a ladder to opportunity – it is a locked door.

Facing financial exclusion means being unable to access affordable credit, insurance, savings products or trusted financial guidance. It means being penalised not because you have made bad decisions, but because you have not yet had the opportunity to build a financial track record.

That challenge is particularly acute for young adults. Fair4All Finance has identified nearly two million ‘Unsteady Starters’ in financially vulnerable circumstances across the UK: many face insecure work, rising living costs, limited savings and mounting financial pressures.

What struck me most in preparing for the debate was how often young people are disadvantaged even when they do everything right.

Take Efe, a 20-year-old accounting and finance student. He paid around £1,500 for driving lessons so that he could access work and training commitments, passed his driving test and expected to be added to his mother’s car insurance policy. Instead, he was repeatedly refused. Insurers told him he was too inexperienced or that the family vehicle was unsuitable. After making every sensible decision, he found himself unable to get behind the wheel.

Efe’s story is not unique. Across large parts of the country, particularly in rural and semi-rural communities like those I represent in Hertford and Stortford, driving is the difference between being able to access employment, education and training or being left behind.

There are now around one million young people classified as not in education, employment or training, or NEET. If we are serious about tackling that crisis, we cannot ignore the practical barriers preventing young people from accessing opportunity.

Research suggests that millions of young people are effectively prevented from driving because of the prohibitive costs they face. For many, the real obstacle is not the driving test itself, rather the insurance premiums that place driving beyond reach. That limits access to apprenticeships, jobs, further education and training opportunities.

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This kind of barrier has consequences on the economy more widely. If we want to boost labour market participation and connect young people with opportunity, we need to work with regulators and industry to ensure the market is functioning fairly. Reforming barriers to affordable insurance could play a meaningful role in reducing inactivity.

Many young people also struggle because they have what is known as a ‘thin credit file’. They may pay rent on time. They may keep up with mobile phone bills. They may manage their finances responsibly. Yet because they lack a traditional credit history, they can still find themselves excluded from mainstream financial products.

At the same time, a generation entering adulthood faces unprecedented financial pressures. Higher housing costs, insecure employment and stagnant financial resilience mean many young adults have little capacity to absorb unexpected shocks. Financial stress and poor mental health often go hand in hand, creating a vicious cycle that can become entrenched early in life.

That is why financial inclusion should not be seen as a niche policy area. It should sit alongside Labour’s wider ambitions for opportunity, growth, social mobility and wellbeing. Research has shown that improvements in financial inclusion could deliver £6.4 billion in additional GDP for the UK economy per year.

The Labour government has already developed a national Financial Inclusion Strategy, but there is a particular case for focusing on the critical 16-to-24 transition period, when young people are making major financial decisions for the first time.

If we want a country where hard work is rewarded and opportunity is genuinely open to all, we must ensure that young people are not excluded from the financial system that underpins modern life.

Because the truth is that young people like Efe are doing everything society asks of them. They are working hard and investing in their future. The question is whether our financial system is prepared to do its part too. The answer to that question will shape not only their future, but the country’s as well.

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