Smith pledges to replace tuition fees with a graduate tax

Mr Smith will call for the current university funding system, which sees students charged up to £9,000-a-year, to be abolished and replaced with a one or two per cent graduate tax.

He will also promise to guarantee a high-level apprenticeship paid at the living wage to every 18-year-old who gets the grades.

At an event at Nottingham University, he will say: “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.”

As part of his package, Mr Smith will also promise to build 50,000 “first homes” a year, earmarked for the under-30s, which would be rented to first-time buyers at 80 per cent of the local market rent with the remaining 20 per cent going into a savings pot.

At the end of the tenancy, which would last between five and eight years, the first-time buyer would be able to buy the property outright by using the savings as a deposit on the mortgage.

He will also pledge new, paid traineeships to help further education students get the skills needed to find a job after their course.

Under Mr Smith’s plan to abolish tuition fees, graduates would pay an additional one to two per cent 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 for graduates in the top tax bracket.

The guaranteed apprenticeship would be available to people with level three qualifications - the equivalent to two A-level passes - and would last for a minimum of two years paid at the living wage.

The schemes would include at least one day a week of off-the-job learning as well as the on-the-job training. The policy would be funded by doubling the apprenticeship levy paid by large firms from 0.5 per cent to one per cent.

The 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.

Under the current fee system students fees are paid for up front by a Government loan which they start to pay back once they reach a certain income threshold.