Sir Keir Starmer should accept an uncapped youth mobility scheme as part of Labour’s post-Brexit “reset” deal with the EU, the bloc has demanded. Officials hope to sign an agreement next year that will allow an unrestricted number of young Europeans to come and live and work in Britain in the next few years.

As part of its demand, Brussels wants its students to be given “equal treatment” with their British peers, including being exempted from paying international university fees – often double those paid by domestic students – and a waiver of the NHS surcharge fee, which covers the potential cost of medical treatments, which costs £776 per year on other youth mobility schemes. Both of these are red-line issues for the UK, which relies on higher international fees to subsidise universities and on the surcharge to fund the NHS. The move has divided ministers, with the Treasury stating that it wants to agree on an “ambitious” scheme to boost economic growth, while the Home Office has expressed concerns about its impact on net migration.

Currently, the UK has several youth mobility schemes in place with other countries around the world, including Canada, Australia, New Zealand, Canada and South Korea. Under these schemes, 18- to 35-year-olds can live and work in the UK for up to two years, provided they can demonstrate they have £2,530 in savings and pay the NHS surcharge.

The number of people arriving in the UK under youth mobility schemes is rigorously controlled, with Australia having the highest annual limit of 35,000 visas.

The announcement comes after EU and UK negotiators – dubbed the “working party on the United Kingdom” – met in the Belgian capital on Friday (December 5) to thrash out the final shape of the Youth Experience Scheme (YES), to be introduced by 2027. According to draft EU papers seen by the Financial Times, the European Commission has argued that numerical quotas run counter to the principle of reciprocity and would be unworkable across its 27 member states.

Home Secretary Yvette Cooper, however, has said any programme agreed must be “robustly managed” and subject to an annual cap. Some British officials have argued that European numbers will be much higher because the EU has a much larger population. More than 70 million young people would be eligible to apply, making an uncapped scheme unbalanced.

Despite ruling out a cap or quotas, European diplomatic sources have envisioned an emergency clause in case of a sudden surge in numbers, according to The Times.

“We do not see the need for setting a quota or cap. What is wrong with our young Europeans? We do not have a problem with young Brits,” one source said. “It will not be a free-for-all as there will be conditions as well as the age and time of stay limits.”

A government spokesperson said: “We are working together with the EU to create a balanced youth experience scheme which will create new opportunities for young people to live, work, study and travel,” adding that both sides had agreed last May that “any final scheme must be time-limited and capped.

“We will not give a running commentary on ongoing talks,” it added.

However, the text of the agreement did not discuss a cap, instead stating that the deal should ensure that “the overall number of participants is acceptable to both sides”.

The two sides are also seeking to agree on a plan for Britain to rejoin the EU’s Erasmus exchange scheme, which would enable British students to spend a year studying at universities in continental Europe.

It was abandoned after Brexit by the Conservative Government, which concluded that it was not good value for money.