'Give every 25-year-old £10,000' to reduce wealth inequality

Kyle Caldwell
3 April 2018

A Citizens Wealth Fund could help bridge the wealth inequality gap with young people should be handed a minimum inheritance of £10,000 in order to reduce wealth inequality, a think tank has suggested,

According to the Institute for Public Policy Research (IPPR), creation of a ‘Citizens’ Wealth Fund’ will “spread the ownership of capital more broadly across society”. The IPPR suggests that such a fund could be capitalised through various means, including selling off the government’s stake in Royal Bank of Scotland and reforming certain ‘wealth taxes’ to broaden the current tax take, including inheritance tax.

The report notes that the uneven distribution of capital ownership is a powerful driver of inequality. It adds the wealthiest 10% of households own 44% of the nation’s wealth, while the least wealthy half of households own just 9%.

A declining labour share of national income, together with unequal capital ownership, mean wealth inequality in the UK has risen and is set to rise further,’ says the IPPR.

The report adds: “A Citizens’ Wealth Fund, a type of sovereign wealth fund owned by and run in the interests of citizens, would help address this problem by transforming a part of national private and corporate wealth into shared net public wealth, and using the income to ensure everyone benefits from rising returns to capital.’

The IPPR adds the fund would target a 4% annual return by investing in shares, land and other assets, both domestically and internationally. The think tank adds that, with a declining labour share of national income, the UK has a challenge on its hands to reduce the wealth inequality gap, which exists between the generations. The millennial generation, for example, those currently aged between 17 and 35, are expected to receive retirement savings that are up to a third lower than the pensions enjoyed by current retirees.

Huge increases in house prices have played a significant part in opening up a wide generation divide. According to analysis earlier this year by the Resolution Foundation, another think tank, millennials are only half as likely to own their home at 30 as baby boomers were. In addition, millennials have accumulated less wealth (property, financial assets and private pensions) than their predecessors had at the same age.

It is not all bad news, with Resolution Foundation finding that millennials are in line to receive the biggest ‘inheritance boom’ of any post-war generation.  For many, though, it will come as too little too late because a typical millennial will not receive an inheritance until they reach the age of 61

This article first appeared on our sister website Money Observer.


In reply to by anonymous_stub (not verified)

Interesting idea, but surely education is critical. As Contax comments, if the money is just squandered (extremely easily done with poor decisions), then this well-intentioned initiative would amount to very little. Surely, better financial education is critical in solving many of the nations' financial problems. Explaining the way savings work to younger members of society is not difficult.

In reply to by anonymous_stub (not verified)

as long as it is back dated to 1960 when i started work earning £4. 50p

In reply to by anonymous_stub (not verified)

Many who received it would squander it instantly then come demanding more, why don't they learn earn their own money by hard work like we had to, that way it makes you think twice before wasting it. Too many entitled youngsters today that don't want to do a proper days work and get their hands dirty.

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