Give millennials £10,000 each to ease generation gap, says think tank

8 May 2018
Image

A new report has suggested a raft of new measures to help tackle the growing challenge of intergenerational inequalities.

The proposals, from the Intergenerational Commission, would create a better funded NHS and care system, radically reform the property market and provide young adults with a £10,000 ‘Citizen’s Inheritance’.

The so-called ‘generational contract’ reflects the fact that society needs to be able to look after its older members, but also that in a progressive society each generation should have a better life than the one that preceded it. However, the commission recognises that, in the current economic environment, more people are questioning whether young people today have the same prospects as their parents.

According to the report, millennials today are half as likely to have purchased their own home by the age of 30 than baby boomers, and four times more likely to be renting privately.

The reports also claims millennials’ home and work life is likely to be less secure than previous generations. Twenty-somethings are 25% less likely to have changed jobs than ‘generation x-ers’ and have missed out sizeable pay rises as a result, while the number of families raising children in rented accommodation has trebled to 1.8 million in the past 15 years.

Yet the report also notes that financial pressures on NHS, care and social security budgets means that there is a risk that older generations will not get the treatment and care that they deserve.

In order to ensure that all generations are treated fairly, the commission has made a number of recommendations, including:

  • A £2.3 billion NHS levy to improve its financial position. This would be funded by extending national insurance to those working beyond state pension age and introducing a new, lower rate to the by income of richer pensioners.
  • Pensions would be subject to major reform too with a new flat rate of 28% tax relief applied to all contributions and a cap to the amount of money that can be taken out of a pension tax free.
  • Give social care a cash injection of £2.3 billion, funded by a new property tax that would replace council tax. This would offer the option of deferred payments for asset rich income poor homeowners as well as those on low incomes.  A new method of care funding would require those who can afford to pay for their own care to do so, but with caps to limit overall contributions.
  • Improve the position of first-time buyers and movers by halving stamp duty and introducing a time limited cut to capital gains tax for those selling property to first-time buyers.
  • Make it easier for renters to put down roots by introducing indeterminate tenancy agreements and three-year ‘light touch’ rent stabilisation.
  • Improve working conditions for those on zero-hour contracts, including the right to a regular contract. Shift workers should get better notice of when they will be required to work.
  • A £10,000 citizen’s inheritance for all 25-year-olds to put towards buying a home or starting a business. This would be funded by a new ‘lifetime receipts’ tax, which would replace inheritance tax. The commission hopes this would reduce tax avoidance. The tax would be applied to recipients, rather than the estate and rates would be lower.

Commenting on the proposals, David Willetts, executive chair of the Resolution Foundation which wrote the report, says: “Britain’s contract between generations lies at the heart of society. As families we provide for our children and parents at different times. We expect the state to support these natural instincts – but too often it is tilted in the opposite direction.

“Many people no longer believe that Britain is delivering on its obligations to young and old. But our commission shows how Britain can rise to this challenge.

“From an NHS levy to put healthcare on a firmer financial footing, to building more homes and a Citizen’s Inheritance to boost young people’s career and housing aspirations, our report shows how a new contract between generations can build a better and more unified Britain.”

However, Tom Selby, senior analyst at AJ Bell, questioned some of the proposals. He says: “The Resolution Foundation has thrown the kitchen sink at some of the biggest challenges facing society today. Some of the ideas, such as paying £10,000 to everyone over the age of 25, feel like gimmicks that will never see the light of day. Others would face severe practical challenges if they were to be implemented.

“There would be significant complexities to overcome in establishing a flat-rate of pension tax relief, particularly in relation to defined benefit pensions. Furthermore, any move to cap tax–free cash would need to be fair to those who have already contributed to a pension based on the rules of the existing system. It is also critical any attempts to address intergenerational fairness through the pension system do not inadvertently damage incentives to save in the UK.

“Although this report adds welcome stimulus to the intergenerational fairness debate, many of the ideas aren’t new and face the same barrier as other reforms – namely the reality of politics. Ultimately, it is hard to imagine any would-be Prime Minister campaigning for election on a platform of raising taxes for those over state pension age or hacking back tax-free cash, one of the biggest attractions of saving in a pension.

“We also need to remember that constant uprooting of the system does little good for confidence and trust in pensions. Savers crave stability, so any radical package of reforms should come with a commitment not to move the goal posts once again a few years down the line.”

Comments

In reply to by anonymous_stub (not verified)

When they give up buying the latest mobiles, when they cease buying ever more exotic tattoos, when I see more than a few of them committing to enthusiastically turning up for work at the bottom of the ladder and prepared to try to climb it and when I see them trying to accept and deal with responsability for themselves I will take this more seriously.Having survived three redundancies while UK manufacturing "restructured" itself by relocating overseas one day I hope to retire, although I am not able to yet.

In reply to by anonymous_stub (not verified)

What an absurd idea - where's the money going to come from? The minnellians should put down there mobiles and take 2nd jobs if they want to get a ladder on the housing market. My husband had 3 jobs whilst saving for the deposit for our first home and I had 2. We both worked full time through the week; he then worked in a garage on Saturdays and delivered the newspapers to the newsagents on a Sunday morning with a 4am start (7day week). I worked Mon-Fri and on a Sunday I worked in a local bakery (6day week). No-on gave us a hand-out: we just had to get on and do it ourselves. We never got a penny in family allowance as we only had one child... Shape up you youngsters, you're supposed to be the bright ones, but it's all 'pity me'. As dear Old Maggie used to say... No, NO, NOOO!

In reply to by anonymous_stub (not verified)

The problem of renting into retirement can be partially resolved by building cheaper housing. The high cost of land can be reduced by not allowing corporate bodies to hold land until prices increase. Leasehold with a peppercorn rent (never increased and never owned by an individual) would reduce the actual cost of a completed house.Why can’t the bonus system be taxed out of exsistancs? How many firm/corporations have a deficit in their pension schemes yet continue to pay well over the top in bonuses and are they justified!!! Employment contracts require review. How can it be justifified to sack an incompetent person then give them a payoff and reemploy them all at the same time? The NHS appears to consider this is a good deal yet are always requiring more money. Everyone who is employed gets paid. Make the employer pay the tax not allow pay into tax havens. When I started work the top rate of tax was over 90%! Germany had a system of only allowing 50% of tax to be taken and that produced an incentive to move up the ladder.Cut out the I need this - what about saving up for it!YoursPeter May

In reply to by anonymous_stub (not verified)

Give them £10000 at the point of contract exchange on their first property, perhaps.

In reply to by anonymous_stub (not verified)

well reading the comments so far here i totally agree with all, we have a generation of work shy wingers.

In reply to by anonymous_stub (not verified)

I do not agree with this £10000 should not be given I have 3 sons all of them own there homes and to get there they have saved and went without such things as drinks cigs and up to date mobile phones If you look at them being given £10000 I wonder how much will b spent on up to date mobile phones name brand trainers clothes drink cigs etc As for older people paying more tax we have worked all our lives to better ourself so why should we carry on paying

In reply to by anonymous_stub (not verified)

I have grandchildren who have worked and saved, and are buying their own home, if they can be disciplined enough to work and save, than so can others. Many, not all seem to think that they are owed handouts,

In reply to by anonymous_stub (not verified)

Why? I started on £320 a year and part of that went into my pension pot. We accepted that we would not get anything without having saved for it. Mortgages were limited to 3.5 times your salary and, sometimes, your spouses salary was taken into account. Interest rates were higher and we faced 17% rates at times. Sorry, it is time people stoppped saying we want it now. Our education system is far too fond of telling the young it is easy, it is not. Loans must be repaid. Oh, and no like most of my generation I did not get free university education. It ws a privilege to go to university and places were not that common.What is broken is the financial system which hands out loans without any thought. Inheritance tax and Council tax urgently need reform certainly.

In reply to by anonymous_stub (not verified)

Giving youngsters 10k isn’t going to solve the housing problem. Housing problem should be solved at source, not making problem worse by giving them cash. Most will just buy a car or holiday anyway. Why don’t they learn value of money by earning it and saving, like the rest of us did.

In reply to by anonymous_stub (not verified)

Did someone move 'April Fools Day' ?There's no substance behind many of these ideas, just aspirational wants for a section of society who feel they are entitled to more than they are prepared to work for and because they think they deserve by right that which they envy others for having.

In reply to by anonymous_stub (not verified)

dont talk nonsense .i thought this country was skint ? i wont be contributing a penny towards this

In reply to by Nick "63" (not verified)

spot on mate your absolutely right there

Add new comment