A think tank has suggested a Citizen’s Inheritance payment of £10,000 for all 25 year olds, to help them buy a property and ease generational inequality.
A new generational contract is needed to tackle the big challenges Britain faces for young and old, covering a better funded NHS and care system, a radically reformed housing market, and a new citizen’s inheritance to boost the prospects of younger generations, according to the Intergenerational Commission published today.
Over the last two years and via 22 reports, the Intergenerational Commission – chaired by Lord Willetts and including TUC General Secretary Frances O’Grady and CBI Director-General Carolyn Fairbairn – has investigated the stresses and strains on Britain’s contract between generations, and what can be done to renew it.
The Commission warns that the public are increasingly questioning whether Britain is offering young people the prospects previous generations have enjoyed. This is not just confined to younger generations either, with healthcare now the most pressing area of worry for British adults.
The Commission finds that much of this pessimism is borne out by the evidence it has uncovered:
- Income and wealth progress for young adults has stalled;
- New analysis shows that the disposable incomes of millennials at age 30 are no higher than the generation before them (generation X) at that age – despite the economy growing by 14 per cent over the last 15 years. In contrast, the incomes of baby boomers at age 30 were more than one third higher than the generation before them;
- Millennials are half as likely as the baby boomers were to own their own home by 30, and are four times as likely to rent in the private sector;
- Millennials are being held back because they are bearing far more risk at work and at home;
- Millennials in their 20s are more likely to be in insecure work, are 25 per cent less likely to have moved jobs than generation X were at the same age, and are missing out on big pay rises as a result;
- The number of families bringing up children in the private rented sector has trebled in the last 15 years, to 1.8 million.
The Commission says that the state now has to rise to this challenge, and sets out a radical blueprint of over 35 recommendations to build a new generational contract. Proposed shakeups to the housing market include:
- Halving stamp duty for first-time buyers and movers, but not those owning multiple properties (at a cost of £2.7bn), and offering a time limited capital gains tax cut for selling properties onto first-time buyers. This would put first-time buyers in a far stronger position in the housing market.
- Introducing indeterminate tenancies and three-year light touch rent stabilisation, so renters can put down roots.
- A restricted use ‘Citizen’s Inheritance’ payment of £10,000 for all 25 year olds would provide up to half of a deposit for a typical property outside London, or vital capital to start a new business, demonstrating that Britain has something to offer young people whatever their background. This would be funded by replacing inheritance tax with a new lifetime receipts tax that tackles widespread avoidance, levies the tax on recipients not estates and entails lower tax rates for all.
David Willetts, Executive Chair of the Resolution Foundation, said, “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.”
Frances O’Grady, TUC General Secretary added, “Today’s young workers shoulder huge risks. They’re bearing the brunt of the rise in insecure work. And many have little prospect of a decent home or a decent pension.
“To fix these problems we need an economy that works for all people – millennials and baby boomers alike. That means building more houses, giving everyone a decent retirement, and crucially stronger unions and rights at work.”