Fix the generation gap ‘by giving £10k to all 25-year-olds’
EVERY Briton should be handed £10,000 at the age of 25, a think-tank proposes today.
It says inheritance tax should be reformed to raise more cash, which could then be redistributed.
The Resolution Foundation’s Intergenerational Commission claims that the money would help younger adults get on the property ladder, pay for education, set up businesses and invest in pensions.
A two-year study says the payment, which it has dubbed a ‘citizen’s inheritance’, would fix the ‘broken’ intergenerational contract between younger people and baby-boomers.
The think-tank claims the redistribution of wealth would reduce resentment towards baby-boomers who have bought their own homes and saved for larger pensions.
The plans would see inheritance tax abolished and replaced with a lifetime limit for recipients of £125,000 before levies kick in. Anything from £125,000 to £500,000 would be taxed at 20 per cent, with a rate of 30 per cent on anything higher than that.
The current rate is 40 per cent, but this only kicks in when inheritance passes the threshold of £325,000.
The commission says its proposals would raise an extra £5billion, initially by curbing tax avoidance.
The think-tank also wants those who carry on working after retirement age to pay National Insurance in order to put £2.3billion towards the NHS.
Executive chairman Lord Willetts, a former Conservative minister, admitted the recommendations in the report were ‘not easy or comfortable’ but said many no longer believe Britain’s young and old are being treated fairly.
He 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.
‘From an NHS levy to put healthcare on a firmer financial footing, to ... 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.’
The commission, which was chaired by Lord Willetts, TUC general secretary Frances O’Grady, and CBI directorgeneral Carolyn Fairbairn, comes after reports that Health Secretary Jeremy Hunt was considering proposals similar to the National Insurance recommendation – a measure that would be ‘deeply unfair’, according to a Tory former pensions minister.
The report also calls for council tax to be replaced with a property tax that would include surcharges on second and empty homes, while stamp duty would be halved to encourage moving.
Miss Fairbairn said: ‘The idea that each generation should have a better life than the previous one is central to the pursuit of economic growth. The fact that it has broken down for young people should therefore concern us all.
‘We need individuals, businesses and the State to pull together to address this challenge, and lift the living standards of young and future generations.’
The commission’s other recommendations include improving employment security, a £1billion ‘better jobs deal’ to help struggling young people get into work, and strengthening rights for renters. But former pensions minister Baroness Altmann warned the National Insurance proposal would be as unpopular with voters as the abandoned election plans for a socalled dementia tax.
She said: ‘Only about one in ten pensioners continues working past state pension age and are not all well-off.
‘It is wrong to see them as an answer to the care funding shortfall. Why should they be targeted to pay for other people’s care while non-working pensioners, many of whom have generous, often taxpayer-funded, pensions would pay nothing?’
Last month another think-tank, the Institute for Public Policy Research, also proposed handing 25-year- olds £10,000 each. It said the handout could be funded through tax reforms and the sell-off of Government assets.