VIDEO: A ‘citizen’s inheritance’ would help redress the balance between Baby Boomers and Generation Rent says the Resolution Foundation
Low employment levels and sky-high deposits mean that many millennials will struggle to ever own their own home and should be given a lump sum of £10,000 to help them along, an expert think tank has found.
The report has concluded that young people who have struggled to enter the workplace since the financial crisis of 2007 are at a disadvantage compared with older generations who benefitted from a post-war wealth boom and drastic measures are needed to even things out.
The proposal follows the two-year Intergeneration Commission – a study by the Resolution Foundation – that brought together leading figures across the worlds of business, academia and policy-making to explore questions of fairness between the generations.
Presenting its findings, the Resolution Foundation says the government should introduce a ‘citizen’s inheritance’ – an “asset endowment to all young adults who entered the labour market during the financial crisis and since – to support skills, entrepreneurship, housing and pension saving.”
Data quoted in this video states that the time it takes to save for the average house deposit has risen from three years in 1995 to 22 years in 2015. Other data produced in a study by Propillo.com said that the average cost of living has priced recent graduates out of 60% of England due to their relatively low salaries.
The 229-page report suggests that from 2030 a citizen’s inheritance of £10,000 should be made available to all British nationals or people born in Britain over the age of 25.
The restricted-use grants would cost £7 billion per year, a cost that could be funded by making amendments to current Inheritance Tax, as well as putting an end to schemes such as Help to Buy or Lifetime ISAs.
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In addition, the report goes on to recommend that the grants be phased in, with 34 and 35-year-olds receiving £1,000 in 2020, with the value increasing each year thereafter and gradually paid to younger groups until 2030 when it will only be paid to 25-year-olds.
The money could be used on deposits for home ownership or rental, to fund education and training or pay off student debt, to invest in new businesses, or go towards a pension fund.
George Bangham, researcher at the Resolution Foundation, says: “Asset ownership is becoming concentrated within older generations – on average only those born before 1960 have benefited from Britain’s wealth boom to the extent that they have been able to improve on the asset accumulation of their predecessors.”
However, Kate Andrews, news editor at the Institute of Economic Affairs, says the redistribution of wealth based solely on age doesn’t take into consideration personal circumstances and ignores the plight of those most in need.
She says, “The UK is facing a major intergenerational crisis, and the Resolution Foundation’s commission has highlighted an array of areas, including housing and healthcare, where young people are getting a raw deal. But a one-off cash transfer would only address the symptoms of these deep-rooted problems, which require an overhaul of state restrictions and structures.”
Other recommendations from the Intergenerational Commission include limiting future Help to Buy loans to those with an annual household income of less than £60,000 a year and reducing stamp duty but slapping a higher rate of tax on those buying additional properties.
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