Millennials should be given £10,000 on turning 25 in order to deal with the daunting economic pressures affecting young people in Britain and reduce the intergenerational gap. That’s the recommendation that’s been made by a major thinktank.
Resolution Foundation is an influential organisation that shapes the debate on issues concerning low to middle-income groups such as the minimum wage, the labour market, social mobility, tax and welfare reform and childcare policies.
Much like the Marvel movie franchise, Resolution Foundation has assembled a ragtag team of high calibre individuals – each with their own speciality – to come together and tackle a seemingly insurmountable task; solving intergenerational inequality.
The Intergenerational Commission includes business leaders, academics and policymakers. People like the Director General of the Confederation of British Industry, the Chief Executive of market research organisation Ipsos MORI, and academic researchers from universities across the country.
After two years, their final report – slightly less action-packed than the methods of resolution deployed by their Marvel counterparts – suggests various courses of action around jobs, housing, pensions and support from the state. Perhaps their most headline-grabbing proposal is the introduction of a ‘citizen’s inheritance’ – an “asset endowment” of £10,000 to all young people, who joined the labour market either during or since the economic crisis, to support skills, entrepreneurship, housing and pension saving.
Too much too young?
The Executive Chair of Resolution Foundation, former Conservative Party MP and life peer David Willetts, said in the report: “We have shown that generational progress has indeed stalled. Moreover, we face significant challenges in providing the health and care that older generations expect.
“This report brings our findings together and the evidence is compelling. No longer can anyone deny the challenge facing us as a country in maintaining a fair deal between the generations.
“If the evidence is so powerful then that means there is an obligation to act.”
He said it was recognised that some of their “carefully developed but ambitious proposals” would not likely be embraced straight away and would require lively debate in the months and years ahead.
But is giving young people across the country £10,000 each really a good idea? And would it be an effective way to reduce intergenerational inequality and resentment?
The current outlook for millennials – those born roughly between 1981 and 2000 – is pretty bleak. It has been reported that the disposable income of 30-year-olds is the same today as it was for the so-called ‘Generation X’ – those born between 1966 and 1980 – despite the economy growing 14% in the last 15 years.
Millennials are also more likely to be in insecure work than their predecessors. Furthermore, the Intergenerational Commission found that millennials were four times as likely to rent in the private sector than the baby boomers – those born between 1946 and 1965 – and are half as likely to own their own home by the age of 30.
So any unrecompensed financial support from the government would therefore surely be gratefully received by millennials downtrodden by the economic pressures present in seemingly all parts of life. Restrictions on the handout would mean the money could not be deployed in a mammoth shopping spree. It would have to go towards starting a business, stockpiling a pension fund, or tackling the paradoxical societal pressures of owning a home and the financial difficulty in doing so.
Magic money tree?
Where would the money come from? The £10,000 lump sum would be paid for by changes to inheritance tax that would swap a current 40% levy on inherited gifts above £1m for a 20% duty on all inheritance up to £500,000 and 30% on anything above that.
If that policy was currently enforced, it would mean dishing out around £60bn to the six million 18-24 year-olds who will be turning 25 over the next seven years.
It would be an expensive venture. Would it really help? It was reported by the IFS last year that average student debts had risen to over £50,000, with the poorest students owing up to £57,000 to repay the higher number of loans required to support them through university. With interest rates especially high for student loans, many students are worried they will never be able to fully pay them back.
And when added to the average £33,000 needed by first-time buyers to take that first step on the property ladder, it seems the government’s £10,000 worth of pocket money would barely make a dent in the outgoing costs of average millennials.
What’s more, millennials’ bad reputation of laziness, entitlement and improvidence – culminating in a resentment of the accumulated wealth of the generations before them – plays against them when it comes to the idea of ‘handouts’.
While it is clear millennials do need support at a time where they find themselves swamped by seemingly impregnable debt and huge costs, perhaps a defter approach is required to tackle the origins of intergenerational inequality that have made ‘citizen’s inheritance’ necessary in the first place.