The research
and policy organisation, the Resolution Foundation, says these radical moves
are needed to better fund the NHS and maintain social cohesion.
Its chairman,
Lord Willetts, said the contract between young and old had "broken
down".
Without
action, young people would become "increasingly angry", he said.
The
Resolution Foundation says its goal is to improve outcomes for people on low
and modest incomes.
Recommendations
include:
Give £10,000
to all young adults at the age of 25, funded by a new "lifetime receipts
tax" that would replace inheritance tax
Scrap council
tax and replace it with a new property tax targeting wealthier homeowners
Use the
proceeds from property tax reform to halve stamp duty for first-time buyers and
increase public funding for social care
Make earnings
of those above state pension age subject to National Insurance contributions
What can you
get for £10,000?
Lord
Willetts, the former universities minister under David Cameron, argued that
young people were being locked out of the housing market and older people were
worried about the demands of healthcare.
Lord Willetts
was speaking as the Resolution Foundation, which he heads, published a report
calling for tax changes to help heal the growing economic tensions between the
generations.
Windfall for
young
The
foundation's Intergenerational Commission report calls for an NHS
"levy" of £2.3bn paid for by increased national insurance
contributions by those over the age of 65.
It says that
all young people should receive a £10,000 windfall at the age of 25 to help pay
for a deposit on a home, start a business or improve their education or skills.
The report
proposes that this money be raised by abolishing inheritance tax and replacing
it with a lifetime limit for recipients of £125,000 before taxes kick in.
The
commission estimates this would raise £5bn.
"We've
got a very serious problem of ensuring there's a fair deal across the
generations," Lord Willetts told me.
"Older
people are worried about a properly funded healthcare system, people in middle
age still haven't been able to buy their own home, and for younger people their
pay is no better than it was 10 or 15 years ago.
"So the
different generations in the UK all face different pressures.
"But we
can tackle them, we can do something about it."The report calls for the
scrapping of the council tax system, replacing it with a new property tax which
would raise more money from wealthier homeowners.
The proceeds
would be used to halve stamp duty for first-time buyers.
The
cross-party commission, which included input from the heads of the CBI business
lobby group and the Trades Union Congress, also demands more secure tenancies
for renters.
Millennials -
people born between 1981 and 2000 - are half as likely as baby boomers - born
between 1946 and 1965 - to own their own home by 30.
Lord Willetts
said that a lot of the problems had been created by political inertia by a
series of governments.
'Broken down'
"I think
we still care about it," Lord Willetts said.
"We
still feel the obligations that generations have to each other, and families
are incredibly important in discharging those obligations.
"But
when you look at public policy, sadly when it comes to a properly funded
healthcare system, houses available so that people can achieve their goal of
owner-occupation and a fair deal in pay for younger people - in all those ways,
that contract between the generations has not been maintained.
"That
contract has broken down. Families are doing their best, the bank of mum and
dad helping out the kids, younger people caring about their grandparents, but
when you look at public policy, there are older people worried about their
social care, there are people of middle age who still aren't owner-occupiers,
and that's what they want to be, and there are younger people whose pay is no
higher than it was 10 or 15 years ago, so there's a problem in public
policy."
New research
produced by the Resolution Foundation revealed that young people are earning
less today than the generation before them was earning at the same age.
It showed
that home ownership levels are far lower.
And a poll
undertaken for the Intergenerational Commission also suggested people were more
pessimistic in Britain about the chances of the next generation having
"better lives" than the one before it - compared with almost any
other country.
I asked Lord
Willetts whether any government would have the stomach for increasing taxes on
pensioners, for example, given that Theresa May was unable to push through a
tax increase for the self-employed last year because of a public and
Parliamentary backlash.
"There's
no avoiding the pressures for more spending on healthcare and social care, the
question is how we meet those pressures," he replied.
"Extra
borrowing is unfair on the younger generation.
"Extra
taxes on the working population - when especially younger workers have not
really seen any increase in their pay - will be very unfair.
"It so
happens that the older people who will benefit most from extra spending on
health care have got some resources, so at low rates, it's reasonable to expect
them to contribute.
"It is
better than any of the alternatives."
Read more
from Kamal Ahmed here
Private
contributions
The
foundation also suggests that wealthier people should contribute privately to a
social insurance system to help pay for social care in older age.
The system
would mirror elements of compulsory health insurance policies in Germany.
"We do
think that there needs to be some element of private payment into social care
costs when people can afford it," Lord Willetts said.
"But
we're absolutely clear there should be a limit on those contributions, so that
people don't face a very large bill that could wipe out their wealth.
"There
should be an upper limit on it, and everybody should expect some contribution
from the state.
"We want
everything to be fair and affordable."