A proposal to provide 25-year-olds with a £10,000 handout to improve their prospects and provide a housing ladder boost has been met with mixed views.
The Resolution Foundation has recommended a restricted use ‘Citizen’s Inheritance’, which it said could help to provide up to half of a deposit for a typical property outside London or provide capital to start business.
Funding for the payment would come from a ‘lifetime receipts tax’ which would replace the current inheritance tax system. This would provide every person with a tax-free allowance of up to £125,000. Beyond this, tax would be charged at 20% up to £500,000 and at 30% thereafter.
The Citizen’s Inheritance is part of a raft of proposals being put forward by the Resolution Foundation think tank as part of a ‘generational contract’ aimed at tackling some of the challenges facing Britain’s young and old generations.
A better funded NHS and care system and a radically reformed housing market were also put forward as recommendations in its report.
David Willets, executive chair of the Resolution Foundation, said: “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.”
However, Kate Andrews, news editor at the Institute of Economic Affairs said a one-off cash transfer would only address the symptoms of the UK’s intergenerational crisis.
She added: “Why should the salary of a 40-year-old person, earning the minimum wage, be redistributed to top up a 25-year-old earning double or triple the national average income?
“There is nothing progressive about cash transfers that are based on age. This proposal stands in opposition to the fundamental principle of welfare safety nets: that resources are distributed to those who are most in need.”
She added: “What is essentially a short-term bribe will not distract young people from the barriers to entry they face when trying to transfer into adulthood.”
Meanwhile, Tom Selby a senior analyst at AJ Bell, said the Citizen’s Inheritance felt like a ‘gimmick’ that would ‘never see the light of day’.
What is your opinion on the Resolution Foundation’s report? Do you think it would be a good idea to provide the payment to 25 year olds? Or do you think it’s a bad idea? Please see our poll on the right hand side of our home page.
