Report: Give millennials £10k to fix generation gap
Is this a good idea? A bold new report has urged the government to give all 25-year-olds £10,000. It says the cash will help young people buy homes, learn new skills and start businesses.
In 1953 in Britain — the year of Queen Elizabeth II’s coronation and James Bond’s first appearance in print — a young family could buy a house for just £1,891. According to 2018’s most recent figures, the average house price is now more than £220,000 (rising to over £430,000 in London).
Yet astronomical house prices are just one factor in the “broken” social contract between home-owning baby boomers and millennials struggling with sluggish wages and an inaccessible housing market.
The solution? A “citizen’s inheritance” of £10,000 paid to all 25-year-olds, funded by extra taxes on rich baby-boomers and pensioners. At least that’s the plan put forward in a report from the Resolution Foundation released yesterday.
Recipients would be allowed to put the money towards four things: a deposit for a house, education, starting a business or pension savings. How far the money would go depends on a variety of factors.
For example, £10,000 might cover half a deposit on a house in the north of England, but would be less than 10% of the average down payment in London. Also, it would not make much of a dent in the £50,800 debt the average graduate now leaves university with.
Nonetheless, the foundation’s chairman, Lord David Willetts, claimed that without a change, young people would become “increasingly angry”. He described a “very serious problem of ensuring there’s a fair deal across the generations”.
According to the report, millennials are half as likely to own a home by the age of 30 compared to when baby boomers were the same age. Wages have also stagnated, with those born between 1981 and 2000 taking home less pay than the generation before them.
All this has led to widespread pessimism. One survey found that 50% of Britons believe that young people will have a worse life than their parents. Only 22% thought that life would be better.
Should all 25-year-olds be given £10,000?
Magic money tree
Of course, some argue. Recipients who invest in education or a new business could boost their earnings later in life — which is also good for the economy. Furthermore, the safety net it provides would encourage more people to take positive risks in their career, rather than always worrying about the next bill. It is the duty of the government to make meaningful investments in young people. This is the best way.
It’s a terrible idea, others respond. Ten thousand pounds is not enough to help the most disadvantaged, and will just top off the trust funds of the most privileged. We can help millennials buy homes by building more houses, while extra tax revenue should come from corporations, not pensioners. Excess money should be distributed fairly to those who truly need it.
- Do millennials deserve cash handouts?
- Are young people today a fortunate or unlucky generation?
- If you had £10,000 and no restrictions on how to use it, how would you spend it? Discuss your ideas with your classmates. What are the most popular suggestions in the class? Why might people want to spend the money in this way?
- One main reason behind the citizen's inheritance policy is to make housing more accessible and affordable. However, many alternative suggestions have been made too. Research some of these ideas. In your opinion, what is the best way to get more young people onto the property ladder?
Some People Say...
“The reason we blame things on previous generations is there is only one other choice.”Doug Larson
What do you think?
Q & A
- What do we know?
- While the report highlights inaccessible housing and stagnating wages, there are also some positive trends for millennials. For example, people in their late 20s experience unemployment rates around 25% lower than those felt by baby boomers at the same age. The report also points out positive progress in “young people’s access to information, entertainment, travel opportunities and education”.
- What do we not know?
- If the government will listen to the foundation’s recommendations. Lord Willetts himself said that some of the changes suggested are not “easy or comfortable”.
- According to statistics from Nationwide Building Society. Adjusted for inflation, this figure is equivalent to approximately £50,000.
- Social contract
- The Resolution Foundation report describes a generational contract in which young people expect better lives than their parents, and the elderly expect to be cared for in later life.
- Baby boomers
- Those born between 1946-1965.
- Those born between 1981-2000.
- The £10,000 payments would be funded by adjustments to inheritance tax. Council tax would also be replaced with a property tax aimed at wealthier homeowners.
- “A New Generational Contract”, published after two years of research. Read it for yourself by clicking the link in Become An Expert.
- Generation before them
- Those born between 1966-1980, otherwise known as Generation X.
- From the Ipsos “Global Trends Survey 2017”.