Think tank wants £10,000 ‘citizen’s inheritance’ for every 25-year-olds

Critics have torn into proposals to hike taxes on older Britons and give every 25 year-old £10,000 to help them buy a home – branding them ‘rubbish’.

The Resolution Foundation says ministers should create a ‘citizens inheritance’ for all young people – no matter how rich they are – to go towards housing, tuition fees or caring costs.

The think-tank says the give-away would be paid for abolishing inheritance tax and replacing it with a new system which will see people start paying the tax at a far lower threshold.

The Resolution Foundation Intergenerational Commission also wants pensioners who continue to work to pay national insurance for the first time to fund a £2.3 billion windfall for the NHS. 

But critics today tore into the proposals, saying they amount to a ‘short term bribe’ for young people and will could end up backfiring by pushing up the price of homes.

They may also discourage ‘silver strivers’ who choose to continue to work after retirement age – costing the UK money in the long term.

While come millennial admitted they would ‘straight down to Selfridges’ if there were no restrictions on the how the cash can be used.

The Resolution Foundation’s commission said that the proposed £10,000 cash give-away would help transform young people’s lives and tackle the problem of young people getting on the housing ladder

Tory MP Bim Afolami told MailOnline he does not like either policy.

He said: ‘They are intellectually interesting but scratch the surface and I don’t think they will work.

 ‘If we have a situation where everyone gets £10,000, the things people buy could go up by £10,000 – I am not sure it will have the impact we are hoping for.

‘And everyone would get it including people who don’t need it – that strikes me as odd.’    

On the national insurance plan, he added: ‘It seems superficially like a good idea, but it might be a deterrent discouraging people from working, which would cost the nation more in the long term.’   

Critics of the proposal said the hand-outs are not the right approach and accused millennials of whining about their problems

Millennials online pointed out that the cash handout will not be enough to make a big difference to their lives 

Other critics of the scheme said it would only end up pushing up house prices 

Another Twitter user pointed out that it makes little sense to charge millennials hefty tuition fees at university only to reimburse them later on

Kate Andrews, from the Institute of Economic Affairs, a libertarian think-tank, said: ‘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 average national 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 redistributed 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.’      

Nikeh Gray, 29, from London, told The Guardian: ‘ With no restrictions it would be gone in a month, but with the restrictions, how would it help me? 

‘Ten thousand pounds is not even enough for a deposit [on buying a house] and I don’t want to deal with my pension until I am in my late 30s. 

‘But if there were no restrictions I would be straight down to Selfridges.’     

Twitter users also raged against the proposals – saying it amounted to a hand-out.  

Neil Saunders wrote: ‘Yeah, let’s create a “something for nothing” culture. That’ll really benefit society.

‘If you want to succeed in life, stop whining, stop expecting everyone else to do things for you, get smart and start working.’    

Phil Roberts said: ‘Giving 25 year-olds £10,000 won’t even scratch the surface.’

David Osland said: ‘What’s the point of putting young people £50,000 in debt for going to college and then giving them a £10,000 rebate when they reach 25?’ 

Baroness Altmann, Tory ex pensions minister, said the plan would be as unpopular with voters as the doomed dementia tax – which was blamed for the Tory Party’s election disaster. 

She said: ‘Only about one in 10 pensioners continues working past state pension age and are not all well-off. 

‘Many older workers keep working because they do not have good pensions and are trying to make ends meet.

‘It is wrong to see them as an answer to the care funding shortfall. 

‘Why should they be targeted to pay for other people’s care while non-working pensioners, many of whom have generous, often taxpayer-funded, pensions would pay nothing?

‘I hope the Prime Minister will heed the lessons of the last election manifesto, which proved how politically toxic the issue of care funding can be. 

‘The aim should be to share the burden of care funding, not single out one group to find funding for everyone else.’    

Under the proposals recommended today, the current inheritance tax system would be scrapped.  

Currently, married couples can pass on up to £850,000 tax free. If a person inherits more than this, they pay 40 per cent tax on anything higher than this.

But under the proposals, the system would be scrapped and instead  people would only be able to inherit £125,000 over their lifetime before taxes kicked in.

Anything above that taxed at 20 per cent up to £500,000 and 30 per cent after that.   

Research shows that young people today are very pessimistic about the prospects of being able to own their own home and having a secure job

The commission estimated the move would raise an extra £5 billion initially by curbing avoidance.  

The cash raised would go to bankrolling a £10,000 giveaway for 25-year-olds to help them get on the property ladder, pay for education, set up a business and invest in pensions.   

Executive chairman Lord Willetts, a Conservative former minister, admitted the recommendations in the report were ‘not easy or comfortable’ but said many no longer believe Britain’s young and old are being treated fairly.

He said: ‘Britain’s contract between generations lies at the heart of society. As families we provide for our children and parents at different times. 

‘We expect the state to support these natural instincts – but too often it is tilted in the opposite direction.

‘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.’

The commission was chaired by the peer alongside Frances O’Grady, TUC general secretary, and Carolyn Fairbairn, CBI director-general.

It also called for an ‘NHS levy’ funded by national insurance on the earnings of workers over the state pension age as well as on some occupational pension income.

It comes after reports that Health Secretary Jeremy Hunt is considering putting forward proposals echoing the recommendation, a measure.

Theresa May (pictured going to church yesterday with her husband Philip) was warned that the think-tank’s plans would be unpopular with voters 

Council tax should be abolished and a property tax introduced in its place that would include surcharges on second and empty homes but stamp duty would be halved to encourage people to move, under the report’s plan.  

Ms Fairbairn said: ‘The idea that each generation should have a better life than the previous one is central to the pursuit of economic growth. The fact that it has broken down for young people should therefore concern us all.

‘We need individuals, businesses and the state to pull together to address this challenge, and lift the living standards of young and future generations.’

The commission also makes a series of other recommendations, including improving employment security, a £1 billion ‘better jobs deal’ to help struggling young people get into work and bolstered rights for renters.

It found millennials, people born between 1981 and 2000, are earning the same as those born 15 years before them were at the same age and are only half as likely to own their home by age 30 as baby boomers, born between 1946 and 1965, were.