Philip Hammond should take cash from pensioners to help millennials - thinktank
Philip Hammond should take National Insurance payments from pensioners to help struggling millennials, a leading thinktank has said.
Scrapping the NIC exemption for the elderly and reversing cuts to Universal Credit would better help the young than tinkering with the tax system, the Resolution Foundation said.
Some Tory MPs - including Nadhim Zahawi - have suggested the Chancellor should lower the basic rate for under-30s to 15% in his upcoming Budget to hand a boost to millennials.
But the Resolution Foundation said the “expensive” and “highly regressive” move would cost the taxpayer £3.2bn by 2021-22 and would benefit the richest 10% of those in their 20s the most.
In a new report the thinktank said the Chancellor should instead make all workers of all ages pay NICs for a £1bn windfall - something Mr Hammond will be reluctant to do after his disastrous first Budget.
It added that any extra spending money should help fund a major living standards boost for young families by unfreezing working age benefits and reversing Universal Credit cuts.
Laura Gardiner, senior policy analyst at the Resolution Foundation, said wrestling with falling living standards for young people amounted to one of the “biggest challenges Britain faces”.
“On the bread-and-butter issue of tax and benefit changes, the Chancellor should reverse a trend of recent years by making young low-income families the main beneficiaries," she said.
“The Chancellor should avoid ill-advised tax cuts for the young. Instead he should remove existing age-related tax inequalities to help fund the unfreezing of working age benefits next year and reboot Universal Credit.
“This would deliver a direct living standards boost and show where the government’s priorities are in terms of supporting millennials just as many of them enter the particularly expensive early stages of parenthood.”
The report comes a fortnight ahead of the Chancellor’s budget and says four-fifths of the proposed revenues would come from the richest fifth of pensioners, with most unaffected.
It finds that 56% of gains from unfreezing working age benefits next April would go to so-called "millennials", with a low-income family with two children gaining £315 a year – at a cost of £1.9bn in 2018-19.
Philip Hammond has been under pressure to help young people, and in September was reported to have asked MPs to submit suggestions on how best to help the disparity between generations.