Ageing baby boomers must pay more tax, former Tory minister warns
Older people must "reach into their own pockets" to fund an increasingly expensive future welfare state, a former Conservative minister will warn today.
David Willetts, who served as universities minister under David Cameron, will point to research suggesting welfare spending will rise by £60bn a year by 2040 to cope with an ageing population.
The Tory peer, who chairs the Resolution Foundation thinktank, will call for an overhaul of both inheritance and council tax to help ease the burden on the younger generation.
And he will warn that the rise in health and welfare spending will be equivalent to an extra 15p on the basic rate of income tax, at the same time as young people are faced with less economic security and a slump in living standards since the financial crisis.
“For 30 years Britain has enjoyed a time when the baby boomers were at their peak earning power. We benefited from lower pressures on public spending. Politicians talked as if tax cuts were the normal state of British politics," he will say.
“But we are now at a tipping point. The baby boomers are moving into retirement and there are fewer younger working age people coming up behind them.
“As we at last emerge from deficits the recession gave us in this decade we need to look forward to the pressures an ageing population is set to give us in the next.
“Politics is going to be very different as the baby boomers retire. The age of tax cuts is over.”
The answer, Lord Willetts will argue, is to increase wealth taxes, with changes to the "regressive" council tax systems and a fresh look at inheritance tax.
He will describe the latter as a "classic bad tax" because it has a very high rate coupled with a very high exemption.
“The time has come when we Boomers are going to have reach into our own pockets," he will warn.
"The alternative could be an extra 15p on the basic rate of tax, paid largely by our kids.
“Is that kind of tax really the legacy we – a generation who own half the nation’s wealth – want to bequeath our children and grandchildren?”