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| A £10,000 handout is a short-sighted solution to millennial misery | |
| (35 minutes later) | |
| Imagine a world in which millennials’ fortunes no longer relied on the “bank of mum and dad”, because everyone inherited £10,000 when they turned 25. | Imagine a world in which millennials’ fortunes no longer relied on the “bank of mum and dad”, because everyone inherited £10,000 when they turned 25. |
| No more nonsense about how young people could easily become homeowners if they just spent less on avocado toast; no more rage-inducing hagiographies of young entrepreneurs, which somehow always fail to mention that they got their fashionable startup off the ground thanks to a big dollop of family cash. Under the “citizen’s inheritance” scheme proposed by the Resolution Foundation thinktank, every young adult would receive a cheque from the state – funded by inheritance tax reform, and strictly reserved for non-frivolous purposes such as a house deposit, further education or starting a business – to get them started in life. | No more nonsense about how young people could easily become homeowners if they just spent less on avocado toast; no more rage-inducing hagiographies of young entrepreneurs, which somehow always fail to mention that they got their fashionable startup off the ground thanks to a big dollop of family cash. Under the “citizen’s inheritance” scheme proposed by the Resolution Foundation thinktank, every young adult would receive a cheque from the state – funded by inheritance tax reform, and strictly reserved for non-frivolous purposes such as a house deposit, further education or starting a business – to get them started in life. |
| The snag, unfortunately, is that it almost certainly isn’t going to happen. The political odds are stacked against such radical ways of easing the tension between baby boomers and struggling millennials, and not just because the Tories remain wary of antagonising their ageing supporters. Would public opinion really stand for giving a “citizen’s inheritance” to young City traders already earning six figures by themselves, or the heirs of the landed gentry? Yet means-testing it would simply create a whole new kind of resentment among those who just miss out. | The snag, unfortunately, is that it almost certainly isn’t going to happen. The political odds are stacked against such radical ways of easing the tension between baby boomers and struggling millennials, and not just because the Tories remain wary of antagonising their ageing supporters. Would public opinion really stand for giving a “citizen’s inheritance” to young City traders already earning six figures by themselves, or the heirs of the landed gentry? Yet means-testing it would simply create a whole new kind of resentment among those who just miss out. |
| But we should see this idea as a starting point for debate about intergenerational fairness. Eye-catching headlines aside, the two crucial things about this report are an emerging political consensus that inheritance tax isn’t working plus a recognition that inheritance in itself isn’t everything. By calling for parental gifts throughout children’s lives to be taxed at 20%, as well as for reform of death duties, the thinktank’s intergenerational commission is tacitly recognising that the help some twentysomethings get from their parents when they’re just starting out in life matters as much, if not more, than legacies those children may not receive until they’re practically retired themselves. | |
| A society this heavily reliant on inheritance is living off past glories, rather than looking to its future | A society this heavily reliant on inheritance is living off past glories, rather than looking to its future |
| Inheritance matters. In an era of stupidly high property prices, flatlining wages – millennials at age 30 have been earning less than Generation X did at the same age – and what feels like dwindling opportunities for kids from tougher backgrounds to break through, then what happens to the money swilling around from previous good times takes on a new significance. And given a housing market predicted to push home ownership out of the lifetime reach of a third of millennials, the next generation’s fortunes will be even more starkly divided by access to the bank of mum and dad. | Inheritance matters. In an era of stupidly high property prices, flatlining wages – millennials at age 30 have been earning less than Generation X did at the same age – and what feels like dwindling opportunities for kids from tougher backgrounds to break through, then what happens to the money swilling around from previous good times takes on a new significance. And given a housing market predicted to push home ownership out of the lifetime reach of a third of millennials, the next generation’s fortunes will be even more starkly divided by access to the bank of mum and dad. |
| That divide should be offensive to politicians on both left and right. For the left it’s a straightforward question of social injustice. But for the right, it represents an embarrassing ideological failure. Whatever happened to self-reliance and entrepreneurship – to the core Tory belief that anyone can get on if they work hard enough? | That divide should be offensive to politicians on both left and right. For the left it’s a straightforward question of social injustice. But for the right, it represents an embarrassing ideological failure. Whatever happened to self-reliance and entrepreneurship – to the core Tory belief that anyone can get on if they work hard enough? |
| There is a clearly a big political argument to be had about how to use the windfall resulting from any reform of inheritance tax: whether it should be dished out to individuals, or whether it’s best used to fund national programmes from which generations of millennials could potentially benefit, such as building more houses or investing in lifelong education. There is an obvious risk, too, that giving every millennial a free house deposit just as the housing market looks headed for a correction would only inflate the bubble all over again. | There is a clearly a big political argument to be had about how to use the windfall resulting from any reform of inheritance tax: whether it should be dished out to individuals, or whether it’s best used to fund national programmes from which generations of millennials could potentially benefit, such as building more houses or investing in lifelong education. There is an obvious risk, too, that giving every millennial a free house deposit just as the housing market looks headed for a correction would only inflate the bubble all over again. |
| But George Osborne’s spectacularly popular bung to older voters, pushing up the inheritance tax threshold to £1m, simply no longer looks sustainable. And if it’s not unwound by a Conservative government, then sooner or later it’s likely to be unwound by a Labour one, swept into Downing Street on a tide of frustrated millennial votes. A society this heavily reliant on inheritance is living off past glories rather than looking to its future. Sooner or later, it will have to pay the price for such short-sightedness. | But George Osborne’s spectacularly popular bung to older voters, pushing up the inheritance tax threshold to £1m, simply no longer looks sustainable. And if it’s not unwound by a Conservative government, then sooner or later it’s likely to be unwound by a Labour one, swept into Downing Street on a tide of frustrated millennial votes. A society this heavily reliant on inheritance is living off past glories rather than looking to its future. Sooner or later, it will have to pay the price for such short-sightedness. |
| • Gaby Hinsliff is a Guardian columnist | |
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