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You know a think-tank report has achieved media cut-through when it is satirised by The Daily Mash. The accolade today goes to the Resolution Foundation, whose proposal of a £10,000 ‘citizens’ inheritance’ to be paid to everyone when they turn 25 is reported on the site as follows:

“A 24-year-old has applauded a new plan to give her £10,000 and promised not to waste it on drugs, holidays, and drugs on holiday.” 

Obviously it’s the Mash‘s job to mock, but good satire also gets to the uncomfortable heart of its subject. The Resolution proposal is garbed in the worthy language of cooling the tensions between young and old, and reducing generational inequality, but it’s hard to see how this idea would fulfil either goal in practice.

The ‘citizens’ inheritance’ concept is supposed to be funded via the hypothecation of a reformed version of inheritance tax. The fact is, though, that taxing inheritance is already deeply unpopular, at a time when the money raised goes into the general pot of public spending. I’m not sure that linking it directly to handouts to 25-year-olds will make it more acceptable to voters. Does anyone really expect those who save all their lives in the hope of doing the best by their own loved ones to be pleased, soothed, or calmed at the prospect of their estate being taxed specifically in order to give away money to young people they don’t know instead?

The Resolution Foundation would limit the permitted uses of such payouts “to support[ing] skills, entrepreneurship, housing and pension saving”, but the stories – and widespread assumptions – about their misuse would predictably start from day one. For some people, the payment would in effect be a cross-subsidy for less worthy choices, and you can be sure in this over-sharing social media age that enough would let the world know for it to become first a media scandal and then a source of quite widespread resentment. The first rich kid boasting of the investment boost for their frivolous business, or pictures of someone’s let’s-drink-the-free-£10k party, accurate or not, will produce more than a few angry letters to the newspapers, not intergenerational harmony.

At the same time, how exactly would this address inequality? It has always been that case that some in society receive inheritances while others do not – what has changed in recent years is the state of the housing market in particular has made it increasingly hard to get a home of your own without help from parents and grandparents, pre- or post-mortem. Announcing inheritances for all might assist some with either the costs of rent or the tough task of saving for a deposit, but it amounts to treating a symptom, not the underlying issue.

To put it another way, why is anyone still pretending that the problem in the housing market is not enough money is chasing the existing stock? Help to Buy has already ramped up the pressure of demand without properly addressing supply, inflating the bubble that bit more. Throw £10,000 per person at the rental or sales market and most of it will, I suspect, be gladly absorbed by landlords and sellers via higher rents and asking prices. It’s been said before, but evidently needs repeating once more, that the best solution to a shortage of homes is to build more.

As Ryan Bourne has argued on Twitter, the other potential uses of the money all have attendant problems, too. Putting it into Government-approved businesses, or paying back student debt, or spending it on skills in effect makes it not an inheritance for the individual but a gimmick by which the state subsidises its own existing services or subsidy schemes. Putting it into pensions might be productive in the long-run, but that doesn’t help young people in their 20s.

The report is worth reading in full, if you’ve the time, because it is a detailed exploration of many of the issues Britain faces on this front. But while it is a weighty piece of work, it feels like it hasn’t really cut through with solutions that would work or prove politically acceptable.

The idea of charging better-off pensioners directly, and via taxes on pension income and a new adaptation of council tax, to improve social care funding, for example, carries a huge amount of baggage from the mess of the 2017 Conservative manifesto. Resolution’s proposals for means-testing and charging against pensioners’ assets for social care are more modest than Nick Timothy’s, but whether you find them appealing or not the fact remains that the whole concept is now only whispered about in Parliament because nobody wants to catch the curse which knocked the Tory campaign off course so badly a year ago.

99 comments for: Handouts to 25-year-olds won’t solve the housing crisis, still less the wider issue of generational unfairness

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