Calls for £10,000 ‘citizen’s inheritance’ for all 30-year-olds
Lord David Willetts calls for urgent move to help offset looming and hugely uneven intergenerational transfer of wealth
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Your support makes all the difference.The next government should hand all 30-year-olds a £10,000 “citizen’s inheritance” to tackle growing inequality as wealth shifts between generations, a Tory peer has suggested.
As new analysis suggests that a hugely uneven £1.5trn wealth transfer to millennials is set to deepen current inequalities, Lord David Willetts warned that “we are going to have some very rich inheritors and a growing number of people who never get on the housing ladder and rent until old age”.
Cautioning that not enough has been done to spread wealth since Margaret Thatcher’s privatisation drive and right-to-buy scheme, the Tory peer and president of the Resolution Foundation think-tank has again raised the notion of a “citizen’s inheritance”.
Lord Willetts, who first suggested such a scheme six years ago while chairing the Intergenerational Commission, said: “It doesn’t matter if you are Conservative or Labour, a world in which inheritance matters more and earnings matter less is a less open and socially mobile society.
“[Inheritances are now] coming to people quite late in life. It will reinforce a pattern of inheritance where the grandkids will benefit.”
The Conservative peer, a former MP for Havant who also chairs the UK Space Agency, told The Guardian the scheme could be funded by lowering the threshold at which inheritance tax is paid, abolishing exemptions, and lowering the 40 per cent tax rate.
It came as analysis by the Institute for Fiscal Studies for the same publication found that millennials – those born between 1981 and 1996 – are set to inherit an average of around £150,000 each from parents who have benefitted from soaring property prices and final salary pensions.
However the IFS found that one in 10 millennials are set to get nothing, while the top 10 per cent will receive more than £500,000 each, as annual inheritance handovers rise by a third to hit £145bn by 2033.
As a result, inheritance will only boost lifetime incomes by 5 per cent for millennials from the poorest fifth of families, in contrast with 29 per cent for the richest fifth, according to the think-tank.
Property values will exacerbate the divide between north and south, while those from Black African, Black Caribbean, Pakistani and Bangladeshi backgrounds are already a third to half as likely to receive an inheritance than their white counterparts, The Guardian reported.
Warning that “the great wealth transfer is coming”, David Sturrock, senior research economist at the IFS, told the paper: “Working incomes are growing more slowly so the amounts [in inheritances] are a much more consequential part of your lifetime resources.”
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