Intergenerational fairness is never far from the news headlines these days. The issues are becoming widely known and frequently debated. The Equality and Human Rights Commission recently published a review which stated that today’s young people are suffering the “worst economic prospects for several generations”.
Rising health and care costs
In a recent speech, Lord David Willetts, Executive Chair of the Resolution Foundation, outlined the stark choices that he feels the country faces in paying for the health and social care costs associated with our ageing society. He believes that baby boomers must pay to fund these spiralling costs or risk inflicting crippling tax hikes on their children and grandchildren.
He argued that while all generations should pay towards the costs, higher capital taxes will need to be borne by the baby boomer generation, if the UK is to avoid putting the entire tax burden on the shoulders of the younger generation, many of whom are already struggling financially. The alternative is that the extra spending needed, which is almost entirely driven by health costs, would mean an income tax rise of
15p in the basic rate to cover the funding gap, which would fall disproportionately on younger workers.
Lord Willetts believes that unless action is taken, the UK is likely to face tough choices between changing its approach to taxation, or cutting access to the NHS and letting social care get into a worse state of crisis. He believes that a 1% tax on property values over £100,000 would bring in around £9bn.