The Resolution Foundation, chaired by former conservative minister Lord Willetts have issued a report addressing, what many term, intergenerational fairness.
The Resolution Foundation, is a research and policy organisation think tank and says these radical moves are needed to better fund the NHS and maintain social cohesion.
Lord Willetts, its executive chairman, said an older generation of ‘baby boomers’ will have to “reach into our own pockets” to fund a spiralling bill for public services.
In a speech in London, he said that spending on health, education and social security would be up £20bn by 2030 and up £60bn by 2040.
“The time has come when we boomers are going to have reach into our own pockets,” he said.
“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?”
He went on “baby boomers – the generation born in the 15 years or so after the Second World War – had benefited from the welfare state and the house price boom, with tax cuts seen as “the normal state of British politics”.
“We have done so well compared with the younger generation in so many ways that we cannot just turn to them to pay for our health and social care,” he said, adding that a “tipping point” had been reached because “the boomers are growing old”.
“Politics is going to be very different as the baby boomers age. The age of tax cuts is over.”
Lord Willetts said people’s property was an obvious source of tax revenue, but added that the current council tax system was “just about the most regressive property tax you could have”, with a disproportionate effect on people in lower-value homes.
He also said the inheritance tax system was “poorly designed, widely abused and under utilised” and should be looked at.
“I know these taxes are unpopular. But the alternatives are far worse,” he said.
“Unless we act, at some point we will face a choice between changing our approach to taxation, or cutting access to the NHS and letting social care get into an even deeper crisis,” he added.
“We can’t delay that debate any longer.”
Lord Willetts told the BBC “We’ve got a very serious problem of ensuring there’s a fair deal across the generations.”
“Older people are worried about a properly funded healthcare system, people in middle age still haven’t been able to buy their own home, and for younger people their pay is no better than it was 10 or 15 years ago.
“So, the different generations in the UK all face different pressures.
“But we can tackle them, we can do something about it.”
“I think we still care about it,” Lord Willetts said.
“We still feel the obligations that generations have to each other, and families are incredibly important in discharging those obligations.”
“But when you look at public policy, sadly when it comes to a properly funded healthcare system, houses available so that people can achieve their goal of owner-occupation and a fair deal in pay for younger people – in all those ways, that contract between the generations has not been maintained.”
“That contract has broken down. Families are doing their best, the bank of mum and dad helping out the kids, younger people caring about their grandparents, but when you look at public policy, there are older people worried about their social care, there are people of middle age who still aren’t owner-occupiers, and that’s what they want to be, and there are younger people whose pay is no higher than it was 10 or 15 years ago, so there’s a problem in public policy.”
And a poll undertaken for the Intergenerational Commission also suggested people were more pessimistic in Britain about the chances of the next generation having “better lives” than the one before it – compared with almost any other country.
When asked whether any government would have the stomach for increasing taxes on pensioners, for example, given that Theresa May was unable to push through a tax increase for the self-employed last year because of a public and Parliamentary backlash, he replied,
“There’s no avoiding the pressures for more spending on healthcare and social care, the question is how we meet those pressures,”
“Extra borrowing is unfair on the younger generation.
“Extra taxes on the working population – when especially younger workers have not really seen any increase in their pay – will be very unfair.
“It so happens that the older people who will benefit most from extra spending on health care have got some resources, so at low rates, it’s reasonable to expect them to contribute.
“It is better than any of the alternatives.”