Politics

Should all 30-year-olds get a £10,000 'citizens inheritance'? This Tory peer thinks so

Giving all 30-year-olds a £10,000 'citizens inheritance' would spread wealth more evenly, a Tory peer David Willetts has suggested

Should all millennials get a £10k payout? credit: canva

The government should give all 30-year-olds a £10,000 “citizens inheritance” to tackle wealth inequality, a Tory peer has urged.

Over the next few decades, the millennial children of ageing baby boomers are set to inherit about £1.5tn – but it won’t be evenly distributed.

This unequal wealth transfer will reinforce existing inequities, warned Lord David Willetts, president of the Intergenerational Centre think-tank.

His solution? Give all 30-year-olds £10,000.

“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,” Willetts said.

“[Inheritances are now] coming to people quite late in life. It will reinforce a pattern of inheritance where the grandkids will benefit. 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.”

The policy – first suggested in 2018 – could be paid for by lowering the inheritance tax threshold and abolishing exemptions, Willetts said. At present, most people don’t have to pay the levy unless they inherit more than £1m.

Why will inheritance reinforce inequalities?

Some millennials are about to get really, really rich.

Annual inheritance transfers are forecast to rise by a third to £145bn by 2033, new research by the Institute for Fiscal Studies for the Guardian shows. The top 10% will get more than £500,000 each – yet one in 10 millennials are still set to get nothing.

The transfer between boomers and their kids will be the “largest flow of generational capital ever seen in the history of humanity,” author and investor Ken Costa told the Big Issue last year.

The new IFS research unpacks the inequalities within this transfer. For millennials from the poorest fifth of families, inheritances will only increase lifetime incomes by 5%. Millennials from the richest fifth, by contrast, will enjoy a 29% wealth bump, the IFS said

Soaring house prices are partly to blame for the inequality.

London homeowners made £254,000 on average in house price growth over the past 15 years, the think tank added. Homeowners in the east or north-west of England enjoyed less than a third of those gains. And renters, of course, gained nothing – save soaring bills.

Property values will also exacerbate racial inequalities – people from BAME backgrounds are around a third to half as likely to receive an inheritance than white people.

The wealth redistribution policy could help bring disillusioned millennials back to the Conservatives.

At 35, millennials are around 15 points less conservative than the national average, Kings College London research released last month suggests. A mere 12% of Brits in their 30s plan to vote Tory in this year’s general election, and 16% in their 40s. By comparison, 58% and 52% plan to vote Labour.

Younger to early middle-age people feel that the social contract is “broken”, KCL professor Bobby Duffy told the Big Issue.

“Policy choices have repeatedly favoured older people, such as protecting pensions and propping up a broken housing market, whilst ignoring issues like childcare provision,” he said.

“Generation-on-generation economic progress ground to a halt as economic growth stalled, with millennials bearing the initial brunt of this stagnation.”

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