Old age tendencies: The impact of tax and benefit changes on intergenerational fairness ahead of the 2024 general election
Connecting Generations members Molly Broome and Sophie Hale have co-authored a new 2024 general election briefing with Resolution Foundation colleagues on the impact of tax and benefit changes on intergenerational fairness.
The report highlights the increase in the generosity of the State Pension, which has led to a 44 billion increase in spending, benefiting older age groups. By contrast, working-age households have seen benefits cut. And although recent cuts to National Insurance (NI) have offset the extent to which policy decisions have tended to favour older age groups, households with children have been left worse off by tax and benefit changes made since 2010.
The report, published by the Resolution Foundation and funded by the Nuffield Foundation, finds that the impact of implementing tax and benefit policies favoured by both main parties would reinforce the long-term trend of the personal tax and benefit system favouring pensioners. Both main parties are implicitly committed to personal tax increases baked into plans for the next parliament, as well as to the continuation of benefits policies from the 2010s. These include an additional three years of freezes on the main Income Tax and personal NI thresholds, freezing Local Housing Allowance (LHA) and the benefit cap, continuing to roll out the two-child limit, and continuing the triple lock for pensions.
How have different generations been impacted by tax and benefit decisions taken since 2010?
Resolution Foundation (@resfoundation) June 26, 2024
Watch this short explainer to find out 🎥⬇️ pic.twitter.com/TVZsLnVKhK
Perhaps recognising this imbalance, both main parities manifestos include pledges that could benefit working-age households. The Conservatives have pledged further NI cuts that would benefit workers below the pension age, although the burden of the proposed 12 billion of welfare cuts would likely fall overwhelmingly on working-age households. Labours offering to those of working age has centred around promises to reform the world of work. Both parties have made pledges to support home ownership and improve access to education and training, which will be of particular benefit to younger adults. And the Conservatives have proposed mandatory National Service, a policy that is popular with those aged 65 plus, but not among young adults.
While such measures can help redress a growing imbalance, the report recommends that achieving intergenerational fairness requires policy that looks beyond measures for specific age groups and instead grapples with the long-standing problem of weak growth that has led to a reversal in generational pay progression.
Sophie Hale, principal economist at the Resolution Foundation, said: The combination of Britains big baby boomer generation retiring, and policies that have benefited pensioners the most, has meant that the profile of Britains public spending has greyed.
Overall pensioners have gained more than working-age households from tax and benefit decisions since 2010, while families with children have seen support fall by 780 a year.
She said that while both the Conservatives and Labour have a wide range of policies targeted at specific age cohorts ultimately these policies wont decide whether the new generation of young adults enjoys higher living standards than their predecessors. That will only come from stronger economic growth.
Read the full report: Old age tendencies: The impact of tax and benefit changes on intergenerational fairness ahead of the 2024 general election
Posted 27/06/2024 09:34
Back
