That was one of the conclusions of the Resolution Foundation’s Intergenerational Commission report ‘A New Generational Contract’.
The report has provoked much debate – the National Pensioners Convention dismissed it but the TUC’s general secretary supported it.
Prospect’s Retired Members Group committee believes a measured response is required since some (but not all) of the proposals have merit. The report made ten policy recommendations:
- Increase public funding for social care by more than £2bn from reformed taxation of property. Increase property-based contributions towards care costs, but with strict limits so that no-one pays more than a quarter of their wealth towards their own care.
- Introduce a £2.3bn ‘NHS levy’ via National Insurance on the earnings of those above State Pension age and limited National Insurance on occupational pension income.
- Boost employment security via: the right to a regular contract for those doing regular hours on a zero hours contract; extended statutory rights for the self-employed; and minimum notice periods for shifts.
- Introduce a £1bn ‘Better Jobs Deal’ that offers practical support and funding for younger workers to take up opportunities to move jobs or train to progress; and £1.5bn to tackle persistent underfunding of technical education routes. Both should be funded by cancelling 1p of the forthcoming corporation tax cut.
- Make indeterminate tenancies the sole form of private rental contract, with light-touch rent stabilisation limiting rent increases to inflation for three-year periods and disputes settled by a new housing tribunal.
- Replace council tax with a progressive property tax with surcharges on second and empty properties; halve stamp duty rates and offer a time-limited capital gains tax cut to incentivise owners of additional properties to sell to first-time buyers.
- Pilot community land auctions so local authorities can bring more land forward for house building, underpinned by stronger compulsory purchase powers; introduce a £1.7 bn building precept allowing local authorities to raise funds for house building.
- Require firms contracting for self-employed labour to make pension contributions; lower the earnings threshold above which employees get auto-enrolled; and provide greater incentives to save among low- and middle-earners by flattening the rate of pensions tax relief and exempting employee pension contributions from National Insurance.
- Develop a legislative framework for new ‘collective defined contribution’ pensions that better share risk; and reform pension freedoms to include the default option of a guaranteed income product purchased at the age of 80.
- Abolish inheritance tax and replace it with a lifetime receipts tax that is levied on recipients with fewer exemptions, a lower tax-free allowance and lower tax rates. Use the extra revenues to introduce a £10,000 ‘citizen’s inheritance’ – a restricted-use asset endowment to all young adults to support skills, entrepreneurship, housing and pension saving.
Jan Shortt, NPC general secretary said: “This report’s main aim is to break the universal principles of the welfare state and reduce current and future entitlements for those who have retired.”
David Luxton, RMG group secretary, said the report’s recommendations will shape public policy over the next few years and it is important to have a considered and measured response.
“There are recommendations Prospect would oppose, such as imposing a National Insurance tax on occupational pension income when retired people have paid tax and National Insurance throughout their working lives.
“However, there are positive recommendations on improving the housing market for the benefit of retired and younger people. Prospect will seek to influence the debate through our affiliation to the NPC and Public Services Pensioners Council.”
Anna Dixon, chief executive of the Centre for Ageing Better, said: “This is not a debate that should be framed as old versus young. Every generation is affected by issues like poor quality housing and lack of decent employment opportunities.
“Changing society so we can all enjoy lives spent in good health, good work and good housing must be a collective endeavour.”