Chancellor urged to deliver living standards Budget ‘boost’ to young people
A think tank said ending the four-year benefit freeze which came in last year would particularly help young families.
Philip Hammond has been urged to extend a Budget hand-up to struggling young families by scrapping the freeze on working-age benefits.
A report by the influential Resolution Foundation (RF) think tank said the Chancellor should use any spare cash he has to address the poor economic prospects facing young “millennials” when he sets out his plans on November 22.
Ending the four-year benefit freeze which came in last year would, the report said, particularly help young families.
It calculated that 56% of the gains from unfreezing benefits from next April would go to millennials, born in the 1980s and 1990s.
For a low-income family with two children that would mean an extra £315 a year while the cost to the Exchequer would be £1.9 billion in 2018/19.
The RF said the Chancellor could also help young families by “rebooting” the Government’s flagship Universal Credit (UC) scheme.
Restoring UC work allowances to pre-2016 levels for those with children would cost £2.1 billion, with 49% of the gains going to millennials, it said.
However, it warned Mr Hammond against an “ill-advised” proposal backed by Conservative MP Nadim Zahawi for a new lower basic rate of income tax for the young.
It said reducing the basic rate to 15% for the under-30s would be both expensive, costing £3.2 billion by 2021/22, and “highly regressive”, with the wealthiest 10% of those in their twenties gaining over twice as much as the poorest 50%.
Laura Gardiner, senior policy analyst at the RF, said “The Chancellor should remember the bigger picture and deliver a Budget that tackles one of the biggest challenges Britain faces, our failure to deliver living standards progress for young people today.
“The Chancellor should avoid ill-advised tax cuts for the young. Instead he should remove existing age-related tax inequalities to help fund the unfreezing of working age benefits next year and reboot Universal Credit.
“This would deliver a direct living standards boost and show where the Government’s priorities are in terms of supporting millennials just as many of them enter the particularly expensive early stages of parenthood.”