The iPod generation 'left to face future of debt'
Tony Blair's policies have left a generation of young people facing an effective tax burden of almost 50 per cent, including repaying student loans and providing for pensions, an audit of his decade in power claims today.
The so-called iPod generation will be worse off than their parents, who have benefited from rising property prices and spending on health and pensions.
The report by Reform, the think-tank, said that the key policies of the Blair decade, such as high spending, increased taxes and a greater role for central government, had blocked public service reform and created new pressures on vulnerable groups such as the young.
In 2008-09 the tax burden will reach 38.1 per cent of gross income - its highest level for 25 years, Reform claims. This is one of a worrying "cocktail of factors" damaging the economic position of the young, it said.
"Policies such as the introduction of tuition fees and near-compulsory private pensions indicate that today's 18- to 34-year-olds face a tremendous burden as the 'crossover generation' who will not only fund their own provision but also fund their parents' existing entitlements," said the report.
Older generations enjoy strong housing equity, advantageous tax allowances and rising benefits at present.
"Younger people currently pay over 40 per cent of income tax - the same level as their parents - but also increasingly find their own provision for higher education and pensions."
Young people, the key engine of economic growth, are under particular pressure.
Reform calculated that in 2012 the average graduate will face an effective tax burden of 47.2 per cent including student loans and pensions contributions.
While earnings had increased by 28 per cent since 1999, the price of the average first-time property has nearly doubled.
As a result, first time property prices are now more than eight times higher than the median earnings of 22- to 29-year-olds - they were only five times higher in 1999.
A survey by Nationwide, the mortgage lender, showed that only 20 per cent of first-time buyers were aged 20 to 24, down from 30 per cent 10 years ago. Only 20 per cent of 20- to 24-year-olds are homeowners, down from 34 per cent 10 years ago.
"It is very striking that the Prime Minister said in a recent interview that the key economic challenge had changed from recession to trying to help young couples get their feet on the housing ladder.
"With tuition fees and private pension payments, the Government has begun what may well be the transfer of welfare state payments from the public sector to the private sector.
"The new deal must be that taxes are reduced to give individuals room to invest in themselves," Reform said.
It claimed that the record of Mr Blair and his government on the economy and public services was "mixed at best".
Less than half of children achieved five GCSEs at grades A*-C including English and maths, even though the exams had become easier.
The approach of the Government had been to centralise decision-making and to increase spending. This had led to waste.
The key trends of each of the Government's key public service measures - mortality rates, GCSE results and crime as measured by the British Crime Survey - "have been completely unchanged by the massive resources for each service".
Property crime has fallen, but much of this is a result of individual citizens improving their security. Sixty-three per cent of family cars now have an alarm, compared to 38 per cent in 1998.
Prison sentences for burglars have increased sharply, from around 16 months in 1994 to 25 months in 2005. But numbers of robberies and anti-social behaviour have remained high.
"This suggests that while a larger prison population and private spending has borne down on crime, the police have made little extra contribution," the report said.
Reform urged the next generation of political leaders to learn from the lessons of the Blair decade. But it said that Gordon Brown, who takes over today, had already suggested he wanted to raise spending on education by around £50 billion a year, equivalent to an extra 16p on the basic rate of tax.
Source: telegraph.co.uk
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