A Conservative peer, David Willetts of the Intergenerational Centre thinktank, has proposed a policy for the upcoming government to distribute wealth more evenly across the UK, as reported by The Guardian.
This involves granting a £10,000 “citizens inheritance” to all individuals when they turn 30, in response to concerns that an impending wealth transfer of £1.5 trillion to millennials could exacerbate current inequalities.
This proposition comes in light of findings that suggest millennials are poised to inherit considerable sums, with an average inheritance of £150,000, due to their parents benefiting from rising property values and robust pension plans. Despite this, the distribution of wealth remains uneven, with a forecasted increase in inheritance transfers to £145bn by 2033, yet one in 10 millennials expected to inherit nothing.
In the United States, a similar trend is observed with an anticipated $90tn asset transfer primarily driven by housing market dynamics, potentially marking millennials as the wealthiest generation historically.
The inheritance boom suggests a potential shift in investment patterns towards cryptocurrencies and environmentally and socially responsible assets. However, the majority of millennials will not see these benefits until much later in life, with the average inheritance age estimated at 64.
Willetts highlighted the issue of late-life inheritances reinforcing wealth disparities and impeding social mobility. He emphasised the need for policy reforms to address the growing inequality in wealth distribution, which is expected to marginally benefit the poorest fifth of millennial families by only 5%, in contrast to a 29% increase for the wealthiest fifth.
The disparity in inheritance is also expected to deepen regional wealth differences and strain social relationships, with significant variances in property value appreciation across the UK.
To fund the citizens inheritance initiative, Willetts suggests lowering the inheritance tax threshold, eliminating exemptions, and reducing the tax rate from 40%. This proposal aims to mitigate the growing concentration of wealth in inheritable assets, which has seen a significant increase over recent years.
