Young Millennials in U.K. Are Paying More Tax for Fewer Benefits

(Bloomberg) -- Young millennials are on course to get a worse deal out of the U.K. tax and benefits system than any other post-war cohort, according to the Resolution Foundation.

In a further sign of the generational divide in Britain, the think tank estimates Britons born in 1996 will receive only 132,000 pounds ($170,000) more in public services such as health care, education and social security than they pay in tax -- less than half the “welfare dividend” enjoyed by those born in the mid-1950s.

The warning is contained in an updated edition of “The Pinch,” which was first published before the 2010 general election. With Britain now heading for its third election since then, the Resolution Foundation urged the main political parties to redress what it sees as a persistent policy bias in favor of older generations.

Divides were opening up more than a decade ago and they have “got worse,” said Resolution Foundation President David Willetts. “Young people have been short-changed by a lack of decent pay growth, a lack of decent, affordable homes, and a state that expects them to pay more in order to receive less.”

The shrinking welfare dividend for millennials is driven by two factors, the foundation said. First, there are fewer millennial taxpayers to fund public services; second, younger generations have been hit by reductions in the generosity of benefit support.

To contact the reporter on this story: Andrew Atkinson in London at a.atkinson@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Jill Ward

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