Baby-boomers have not had it so good, say UK's official statisticians

Charles Hymas
Baby boomers - Copyright 2016 The Associated Press. All rights reserved.

The claim that baby-boomers are living the high-life at the expense of millennials has been challenged by new research that shows they are paying more in tax.

The study by the Office for National Statistics (ONS), shows millennials and people approaching middle age are enjoying more benefits-in-kind from the state than their predecessors despite a decline in the rate of pay rises.

The ONS statisticians looked at the disposable income of the highest earner in about 5,000 families across eight decades, based on annual surveys, to compare the tax contributions and beneficiaries of public spending across generations. 

People of working age have always paid more on average in taxes than the value of public services they use. This pattern is reversed once they begin drawing a state pension and require more health care, the research found.

However, state spending for working people increased significantly because of Tony Blair’s big rises in spending as prime minister, particularly on schools and the National Health Services, and on tax credits to top up low pay and support childcare and other costs.

The analysis found that people now aged 20-24 were net beneficiaries when comparing taxes and benefits, receiving £4,124 more than they paid in, while the generation born in the 1950s were net contributors when they were in their 20s and paid in £2,593 more than they took out.

The net contribution of the millennial generation aged 25-34 fell to only £1,072 a year, much lower than the figure of £2,967 for their age group 40 years earlier.

The present generation aged over 65 take far less from the system relative to what they pay in taxes than in previous decades: their net benefits were £8,209, compared with a surplus worth £11,038 for people of their age ten years earlier and £12,405 for people aged 65 and over two decades ago.

The research looked only at income so did not include generational disparities in wealth such as the value of property or financial investments.

There has been growing political pressure to reverse some of the largesse shown to pensioners by Gordon Brown, who as prime minister raised the state pension and introduced free bus passes for people aged 60 and free TV licences aged 75. His successor, David Cameron, also guaranteed generous annual rises to the state pension.