18 hours ago
Baby boomers to open up even bigger wealth gap over working families
Baby boomer pensioners are set to get even wealthier under Labour as working families struggle, new analysis shows.
Pensioners will be £1,500 better off on average over this parliament, research by the Resolution Foundation shows.
The boost to pensioners' disposable incomes after inflation and housing costs means they will fare significantly better than other groups.
Families with children will see no improvement to their incomes by 2030, in a blow to Sir Keir Starmer's promise to raise living standards across the country.
Sir Keir has made delivering higher living standards a key 'milestone' for this parliament, promising in December to raise 'living standards in every part of the United Kingdom so working people have more money in their pocket'.
When looking across all households, the Resolution Foundation said disposable income will only rise marginally by 1pc over five years, a cash boost of £300 that the think tank described as 'bleak'.
Adam Corlett, from the Resolution Foundation, said: 'There are winners and losers within this weak outlook. Pensioner incomes [are] set to grow by a healthy 5pc over the rest of the decade, while the poorest half of the population are set to see their incomes fall.'
The growing disparity between mainly retired baby boomers and younger families will further inflame a tense political debate about generational inequality. Boomers are the wealthiest generation, with the prospects for millennials and Gen-Zs underwhelming by comparison.
It follows a period described by the Resolution Foundation as 'bust and boom' for living standards, with years of no pay growth followed by a sudden spurt last year.
Mr Corlett said: 'The living standards story of the decade so far has been bust and boom, with Covid-19 and a cost of living crisis followed by a much-needed recovery last year. But the rest of the decade looks bleak.'
He added: 'A stronger economy and the right policy interventions can brighten this outlook. Maintaining strong wage growth and returning to pre-pandemic employment levels would make middle-income Britain far better off, while ending the two-child [benefit] limit can lift living standards for poorer families.'
The research found people who own their home outright – typically babyboomers – will be far better off in coming years than those still paying down their mortgage. Their incomes are on average set to rise by 3pc by the end of the decade.
Mortgaged homeowners will meanwhile see their disposable incomes fall by 1pc, as they feel the slow burn of much higher interest rates than in the recent past.
Improving fortunes for pensioners come after the Prime Minister was forced into a humiliating about-turn on winter fuel payment cuts for the elderly.
The Resolution Foundation said Sir Keir could improve living standards for more people by ending the two-child benefit cap, a move that would raise average incomes for the poorest half of the country by £200.
The number of children in relative poverty is set to hit a record 4.8m on Sir Keir's watch despite pledges to reduce it, the Resolution Foundation said.
The think tank called for Sir Keir to fund the axing of the two-child cap by mounting a stealth raid on workers by extending the freeze on tax brackets.
A Treasury spokesman said: 'Since July, real wages have grown more than in the entire first decade of the last government, our commitment to economic stability has helped interest rates to fall four times, we have protected working people's payslips from higher taxes, froze fuel duty, increased the national living and minimum wage and in the latest data, and real household disposable income per person is growing at its fastest pace in two years.'
