Millennial Budget wishlist: What we want to see from Philip Hammond - and what we don't
The Budget is a financial and political affair in which the Chancellor sets out both to reassure existing party supporters and to woo new fans.
The Conservatives have not had a reputation for being very popular with younger voters, but it’s become increasingly important for all parties to focus on those who they hope will become the party members of tomorrow. Is Philip Hammond set to deliver? Here’s a list of what some of us at MoneyLens hope will (and won’t) feature in his Budget…
What we DO want to see from Philip Hammond on October 29…
1. Scrap the “tampon tax”
Wouldn’t it be great if the Chancellor promised to scrap VAT on tampons and other sanitary products?
They attract VAT of 5%. This is less than the standard VAT rate of 20%, which applies to most goods, but it’s still unfair when you consider that other products – such as most food – are entirely free of VAT.
A 2015 petition to scrap the “tampon tax” attracted more than 300,000 signatures but the Government said EU rules prevented it from cutting VAT below the 5% level.
The European Commission said it would try to bring in a zero rate for sanitary products this year but so far no such change has materialised. But Brexit could mean the UK can go its own way. Taking action on this issue would win serious brownie points with younger voters.
2. Boost spending on mental health
Theresa May has pledged significant increases to NHS spending in future years. One area where younger citizens in particular would benefit would be through increased funding going to tackle mental health. Preventative measures would, in time, reduce the cost to tax payers (and companies) by billions of pounds a year. The Tories are traditionally seen as out of touch and not very empathetic – so this would improve their image.
3. Introduce a renters’ perk by helping long-term tenants buy their home
It’s been suggested that landlords should be given an incentive to sell their buy-to-let properties to long-term tenants, many of which are younger renters. One incentive for example would be to exempt landlords from capital gains tax where the tenant is the buyer.
This could benefit younger tenants, who could arguably negotiate a good price on the property based on the fact that their landlord escapes a tax bill. In practice there are difficulties – and the measure might be unpopular because it would be seen to favour buy-to-let investors.
But the Government needs to consider such measures both as a way of helping younger buyers get on the property ladder – and giving more security to tenants.
4. Make it easier for older generations to give money to younger relatives tax-free
Inheritance tax, which is paid when someone dies and their estate is worth more than a certain amount, affects relatively few families in practice. But many parents and grandparents take notice of the inheritance tax rules during their later years and plan accordingly. At the moment well-off parents or grandparents can only give away £3,000 per year without potential inheritance tax considerations. This limit hasn’t been raised since the 1980s, meaning it is a far less significant sum today than in previous decades. If it were increased (say to £10,000) younger generations might find they are the lucky recipients of more by way of cash gifts from parents and grandparents. This would help better-off families only – but it’s unlikely to result in a big loss of tax to the Government.
…and what we DO NOT want to see
1. Gimmicky, tokenistic measures that deliver nothing – such as the “millennial railcard” sham
Chancellors often unveil measures with huge fanfare – where in reality the measures are ill-thought out and doomed to fail.
Philip Hammond’s November 2017 announcement of a “millennial railcard” – supposed to give discounts to those aged 26-30 – was given a lukewarm welcome at the time.
But there were several problems.
Firstly, the benefits of a 26-30 railcard were limited, especially for regular commuters in peak hours who could be better off just getting season tickets.
But other logistical problems have helped make the scheme a full-scale flop.
So far only 20,000 26-30 railcards have been released as “trials”, covering only a small fraction of the millennial population. The scheme’s website has crashed on occasion.
These small token gestures – which are superficially attractive offers but in reality have insignificant benefits - are an attempt to win over young voters. In reality they show how detached political leaders are from understanding the more pressing issues affecting millennials today such as housing, employment and student debt.