Govt accused of 'IPOD neglect'

Report claims young workers over taxed with few rewards

Tuesday, 30, Oct 2007 12:00

The government is neglecting a generation of young workers who face a future of debt and high taxes, a think-tank has claimed.

The centre-right think tank Reform warns 18 to 34-year-olds can expect to lose half their income through tax by 2012, funding government initiatives targeted at the wealth of baby boomers.

Today's report dubs younger workers the "IPOD generation," characterising them as insecure, pressurised, over-taxed and in debt.

Reform calls on the government to reduce public spending and borrowing and set new fiscal rules in order to avoid "mortgaging the future of a generation".

In one of his first statements as prime minister, Gordon Brown pledged to help first-time buyers as well as all ambitious young people.

But Reform claims the government's spending announcements to date show an increased priority for healthcare and pensions, resulting in a heavier financial burden for young workers.

Nick Bosanquet, consultant director of Reform, said: "Protecting today's and tomorrow's young people is a defining modern political issue.

"The IPOD generation have been reduced to galley slaves in the public spending empire of the baby boomers."

The Treasury disputed Reform's report, insisting its analysis was misleading and inaccurate.

A Treasury spokesman explained: "Pension contributions and student loan repayments are plainly not taxes; what's more the report makes arbitrary assumptions about young people's spending patterns.

"The fact of the matter is that since 1997, reforms of the tax and benefits system carried out by the government have improved incentives for young people to progress in work."

The Conservatives argued Mr Brown's final Budget did little to help first-time buyers and increased taxes for single people on low incomes by abolishing the ten pence tax rate.

Philip Hammond, shadow chief secretary to the Treasury, said: "No wonder so many young people are disillusion with government and do not trust Labour to their needs."

The Liberal Democrats also argued the government is failing young graduates and laid the blame on Mr Brown.

Economic spokesman Vince Cable said: "A decade under Labour has left many young people facing crippling student debt, high council tax bills and, following the abolition of the ten pence rate, higher levels of income tax."