A stark generational divide is emerging in Britain's economy, where young graduates face effective marginal tax rates exceeding 50% while simultaneously funding increasingly generous retirement benefits for the wealthiest generation in modern history.
The Graduate Tax Burden
The reality of this imbalance becomes clear through personal experience. One graduate from King's College London accumulated £45,000 in student debt by their 2022 graduation, which has since ballooned to £57,592.72 with approximately £163 in interest added monthly.
Statistics reveal the true cost of higher education in today's Britain. Graduates typically face an effective marginal tax rate of 37%, nearly double the 20% rate most working adults pay. The situation deteriorates further for higher earners. Those becoming higher-rate taxpayers on £50,000 confront a marginal tax rate of 51%, while some postgraduate degree holders surrender 57% of additional earnings.
The Pension Protection Racket
Meanwhile, Britain's baby boomers - the richest age group in the country with one in four being millionaires - continue to benefit from substantial state support. The controversial 'triple lock' pension guarantee has seen the state pension increase by approximately 60% in cash terms between 2010 and 2023, dramatically outpacing both average earnings growth (40%) and inflation (42%).
This pension protection comes at significant cost to younger taxpayers. By 2030, the state pension is projected to cost £15.5 billion annually, with many young people funding a benefit they doubt will exist when they retire. A 2022 Royal London survey found a third of young people expect no state pension will be available to them.
Wealth Transfer From Young to Old
The intergenerational wealth transfer extends beyond pensions. The government is reconsidering payments to millions of 'Waspi' women - Women Against State Pension Inequality - which could cost taxpayers up to £10.5 billion. This represents another substantial wealth transfer from workers to retirees.
The data reveals a dramatic shift in wealth distribution. Between 2008 and 2022, the share of national wealth held by the over-60s jumped from 39% to 49%, according to the Resolution Foundation. The wealth gap between millennials in their early 30s and baby boomers doubled over the same period.
This inequality manifests most visibly in the housing market. In 2023, the average house price reached 8.6 times average annual disposable household income, nearly double the 4.4 times ratio recorded in 1999. With over 16 million immigrants arriving since 1997 and successive governments missing house-building targets, the housing crisis continues to push property prices and rents beyond the reach of many young people.
The consequences of this generational unfairness are becoming increasingly political. A Savanta poll shows the Greens now command support from 32% of 18 to 25-year-olds, while Reform UK's share of this demographic has grown to 20%, indicating young people's desperation for radical change in a system they perceive as stacked against them.
