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Young are tomorrow's failing home buyers

The young are set for increasing pressure from rising debt and low earnings growth and will face extreme difficulty in entering the housing market, according to a think tank report.

Taxes, repayment of student debt and compulsory pension contributions will give the average graduate aged 21-35 an effective tax burden of nearly 50% early in the next decade, according to the report from Reform.

The new young are called IPODs by Nick Bosanquet, Professor of health policy at Imperial College London, one of the authors of the report, because they are insecure, pressured, over-taxed and debt-ridden.

"Young people are under increasing pressure from rising debt, low earnings growth and low savings and face extreme difficulty in entering the housing market," he said.

The report from the political think tank calls on the government to make the improvement of the economic position of young people a key theme of next year's Spending Review.

The key long term policy decision over the last year – the landmark Pensions White Paper – represents a very bad deal for young people who will have to pay the costs of more generous state pensions, pay for their own personal pensions on top and retire later, argues the report. Older people will not bear the cost of higher pensions and people aged over 47 now can still retire at 65. New near-compulsory payments into pension funds will push the tax burden of the typical graduate up to 48%.

Reform also released a new ICM poll which shows that all generations are concerned about the economic position of young people. A very large majority of all voters (65%), and clear majorities in all age groups, think that it is now more difficult for younger people to get started in life than it was for their parents.

Only 11% think that today's young people find it easier. A clear majority – 52% to 39% – think that none of the political parties are setting out new ideas to improve the economic position of young people.