Chancellor Rachel Reeves is expected to frame upcoming tax increases in the Budget as essential for managing the UK’s national debt.
Proponents of controlling national debt argue that it safeguards the financial future of younger generations. A drastic increase in national debt could necessitate higher taxes for younger individuals to cover interest payments.
Generation Z, those born between 1997 and 2012, have faced economic challenges over the past 15 years, including benefit cuts and the repercussions of the significant rise in university tuition fees in England from £3,375 to £9,000 in 2012 (with subsequent changes in Wales).
Furthermore, homeownership rates among those born since the 1990s are notably lower than previous generations due to the difficulties in entering the housing market.
However, most politicians, including the chancellor, remain committed to maintaining the “triple lock” on state pensions, ensuring annual increases based on the highest of average wage growth, inflation, or 2.5%.
Concerns are mounting that current fiscal policies favor pensioners at the expense of younger generations, and that the triple lock, in particular, will drive up public spending and national debt in the long run.
Will this Budget genuinely benefit younger generations, or could it burden them with increased taxes and debt?
BBC Verify has analyzed the relevant data.
The UK’s national debt currently hovers just below 100% of GDP, which represents the total value of goods and services produced by the economy annually.
The Office for Budget Responsibility (OBR), the government’s official forecasting body, has cautioned that it could exceed 250% within the next 50 years unless taxes are increased or public spending is reduced.
Some economists question the likelihood of such a dramatic and sustained debt surge, suggesting it would trigger a bond market crisis well beforehand. This would lead to extreme borrowing costs imposed by private investors, compelling a change in tax policy or spending.
Nonetheless, the OBR states that its long-term projection aims to underscore the “unsustainable” trajectory of the UK’s public finances.
According to the OBR, the primary driver of rising long-term spending, and therefore the increase in national debt, is the aging population, necessitating increased government expenditure on the NHS, social care, and state pensions.
The population aged over 65 is projected to rise from 13 million to 22 million over the next five decades. This would increase the old-age dependency ratio – the proportion of older people (over 65) relative to those aged 16 to 64 – from approximately 30% today to nearly 50% by 2070.
The state pension age is currently 66, but it will likely be raised for those born after 1990 to encourage longer working lives and reduce the old-age dependency ratio.
Even with this measure, the national debt is likely to increase substantially from current levels due to these old-age spending pressures.
Since 2010, government benefit policies have generally favored older generations at the expense of younger ones.
Over the past 15 years, individuals over 65 have received an average of £900 more per year, while those under 65 have lost an average of £1,400 per year, according to calculations by the Resolution Foundation think tank.
This disparity is primarily driven by the triple lock, which has caused the value of the state pension to increase faster than average wages since 2010, coupled with government cuts to working-age benefits, including housing benefits, unemployment benefits, and universal credit.
The OBR projects that the triple lock will continue to drive up state pension spending in the coming decades.
If the state pension were only tied to increases in average wages, its share of GDP would rise from 5% today to only 6% in 2070, according to the OBR. However, it projects that the cost of the triple lock will push government spending on the state pension to nearly 8% over the next 45 years.
While this may represent only two extra percentage points, it equates to approximately £60 billion in today’s money, a cost that would be borne by younger, working-age individuals through their taxes.
The impact on different age groups will depend on which taxes are increased and which benefits are protected.
For instance, additional taxes on high-value homes would disproportionately affect older individuals who tend to possess greater property wealth.
Regarding earnings, pensioners still pay income tax but are no longer subject to employee National Insurance.
And younger individuals are considered to have been more heavily affected by the increase in employer National Insurance contributions introduced by Rachel Reeves in her first budget in October 2024, which appears to have slowed down job hiring rates.
All taxpayers share an interest in controlling the debt burden as a proportion of the economy. However, government borrowing also funds investment in infrastructure such as roads and housing. Some economists caution that reducing such spending and borrowing out of concern for national debt could be counterproductive and ultimately detrimental to younger people.
As for the triple lock, younger individuals could benefit from its continuation upon their eventual retirement – and polling indicates that 18-49 year olds are generally in favor of maintaining the policy.
Nevertheless, considering the past 15 years, many economists argue that younger people also have a vested interest in a rebalancing of the tax and benefit system to address the treatment of older and younger generations.
Clarification 24 November: The reference to university tuition fees has been changed to make clear that the large increase happened in 2012 and to make clear the extent of this within the UK.
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BBC Verify has examined what we know about how the Budget is likely to financially affect different groups.
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