The UK faces “crippling” tax rises to fund future pension and social care contributions, the Institute of Economic Affairs warns.
A new report by the think-tank, published ahead of next week’s Budget, claims total spending would need to be cut by a quarter, or health and social care expenditure by 50 per cent, to avoid future tax increases.
The IEA argues that measures being introduced to reduce the cost to the Government of the UK’s ageing population, such as raising the state pension age, are being implemented too slowly and are “inadequate”.
It says further policies should be implemented to shift the balance of responsibility for funding social protection services from the state to the individual.
“Without such reforms, the already hugely underfunded government provision of social insurance is likely to run aground,” the report argues.
IEA editorial and programme director Professor Philip Booth says: “Without reform, today’s young people are likely to be disappointed, either in terms of higher tax rates or in terms of reduced future benefits provided by government.
“The quicker the government changes policy, the more painlessly the situation will be resolved. For too long people have voted themselves benefits to be paid for by the next generation of taxpayers, not by sacrifices that they will make themselves.”