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Chancellor considers linking taxation to age in the Budget, report says

Philip Hammond will restructure the tax system to make older people pay more and younger people pay less, it has been reported.

The Chancellor is expected to link taxation to age for the first time in next month's Budget as part of an attempt to promote "intergenerational fairness", according to The Daily Telegraph.

It follows concern over the past few years that members of the "baby boomer" generation have seen their wealth grow, while younger "millennials" are facing a poorer future than their parents.

The Telegraph says tax breaks will be offered to workers in their 20s and 30s, and that will be paid for by cutting tax relief enjoyed by older and wealthier workers.

A Whitehall source told the newspaper that the Budget would be a "bold" attempt by Mr Hammond to "restack the deck for the next generation".

The source said: "It is more of a question of rebalancing than just spending money. He is looking at things around regulation - at no cost to the Exchequer - or rebalancing.

"There is a recognition of a need to make an offer to appeal to younger voters in some way. That has been falsely focused on students and student finances. It is a much broader thing."

During the Conservative Party conference two weeks ago, Theresa May and Cabinet ministers unveiled a tuition fee freeze, an extension of help-to-buy and more protection for tenants of private landlords, all of which were interpreted as aimed at younger voters.

On 2 October, the Chancellor had tweeted: "We are the party that makes a clear commitment to the next generation - that they will be better off than us. We will not let you down."

The tax proposals have been backed by David Willetts, the former Conservative universities minister who now heads the Resolution Foundation think tank.

He told Radio 4's Today programme: "If you look at the incomes of younger people, they are lower than younger people used to earn.

"If you are 30 now, you are probably earning less than a 30-year-old 10 or 15 years ago. So anything that rebalances and helps younger people, I would be in favour of."

The "Thatcherite" Institute for Economic Affairs (IEA) said Mr Hammond's plan was plausible but could lead to rich young people, like city traders, being given tax cuts when they didn't need them.

Julian Jessop, the IEA's chief economist, told the Telegraph: "There are precedents for applying different tax rates at different ages - for example you don't pay National Insurance after you reach state pension age, unless you're self-employed and paying Class 4 contributions.

"And there are many other ways in which the tax system discriminates - for example, between married and single people. But it's not obvious that merely being 'young' is a good basis for paying less tax."

He said that if some younger people face specific problems, they should be tackled directly, rather than by the tax system.

Other commentators have said the policy could face difficulties as it will target the generations that make up the Conservative Party's core vote.

Meanwhile, The Times reported that some Conservative MPs are urging Mr Hammond to use Budget cash to increase the number of houses being built to tackle the housing crisis.

The Telegraph's claims come amid a battle between two wings of Theresa May's Cabinet over the future direction of Brexit negotiations, with calls to sack pro-Remain Mr Hammond for his unwillingness to plan for a no-deal scenario.

There were suggestions that stories in some of the weekend's papers, for example one in The Sunday Telegraph saying that the DUP wants Mr Hammond demoted, were placed by his opponents who support a harder Brexit.

But he was supported by fellow Remainer Nicky Morgan, the chair of the Treasury Select Committee, who told ITV: "The majority of MPs in the parliamentary party do not want Philip Hammond to be sacked."