Weaponising Interest Rates: How UK governments have set interest rates to the detriment of the young

Document type
Hanton, Angus; Jones, Elliot
Intergenerational Foundation
Date of publication
26 February 2018
Social Policy, Poverty Alleviation Welfare Benefits and Financial Inclusion, Children and Young People, Older Adults
Social welfare
Material type

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This paper calls on the Government to stop using the interest rates it controls in ways that penalise the young. It investigates the use of different interest rates set by government departments by the age of the borrower or saver. The paper demonstrates that over recent years governments have decided that “age” is a justifiable basis on which to offer loans and savings products at different interest rates, to the exclusive benefit of older people.

The paper concludes that the Government should follow the lead of HMRC and standardise the basic rate at which it lends, regardless of the age of the borrower. RPI should be consigned to history, and a standard discount rate should be adopted based on the government’s cost of borrowing.

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