![Inflation equals record of 5.2%]()
Inflation matched its record high last month, official figures have revealed, hitting the Government with a hefty bill for increased state benefits and highlighting the tough conditions faced by households.
The rate of consumer prices index (CPI) inflation in September, which is used to determine next April's rise in state benefits, rose from 4.5 per cent to 5.2 per cent, which equals the record high reached in September 2008, the Office for National Statistics (ONS) said.
Next year's benefit rates are not formally unveiled until later this year, but this means the basic single state pension will increase by £5.31 to £107.46 a week, while the joint state pension will increase by £8.49 to £171.84.
Employment benefits, such as jobseeker's allowance (JSA) and income support are also calculated using the September CPI rate, meaning JSA will increase by £3.51 to £71.01 a week. The higher-than-expected surge was driven by a jump in utility bills, as gas and electricity increased 13 per cent and 7.5 per cent respectively following price hikes from major energy providers, including Scottish & Southern Energy, E.ON, British Gas and Scottish Power.
Sir Mervyn King, governor of the Bank of England, which is tasked with keeping inflation down, is expected to mount a strong defence of the Bank's handling of the economic crisis in a keynote speech as part of the Monetary Policy Committee's visit to the north west of England on Tuesday evening.
The increase in state benefits will put more pressure on Chancellor George Osborne, who is battling to slash the nation's budget deficit, as unemployment hit a 17-year high of 2.57 million in the three months to August.
It will be the first time the uprating in benefits is calculated using CPI rather than the retail prices index (RPI) rate of inflation, which rose from 5.2 per cent to 5.6 per cent in September, which is the highest rate in 20 years. If the calculation was still based on RPI, the single state pension would have been £108.42 and the joint one would have been £173.36.
The CPI inflation rate also underlines the increasing squeeze on household incomes after figures last week revealed weekly earnings grew at just 1.8%. Housing, water, electricity, gas and other fuels increased 8.6%, the highest increase in two-and-a-half years, the ONS said. It also warned there would be further pressure from utility bills in October's figures as price hikes from EDF and Npower are introduced.
Downing Street confirmed that it was the usual procedure for September's inflation rate to be used to determine the uprating of benefit and pension levels. But the Prime Minister's official spokesman said it was a decision for the Chancellor each year whether to continue to apply this procedure.
Asked for David Cameron's response to the latest inflation figures, the PM's spokesman said: "We understand it is a difficult time for households who are affected by these price rises, which reflect what is happening to global oil and gas prices."
Severe sentences will be handed out to anyone who takes part in the kind of lawlessness which caused "mayhem" across the country in the summer, judges have warned.
Rejecting all but three of 10 sentence challenges arising out of August's widespread civil disorder, they stressed that punishments given to offenders by the courts should be "designed to deter others from similar criminal activity".
Lord Chief Justice Lord Judge, sitting at the Court of Appeal with the President of the Queen's Bench Division Sir John Thomas and Lord Justice Leveson, said the "level of lawlessness was utterly shocking and wholly inexcusable".
Among the seven appeals against "excessive" sentences thrown out by the judges were those brought by two men given four-year terms for setting up Facebook pages inciting others to riot. Lawyers for Jordan Blackshaw, 21, of Northwich, and Perry Sutcliffe-Keenan, 22, of Warrington, both Cheshire, said what their clients had done was "monumentally foolish", "hugely stupid" and "hugely short-sighted".
But dismissing their pleas for a sentence reduction, Lord Judge said both had intended to cause "very serious crime" at a time of "sustained countrywide mayhem". The sentencing judge was "fully justified" in concluding that deterrent sentences were appropriate, he said.
He added: "The abuse of modern technology for criminal purposes extends to and includes incitement of very many people by a single step. Indeed, it is a sinister feature of these cases that modern technology almost certainly assisted rioters in other places to organise the rapid movement and congregation of disorderly groups in new and unpoliced areas."
The judges also dismissed five appeals in burglary cases, but allowed three challenges relating to handling offences and reduced the custodial terms originally given.
Lord Judge said: "None of these cases of dishonest handling involves someone who handled stolen goods by way of encouragement of the commission of burglary and theft as part of the disorder. Rather, each represents opportunistic involvement after the burglaries had occurred, and although in close proximity to the scenes of disorder, the appellants did not participate or contribute to them."
On the issue of sentencing, Lord Judge said: "It is very simple. Those who deliberately participate in disturbances of this magnitude, causing injury and damage and fear to even the most stout-hearted of citizens, and who individually commit further crimes during the course of the riots, are committing aggravated crimes.
"They must be punished accordingly, and the sentences should be designed to deter others from similar criminal activity."
Captured Israeli soldier Gilad Shalit has been released by the Hamas militants who had held him for more than five years.
His freedom came at the price of a prisoner swap that let more than 1,000 Palestinians out of Israeli jails.
Shalit, a sergeant, was freed in Egypt by Hamas gunmen who whisked him across the border and handed him over to Egyptian mediators. At the same time, Israel sent buses carrying hundreds of Palestinians prisoners into Egypt on their way to Gaza, where they will be greeted by a massive celebration.
In the first public sighting of Shalit since he was captured, the 25-year-old soldier appeared pale and thin but otherwise healthy in a brief video clip broadcast on Egyptian TV.
The Palestinian prisoners, who included dozens of people who had been serving life sentences for deadly attacks, were returning to heroes' welcomes, while dozens of people prepared a joyous homecoming in Shalit's tiny hometown in northern Israel.
The deal, the most lopsided prisoner swap in Israeli history, caps a five-and-a-half-year saga that has seen multiple Israeli military offensives in Gaza, an Israeli blockade on the territory and numerous rounds of failed negotiations.
The swap got under way as Hamas moved Shalit across Gaza's border with Egypt, while Israel simultaneously began freeing the Palestinian prisoners.
Hamas' Al-Aqsa TV reported that a high-level Hamas delegation arrived on the Egyptian side of the Rafah border crossing with Gaza to hand over Shalit and to greet the returning prisoners.
In an elaborate operation, Shalit was then to be taken across Egypt's border into Israel and flown to the Tel Nof air base in central Israel to be reunited with his family.
Israel's prime minister, Benjamin Netanyahu, was at the air force base with Shalit's family.
Inflation matched its record high last month, official figures have revealed, hitting the Government with a hefty bill for increased state benefits and highlighting the tough conditions faced by households.
The rate of consumer prices index (CPI) inflation in September, which is used to determine next April's rise in state benefits, rose from 4.5 per cent to 5.2 per cent, which equals the record high reached in September 2008, the Office for National Statistics (ONS) said.
Next year's benefit rates are not formally unveiled until later this year, but this means the basic single state pension will increase by £5.31 to £107.46 a week, while the joint state pension will increase by £8.49 to £171.84.
Employment benefits, such as jobseeker's allowance (JSA) and income support are also calculated using the September CPI rate, meaning JSA will increase by £3.51 to £71.01 a week. The higher-than-expected surge was driven by a jump in utility bills, as gas and electricity increased 13 per cent and 7.5 per cent respectively following price hikes from major energy providers, including Scottish & Southern Energy, E.ON, British Gas and Scottish Power.
Sir Mervyn King, governor of the Bank of England, which is tasked with keeping inflation down, is expected to mount a strong defence of the Bank's handling of the economic crisis in a keynote speech as part of the Monetary Policy Committee's visit to the north west of England on Tuesday evening.
The increase in state benefits will put more pressure on Chancellor George Osborne, who is battling to slash the nation's budget deficit, as unemployment hit a 17-year high of 2.57 million in the three months to August.
It will be the first time the uprating in benefits is calculated using CPI rather than the retail prices index (RPI) rate of inflation, which rose from 5.2 per cent to 5.6 per cent in September, which is the highest rate in 20 years. If the calculation was still based on RPI, the single state pension would have been £108.42 and the joint one would have been £173.36.
The CPI inflation rate also underlines the increasing squeeze on household incomes after figures last week revealed weekly earnings grew at just 1.8%. Housing, water, electricity, gas and other fuels increased 8.6%, the highest increase in two-and-a-half years, the ONS said. It also warned there would be further pressure from utility bills in October's figures as price hikes from EDF and Npower are introduced.
Downing Street confirmed that it was the usual procedure for September's inflation rate to be used to determine the uprating of benefit and pension levels. But the Prime Minister's official spokesman said it was a decision for the Chancellor each year whether to continue to apply this procedure.
Asked for David Cameron's response to the latest inflation figures, the PM's spokesman said: "We understand it is a difficult time for households who are affected by these price rises, which reflect what is happening to global oil and gas prices."
Joanna Yeates's killer admitted his crime to a prison chaplain but was angry when told his confession would be passed on, a court has been told.
Salvation Army member Peter Brotherton told the jury he shook hands with Vincent Tabak before the defendant told him: "I have got something to tell you that is going to shock you."
Tabak, who admits manslaughter but denies murder, had been under 24-hour supervision at HMP Long Lartin, and was said to have told Mr Brotherton of his plan to plead guilty on February 8 - three weeks after his arrest.
Appearing in the witness box at Bristol Crown Court, Mr Brotherton said he decided he could not keep the information secret because Tabak was not religious.
Mr Brotherton, who has been visiting prisoners since 1975, said "there was a little bit of anger" in Tabak's voice after the chaplain said he would have to pass on the information. Tabak, was said to have made the confession on their third encounter.
"I'm not going to tell you anything else," Tabak was said to have told Mr Brotherton. When Tabak told him he had something that was going to "shock you", Mr Brotherton was said to have replied: "You tell me and we will see."
After Tabak said "I am going to change my plea", Mr Brotherton asked him: "Are you sorry what you have done?" Tabak was said to have replied: "Yes."
During cross-examination, Tabak's QC William Clegg claimed Mr Brotherton's comments differed from a statement he gave on February 16.
Mr Clegg said: "Let me suggest to you there was no suggestion of 'changing my plea'. 'I am going to plead guilty' - that's what he said. "You said 'What for?'. And he said 'For the crime I have done'."
When the barrister suggested some of his evidence on Tuesday was wrong, Mr Brotherton replied: "If that's what you say, I would agree with you."
Liam Fox's contacts with his self-styled adviser Adam Werritty constituted a clear breach of the Ministerial Code of Conduct, the Cabinet Secretary Sir Gus O'Donnell has said.
In his report on the former Defence Secretary, Sir Gus said that Dr Fox should have declared details of his relationship with Mr Werritty to his permanent secretary at the Ministry of Defence.
He said Dr Fox's "close and visible association" with Mr Werritty and his misleading use of business cards describing himself as Dr Fox's adviser fuelled a general impression that Mr Werritty spoke on behalf of the British Government.
Sir Gus said there had been a "blurring of lines" between Dr Fox's private and official responsibilities which was "not appropriate and not acceptable".
Dr Fox said that he welcomed the fact that the report made clear that there was no basis in any allegation of him having breached national security or having sought, expected, or received financial gain.
In a statement, Dr Fox accepted it was a "mistake" to blur distinctions between government and private roles, adding: "I take my share of the responsibility for this."
Police investigating a fire at a farm in which a two-year-old girl died said they have traced three people they want to speak to about the blaze.
The three witnesses were seen in a field overlooking Hessle Farm, Wragby, near Wakefield, West Yorkshire, shortly after the fire, which killed Isobel Dobson last month, broke out.
Detectives said they would be speaking to the three people, who they believe may have information about the blaze on September 30.
Isobel's 37-year-old stepfather was arrested on suspicion of murder and attempted murder after the fire and remains on police bail pending inquiries.
The two-year-old girl, from Hemsworth, near Pontefract, and her one-year-old half-sister were trapped in a burning van when the fire broke out in an adjacent hay barn. Her stepfather and the girls' mother rescued the baby from the vehicle but were beaten back by flames as they tried to save Isobel. Her body was found later that night.
The man and his one-year-old daughter received treatment for burns at Pinderfields Hospital in Wakefield.
West Yorkshire Police said the cause of the fire had not yet been established and a joint investigation by police and the fire service was still ongoing.
A force spokeswoman said: "Police appealing for witnesses in relation to the fatal fire at Wragby, in Wakefield, on Friday September 30, in which Isobel Dobson died, have managed to trace three people who they believe may have information.
"Detective Superintendent Sukhbir Singh said officers would be speaking to them. He continued to appeal for any other witnesses or anyone with information that they feel could assist the investigation to contact the homicide and major inquiry team via 0845 6060606 or Crimestoppers anonymously on 0800 555 111."
An inquest into Isobel's death was opened and adjourned last week.
A young mother was beaten to death by her violent ex-partner in front of her two-year-old daughter after police failed to intervene 11 times, investigators have said.
Casey Brittle, 21, repeatedly called Nottinghamshire Police before she was murdered by Sanchez Williams.
Amerdeep Somal, a commissioner at the Independent Police Complaints Commission, said Williams, from Nottingham, was "well-known to local police for his propensity for violence and threatening behaviour".
"In this case it is clear that a number of officers failed to perform to the level expected of them and basic actions, that may have helped others see the full picture of her suffering, were not completed," the commissioner said. "No consideration was given to why Casey was reporting domestic abuse but then subsequently saying that she did not want police help."
Ms Brittle died from a series of injuries to her head, including a fractured jaw, cuts and bruising in October last year.
Williams, of Lathkill Close, was jailed for life after he admitted murdering Casey at her home. His minimum term of 15 years was increased to 20 years by the Court of Appeal in June after the Lord Chief Justice, Lord Judge, agreed the original sentence was "unduly lenient".
One of the aggravating features of the case, said Lord Judge, was that the small child had "witnessed the murderous attack on her mother by her father". The judge said: "We simply cannot guess the long-term damage which will have been caused to that little girl and we can only hope that her future happiness is not irretrievably damaged."
In a statement, Paul Broadbent, assistant chief constable of Nottinghamshire Police, said the force unreservedly accepted the recommendations of the report and that he deeply regretted Ms Brittle's death and the circumstances surrounding it and had apologised to her family.
Six officers have appeared before a misconduct meeting and admitted their individual failings in relation to the case. One received a written warning while three received management advice, Mr Broadbent said. No action was taken against the remaining two.
Four others, who were not required to attend the meeting, have been subject to unsatisfactory performance procedures, he added.
Travellers have locked down the UK's largest illegal travellers settlement as they expect bailiffs to begin a site clearance on Wednesday.
Last minute work to reinforce the barricades behind the main gate at Dale Farm, Essex, was under way and three people will chain themselves to the gate by the neck at dawn.
Two cars and a former Russian military vehicle have been parked behind the gate, and piles of wood and bricks have been gathered at several key points. An alarm will sound if bailiffs make a move during the night.
The number of supporters inside the site has fallen from more than 100 a month ago, when the council was first expected to begin the clearance, to less than 50 now. A similar number of travellers remain in their homes.
A delegation of travellers who walked out of a meeting with council officials on Tuesday said they expected bailiffs to arrive after 8am on Wednesday.
Dozens of bailiffs arrived at a compound neighbouring the site for last minute preparations on Tuesday. Two diggers and a crane were on standby. At a nearby police compound, van loads of officers arrived throughout the day.
At the earlier meeting, the council said it had only intended to discuss health and safety, not to negotiate. Campaigner Gratton Puxon said: "We also tried to discuss how elderly travellers will be able to access legal homes, which will stay, if roads and hard standings are destroyed. As things stand the council will not budge and can move in at any time and there is no hope of a resolution."
Tony Ball, leader of Basildon Council, said: "We now believe that those who want to leave peacefully have already done so and those who are left have made it clear that they have no intention of co-operating with the council.
"Resistance and violence as some are now suggesting will be in nobody's interest - especially not the travellers or their families. We now must get on with the difficult job of clearing Dale Farm in as safe and dignified a manner as possible - and that is what we will now do."
The clearance of 54 unauthorised plots, home to some 80 families, follows a decade-long row over the development of the green belt site. Last week the travellers lost a High Court bid to stop the eviction and on Monday they were refused the chance to appeal against the ruling.
Julian Barnes has won the Man Booker Prize at the fourth attempt for his novel The Sense of an Ending.
He picked up the £50,000 prize at a ceremony at Guildhall in London.
Dame Stella Rimington, who chaired the judging panel, said the 150-page novel "spoke to the humankind in the 21st century".
The book is the story of a middle-aged man, Tony Webster, struggling to come to terms with his life as his past begins to unravel from the moment he receives a lawyer's letter.
Barnes has been shortlisted for the prize three times previously without winning, but Dame Stella said that "didn't figure in the debate".
She said: "It is a book about somebody who appears to be at first blush a rather boring bloke and you think 'Why are we reading about a very boring bloke?' but gradually as the book goes on you realise that this boring bloke who has presented himself in that way doesn't actually know very much about himself and gradually he's revealed to be far from that but to be somebody quite different and I think one of the things the book does is talk about the humankind.
"None of us really know who we are, we present ourselves in all sort of ways but maybe the ways we present ourselves are not how we really are and what this book does is unravel for us this person and who he really is and what's happened to him and it shows that his memory of what happened and his understanding of himself is actually quite wrong".
She said the slim volume stood up to re-reading several times and praised Barnes' style, adding: "We thought it was a beautifully written book, we thought it was a book that spoke to the humankind in the 21st century."
Jon Howells from booksellers Waterstone's said: "Julian Barnes is a worthy winner - this is not right writer, wrong book syndrome, The Sense of an Ending is a brilliant novel, one that turns in the reader's head long after finishing."
The five judges took just over 30 minutes to come to their decision and Dame Stella said it was eventually unanimous and "there was no blood on the carpet".
Families facing the biggest squeeze on household incomes since the 1930s should expect some respite from high inflation next year, Bank of England governor Sir Mervyn King has said.
Sir Mervyn said price pressures within the UK still remained "subdued" and weakening demand should see prices fall further, despite CPI inflation hitting a three-year high of 5.2% in September.
Spiralling energy tariffs and bumper mobile phone bills were behind the higher inflation rate, which dwarfs average wage growth of just 1.8% a year and comes as unemployment is at a 17-year high.
The Office for National Statistics (ONS) said gas and electricity jumped 13 respectively, food shot up 6.4%, communication costs, driven by mobile phone charges, increased 5.9 on a year ago.
Sir Mervyn defended the Monetary Policy Committee's (MPC) decision to pump an extra £75 billion into its quantitative easing programme - a move which could fuel further rises in inflation.
He said: "It may seem odd to many that a time of high and rising inflation, the MPC has eased policy further."
He went on: "Increases in energy prices, import prices and VAT account for the current high level of inflation. Once the effect of these temporary factors begins to dissipate, inflation should fall back sharply early next year."
Elsewhere, Sir Mervyn said new incentives should be provided to banks to encourage lending to small and medium-sized enterprises (SMEs) but he said ultimately this was down to the Government.
September's inflation rate is traditionally used to calculate April's rise in state benefits, although the Government has yet to confirm this will happen.
If it does, the single state pension will increase by £5.31 to £107.46 a week, while Jobseeker's Allowance will increase by £3.51 to £71.01 a week.
A female police detective whose body was found in woodland has been described as an "exceptional officer".
Surrey Police confirmed that the body was that of 33-year-old Detective Constable Heather Cooper. Her partner, Peter Foster, a former police detective, is under arrest on suspicion of murder.
Officers were called shortly before 11.30pm on Sunday to a report of a concern for safety. They went to West Street, Haslemere, Surrey, where mother-of-two Miss Cooper lived.
Following inquiries, they then went to Blackdown Woods near Lurgashall, West Sussex, where a search of the woodland led to the discovery of the body concealed in undergrowth about four miles from the house.
Police then detained 35-year-old Foster who is now believed to be a heating engineer after leaving Surrey Police around two years ago.
A Surrey Police spokeswoman said that Miss Cooper joined the force in 2003 and worked in the Public Protection Investigation Unit based at Guildford Police Station.
During her career she received several letters of praise from senior officers for her work on various crimes and in 2009 was given a commendation by the Force in recognition of her "professionalism, dedication and commitment". She was on maternity leave at the time of her death, the spokeswoman added.
Surrey and Sussex Assistant Chief Constable Olivia Pinkney said: "Heather's death has had a profound effect on all who knew her and we are doing everything we can to support her family at this difficult time. She was an exceptional officer and much loved among her police colleagues, many of whom were also her friends.
"The police service is in many ways like a family. The death of any officer is always a time of sadness but to lose Heather under such circumstances has been particularly hard to bear.
"I cannot praise enough the professionalism of Heather's friends and colleagues within the force, many of whom have continued to do their jobs at a time of personal grief."
More than a million families could lose over 16% of their council tax allowance under benefit changes being planned by the Government, the TUC has said.
A study by the union organisation found that 5.8 million people received council tax benefit, but under the proposals it will be replaced from 2013/14 with schemes run by local authorities, with the aim of making savings worth 10%.
The TUC said it was concerned that because pensioners and disabled people will be exempt from the changes, remaining groups will be hit by a bigger cut, estimating it could be at least 16%.
It was likely that more than a million families will face cuts, which would "inevitably" increase the number of children living in poverty, said the TUC.
General secretary Brendan Barber said: "Everyone who receives this benefit does so because they live at the very least on the verge of poverty.
"Excluding pensioners, disabled people and many in work from this 10% cut will simply exacerbate the problem for those remaining. The planned reforms will force local authorities to push vulnerable families deeper into poverty and debt.
"The Government is already set to miss its child poverty targets and this change will only make things worse."
Council tax benefit for under 65-year-olds is £15.74 a week, or £818 a year, so a cut of 10% would bring it down to £736, while a 16% reduction would see it fall to £687, said the TUC.
Listed industrial buildings ranging from mills to power stations are more at risk than almost any other kind of heritage, it has been claimed.
English Heritage said that despite four-fifths of people believing industrial heritage is as important as castles and country houses, around 11% of Grade I and Grade II* listed industrial buildings are at risk of neglect, decay or even demolition.
The figure is far higher than the average across all Grade I and Grade II* listed structures, where 3% of buildings are at risk.
The conservation body revealed the "bleak picture" for England's historic industrial buildings as it published its annual Heritage At Risk register. Key industrial sites on the at-risk list include Chatterley Whitfield Colliery, in Stoke-on-Trent, the first pit to produce a million tons of coal in a year, Stanley Dock in Liverpool, the Bowes Railway, Tyne and Wear, and Battersea Power Station in London.
The findings have prompted English Heritage to take action to help save what chief executive Simon Thurley described as the "world's most important industrial heritage".
He said that while many people's image of England is one of green fields and rolling hills, as the first nation in the world to industrialise, many of the structures and technologies needed to drive the Industrial Revolution were invented in England, from railways to mines, and remain a key part of the heritage.
The decision to focus on industrial heritage is backed by a poll of public attitudes, which revealed that 86% believed it was important to value and appreciate buildings such as mills and collieries, and 80% thought they were as important as country houses and castles.
As part of efforts to tackle the problems facing these buildings and sites, the Government's heritage body is planning to turn itself into a "marriage agency" to bring together developers and the 40% of listed at-risk industrial buildings which can be put to sustainable and economically viable new uses.
And to recognise that the economic climate is not great for developers, English Heritage said it may need to encourage owners to "mothball" important buildings so that they do not fall into disrepair in the next few years before uses can be found for them.
It is bringing out a new set of guidance and £2 million in grants to help owners protect vacant historic buildings until uses can be found for them, for example by making sure the roof is on and pigeons are kept out.
Household spending in Britain has fallen at an unprecedented rate over the past three years, an economic study claims.
In an analysis of the last recession, the Institute of Fiscal Studies (IFS) also said there were marked changes in the areas people cut back on compared with previous economic downturns.
Household expenditure fell by 5% in real terms between 2008 and the first quarter of 2009, when Britain was last officially in recession, but unlike the previous two downturns, in 1980-81 and 1990-91, spending has still not recovered to its pre-recession levels.
Food purchases were significantly lower in the last recession due to higher food prices, along with lower spending on holidays, alcohol and eating out.
Consumer durables expenditure, though, was little changed during 2008-09, something the IFS attributes to the temporary cut in VAT and the vehicle scrappage scheme introduced by the last government. In the previous recessions, consumer items saw the largest reductions in spending, according to the IFS.
The think-tank also said it was young households, where the oldest person was under 35, which reduced spending fastest while households with people over 64 carried on with little change.
Cormac O'Dea, a research economist at the IFS, said the pattern of household expenditure is crucial to the understanding of the path of the economy as it accounts for about 65% of GDP.
"Continued economic weakness has gone hand in hand with continued low levels of household spending and the drop in spending since 2008 has been unprecedented in recent history both in its scale and its persistence."
Last month, the IFS warned the impact of public spending cuts and tax rises on UK household income would be felt for up to 10 years.
Government forecasts made in March implied twice as long a period of spending below the pre-recessionary period than in the previous two downturns, the IFS said, but even these forecasts are now regarded as too optimistic.
More than a third of homes in England are "under-occupied," putting pressure on younger generations as older people remain in their properties for longer, a study has suggested.
The Intergenerational Foundation, which released the report, called for tax breaks to encourage older people to downsize.
Its Hoarding on Housing report said that 25 million bedrooms are empty in England's homes.
The document, based on English Housing Survey figures, found that 51.5% of over-65s live in homes with two or more bedrooms that they do not need, and half of single households where the owner is aged over 60 have three spare bedrooms or more.
The document said that more than a third of homes are "under-occupied," up from a fifth in 1971. These are classed as households with at least two bedrooms more than they require.
"It is perfectly understandable that retired people cling to their home long after it has outlived its usefulness as a place to bring up a family in," said the report's co-author Matthew Griffiths. "But there are profound social consequences of their actions which are now causing real problems in a country where new house-building is almost non-existent."
The document said that in 2008/09 three-quarters of over-65s owned their own home, up from 49% in 1981. It said the age group with the largest levels of home ownership is 55 to 65, with an 80% home ownership rate.
The report said: "The ageing UK population will be one where outright home ownership will be the norm. It will also be one dominated by small households."
Unemployment and debt meant "home ownership is being replaced by the private rented sector as the likely default housing option for younger people". More than 70% of those in the private rented sector are aged between 16 and 44, the study found.
The Intergenerational Foundation said it was not urging the Government to "turf out" older generations. It called for reforms such as exemption from stamp duty for the over-60s when they move to a smaller property, and overhauling the council tax system.
Around six million people could receive tax rebates of around £300 each, while one million others will be told they have underpaid to the tune of £600, it has emerged.
Her Majesty's Revenue and Customs (HMRC) has carried out an annual check to make sure that the amount of tax and National Insurance deducted by employers matches its records.
One million people will receive letters in the next few months notifying them that they have paid too little tax. The average amount owed per person is expected to be around £500 to £600, an HMRC spokesman said.
He explained that those affected will be able to pay the amount back in stages if necessary, by either having their tax code adjusted or coming to an agreement with the Inland Revenue.
Six million other people will be told that they paid too much tax in the year 2007/8 or earlier, with average rebates of around £300.
This process will take longer, but HMRC hopes to have it completed by December 2012.
Last year the Inland Revenue brought in a new IT system which made it easier to spot discrepancies and therefore more cases where people have over or under paid came to light.
The HMRC spokesman said: "Money that is owed going back many years is now going to be automatically paid back as we get the tax system up to scratch.
"We are getting cases that were left unreconciled up to date as quickly as possible. Anyone owed money will be paid back with interest without the need to contact us.
"The fact is there will always be some cases at the end of every tax year that require an under or overpayment to balance but these cases will reduce as the new system beds in."
Facebook may be changing people's brains as well as their social world, research has shown.
Scientists have found a direct link between the number of "Facebook friends" a person has and the size of specific parts of the brain.
The regions involved have roles in social interaction as well as memory and at least one is implicated in autism.
It could be that the differences seen are due to the effects of online activity on the brain.
Alternatively, people with certain brain traits may be more likely to have larger numbers of friends, both on Facebook and in the real world.
"We have found some interesting brain regions that seem to link to the number of friends we have - both 'real' and 'virtual'," said Dr Ryota Kanai, one of the researchers from University College London.
"The exciting question now is whether these structures change over time. This will help us answer the question of whether the internet is changing our brains."
The research is published in the journal Proceedings of the Royal Society B.
Professor Geraint Rees, from UCL, who led the Wellcome Trust-funded research, said: "Online social networks are massively influential, yet we understand very little about the impact they have on our brains. This has led to a lot of unsupported speculation the internet is somehow bad for us.
"Our study will help us begin to understand how our interactions with the world are mediated through social networks. This should allow us to start asking intelligent questions about the relationship between the internet and the brain - scientific questions, not political ones."
