A new anti-ageing therapy is causing Sima the lab rat to far outlive all the others in her scientific trial. What is this elixir of life? The blood of the young, whose plasma infusions reinvigorate her ageing organs. The symbolism is too good to miss: older people sucking up the housing, wealth and incomes of young people will be wanting their blood next.
Intergenerational injustice gets an occasional airing, but in budgets it gets forgotten. My generation, who were given everything, still go on taking: look at our lucky lives. The NHS was created for us to be born into. RA Butler’s Education Act provided schools, new universities opened with free tuition and grants. Many have the best ever pensions, whose excellent terms are unlikely to be repeated. The huge postwar expansion in council-house building helped many families. But then those homes were almost given away to the lucky, devastating the next generation needing somewhere affordable to live. State-owned utilities were sold off to us at knockdown prices, to make the UK Margaret Thatcher’s “share owning democracy”, leaving rip-off energy and water companies for those who came after.
Young people are worse off than we were at their age, which breaks a basic social contract. Their earnings are lower, their rents are higher and they are burdened with student loans, on which they will soon be charged 6.9% interest, while triple-locked pensions rise by 10%. There are 3 million pensioners in millionaire households, a number that has nearly quadrupled in a decade, says the Intergenerational Foundation.
Shall I continue to lay it on thick? Older people seriously underoccupy their homes: 67% of homeowners of retirement age have two or more spare rooms, rattling around in houses badly needed for families.
The riposte to all this is often that, in the end, things get evened out: older people pass on their wealth in inheritances and lifetime gifts. The Institute for Fiscal Studies (IFS) has just published its analysis of an eight-year cohort of young people in their 20s and early 30s, finding that well-off parents in their 50s will provide £17bn in gifts and loans this year. Parents who can reach into their pensions (which George Osborne unwisely allowed people aged over 55 to do for the first time: his government said they could buy Lamborghinis instead of annuities) do so to help their children. Some take out second mortgages or release equity on their property, while those same family bonds mean large numbers of children care for frail older parents.
Money is mainly passed on after death, but lifetime gifts are becoming more important – and they are accelerating the growth of inequality in this already most unequal country. Children of university-educated homeowners receive six times more than the children of renters: those receiving gifts are already high earners in their generation, likely to use funds for home-buying, as most homebuyers under the age of 35 now rely on the bank of mum and dad. The IFS is clear: “Those with higher incomes were more likely to receive a transfer [of money] and received larger amounts, in absolute terms and as a share of their income.” To them that hath shall be given, this we know.
All this is only too human. Of course parents want to help out if they can, rather than buy Lamborghinis while their children struggle to pay monster rents and impossible childcare fees. The inequality it exacerbates among the young is no more the parents’ fault than the remarkable good fortune that has greeted them all their lives and enriched them in old age. Blame is not the point.
When the social contract between generations is broken, when the distortion in distribution of wealth and income becomes too grotesque, it is for governments to redress. In these Tory years the government has done all it can to widen the generational gap, spending more on the (voting) older people than on the young, while funds for education and skills fell as a share of GDP and Sure Start was axed.
For a brief moment mid-pandemic it looked as though young people would get generous recognition for the mental suffering and educational loss they had endured, locked in largely to save older people, not themselves. But like clapping for nurses, that moment passed.
Let blame begin here, now the facts are known. Older people have to accept future budgets that rebalance the disparity between the ages. The ex-Tory minister David Willetts, whose recently updated book, The Pinch, sent up early warning flares, chaired the intergenerational commission on which sat a long list of distinguished economists. He puts blame like this: “It’s not evil to want to help your kids, but we are better parents than we are citizens.” As good citizens, he says, we should care about more than just our own children.
The commission came up with radical proposals to improve the lot of young people and see older people pay more tax, including towards their own care. Suggested remedies included a massive housebuilding programme, reforming regressive council tax to make expensive properties pay their share and a surcharge on second homes. Renters would have secure tenancies and jobs would have secure contracts with no zero-hours clauses. Agricultural and business escapes from inheritance tax would be abolished. It recommended levelling up capital gains and income tax rates to raise revenue from wealth.
Willetts also queried why Rishi Sunak had not brought back the national insurance health and social care levy the then-chancellor passed into law, which was subsequently dumped by Liz Truss. The commission ended with an eye-catching proposal for a £10,000 “citizen’s inheritance” grant to every 30-year-old, for housing, education or pensions. All that comes from a Tory, alas one so unusual he barely qualifies as such. Willetts says this great shift needs cross-party agreement, as happened with pension reform, but the likelihood of it being reached seems wildly improbable.
The Intergenerational Foundation backs all those commission proposals, and its director, Liz Emerson, adds in more radical wealth-spreading, such as charging capital gains tax on primary residences. Paul Johnson of the IFS recommends radical reform or abolition of unpopular inheritance tax, which could be replaced by taxing the recipients of lifetime gifts. Failure to charge capital gains tax or inheritance tax on pension pots after death is bizarre.
Ideas abound for relieving older people of their accretions of unearned asset wealth, to redirect towards the life chances of young people. Some of these things Labour will do, but not as yet enough. Politicians need to be brave enough to tell older people to be good citizens and vote for interests beyond their own. Not easy: I nearly caused a riot giving a lecture to older people on a cruise ship about generational injustice. Sima the lab rat is a warning that longer lives must not mean sucking yet more life blood out of the young.
