Life is both harder and easier for younger people than it was for older generations when they were young. That sounds contradictory – and it is – because the facts are mixed.
Young people today are much less likely to die of diseases and accidents than older generations were, thanks to advances in healthcare and safety. In 1986, 2,884 children died in the UK compared to just 1,157 in 2016. Many more young people attend university, too. As recently as 1990, just 77,163 students were awarded a degree compared to 350,800 in 2011. They also have access to time-saving technology once seen only in science fiction and a world of information on their smartphones that was previously only accessible to the most committed of researchers.
But life isn’t entirely a rosy story of Deliveroo, Wikipedia and smashed avocados. Young people today earn less than their parents did, pay higher rents and are much less able to buy their own homes. And while many more attend university, it is much harder to get a job without a degree than it was. Rightly, too, students have to pay much of the costs of their higher education. But this leaves graduates with substantial debts. At 31 years of age, those born in the 1970s had an average household net wealth of £53,500. But that statistic did not improve for those born in the 1980s at the same age. In fact, it had collapsed to just £27,500.
So it is timely that a new report by the House of Lords intergenerational fairness committee calls for policy to be rebalanced “in favour of the young to save the intergenerational bond”. It follows their long parliamentary inquiry, to which I was pleased to give evidence.
Commendably, their Lordships don’t shy away from difficult recommendations. They call not only to scrap the state pension ‘triple lock’ but also age-based free TV licences, free bus passes and winter fuel payments, arguing that while they might have been justifiable when pensioners were the poorest age group, that justification no longer exists. These are arguments the TaxPayers’ Alliance has long advanced.
They also recommend extending national insurance to people over the state pension age, who are currently exempt, as part of a “greater alignment and eventual merger” with income tax. Raising tax at time when the tax burden is already at a 50-year high will not be welcomed by taxpayers, but it’s great to hear another call to end the ludicrous situation of running two separate income tax systems under the deceitful pretence that one is an insurance scheme – another issue close to the heart of the TaxPayers’ Alliance.
But as any young renter will know, the biggest intergenerational issue of them all is the housing shortage, particularly in London and other high demand cities with good job opportunities. The evidence is pretty clear that the overwhelmingly dominant culprit is restrictiveness in the planning system, particularly in the areas like London where people want to live because good jobs are nearby.
As in any market, a shortage of products leads to high prices. High rents incentivise landlords to pay high prices for property. This pressure should in turn incentivise landowners to develop their property to profit from the potential rental income from homes built on their fields or, if the land already has homes on it, by building more homes, taller and more densely.
But all too often, that’s not what actually happens. Instead, the green belt bans homes from being built on the edges of existing cities while local planning policies abound with restrictions which severely limit the permitted height of new buildings and prevent people filling out their plots of land by building on gardens.
The green belt and restrictions on the height and bulkiness of new buildings are often popular with (often older) local voters, but their consequences are dire for (often younger) tenants and home buyers. Fixing that has to be the overwhelming priority for anyone interested in fairness between the generations. On this key aspect of why we have a housing shortage, the Lords had precious little to say. Which is a shame, because on a great many other issues, including closely related ones such as the stamp duty problem, developing public sector land and housing supply in general terms, there is much to recommend, unlike so much written on the subject.
This Lords report makes a noble effort to push the debate in the right direction. How fitting it is then that the younger generation has apparently found their best advocates in a committee of older peers of the realm.
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