13 February 2017

Why Britain really is biased against the young


The biggest lie about democracy is that it means rule by the people.

Yes, that might be the literal meaning (the kratos of the demos). But what it actually means is rule by the people who can be bothered.

That’s why, for example, the latest YouGov polls here in the UK are even more devastating for the Labour Party than they outwardly appear (which is pretty damn devastating already).

It’s not that the Conservatives are ahead by 40 per cent to Labour’s 26. It’s that Labour’s vote is concentrated among the young: they get the backing of 42 per cent of those aged 18-24, but just 11 per cent (!) of those aged 65 and over. And of those Tory-supporting oldies, 71 per cent say they are likely to vote, compared with just 41 per cent of the young Labour-lovers. Which is the basic reason why you’re not going to see Prime Minister Corbyn any time soon.

There’s another story today that helps illustrates the consequences of this. A new study by the Resolution Foundation has found that pensioners now have higher incomes than working families. I say “found” – it’s really “confirmed”, given that the Institute for Fiscal Studies reported similar findings back in 2015 .

The financial imbalance between old and young is one of the few topics on which there is near-unanimity across the political spectrum. There have been numerous books written on the topic – most notably ‘The Pinch’ by Lord Willetts, and ‘Jilted Generation’ by Ed Howker and Shiv Malik. There have been reports and commentary from Resolution (now headed by Lord Willetts), the IFS, Policy Exchange and the Centre for Policy Studies (which, full disclosure, is the home of CapX), among many others.

But still nothing happens. And it doesn’t happen for a very good reason: because the older generation have the political power.

That’s why the Conservatives came to power promising a “triple lock” on the state pension – which has increased pensioner benefits at a much greater rate than wages. It’s why repeated rounds of benefit cuts fell primarily on those for people of working age.

It’s why rich middle-aged families no longer get child benefit, but rich pensioners still pick up their free bus passes and TV licences and even winter fuel payments. And it’s why John McDonnell and Jeremy Corbyn, having won the Labour leadership on a platform of speaking for young people whose futures had been taken from them, recently committed to keeping the triple lock themselves – only to see their support slump further.

But it’s not all about benefits. One interesting finding in the Resolution Foundation report today is that while pensioners as a whole are far richer than they were, existing pensioners have only seen modest gains. What’s happened is that people have been hitting retirement age with more assets – private pensions, salaries from the jobs they’ve kept on doing, and of course their housing wealth – and then helped themselves to those state benefits as well. And the icing on the cake is that they don’t have to pay as much tax.

The result is a situation that everyone accepts is increasingly unfair. Those of retirement age are increasingly wealthy, and increasingly likely to own property: 73 per cent of pensioners currently own a home compared with 64 per cent in 2011. And those homes are, of course, worth far more than they used to be.

Of course, no one could object to pensioners getting richer – if it wasn’t for young people getting poorer. As another Resolution report found, the average millennial will have earned £12,500 less by the age of 30 than those born between 1966 and 1980. And I’d cite the statistics on home ownership, but I don’t want to be cruel – let’s just say that for twentysomethings, the pages of Country Life or even the average estate agent’s window have gone from being property porn to torture porn.

And why aren’t we building more houses to compensate? Largely because the people who already have houses, and who tend to vote in larger numbers, don’t want any more of them blocking the view.

Throughout the 20th century, each new generation had it substantially better than the one before. That system has now broken down. And it’s understandable that people are embittered about that.

Brexit, for example, has been seen by many young people as a theft of the future – their future – by the past. I’ve even heard dark mutterings about how the referendum shouldn’t stand, because mortality rates mean that by the time we actually leave the EU, those who voted Remain will almost certainly outnumber those who voted Leave.

The big problem, of course, is that this is going to get worse. On current rates, as Prof Andrew Scott pointed out in a fascinating piece for CapX, average life expectancy for those born in the UK today will be 105 for girls and 102 for boys. That puts the public finances under hideous strain, not least by increasing the costs of a health and social care system primarily used by the old but paid for by the young. It also means that the transfer of wealth between generations will slow to an even more glacial pace.

Even if young people turned up to the polls in record numbers, it wouldn’t alter the fact that Britain – like other Western countries – is becoming a demographically top-heavy country. In this kind of gerontocracy, it will always be the logical political move to promise more money to pensioners: to rob from the present, and the future, to pay for the past.

But on current turnout trends, the problem is drastically exacerbated. As a result, the only realistic hope the young have of getting a fair deal is the pity of the old.

Robert Colvile is the Editor of CapX