My generation is set to be the first in 100 years to be poorer than our parents, yet we have a political system that funnels money into the hands of the old. The most obvious, and perhaps most egregious manifestation of this is the triple lock on pensions.
Spending on pensions is expected to balloon to £135bn by 2025 as a result of the triple lock – that’s more than the day-to-day budgets for the Department for Education, the Home Office, and the Ministry of Defence combined. And this astronomical amount of money is being funded by us – young people who are contributing to the labour market. It is utterly unsustainable, and makes it even less surprising that one poll found that just 1% of 18 to 24 year olds are planning on voting Conservative in the next election, compared to 46% of over 65s.
This represents an existential issue for the party – to put it bluntly, Tory voters are dying off.
So, how did the Conservatives get into this intergenerational mess?
On the 2nd October, I chaired a panel discussing exactly this. I was joined by the Centre for Policy Studies’ Emma Revell, Damien Green MP, the Institute of Economic Affairs’ Alex Morton, Lee Rowley MP, and London Mayoral candidate Samuel Kasumu.
In addition to the much-maligned triple lock, a point raised time and again was housing. The conclusion was clear – the market is fundamentally broken, and political incentives simply do not allow policymakers to introduce the structural reforms needed to increase supply. The impact that anaemic house building is having on the young is dire. In 1991, the proportion of 25-34 year olds in the UK who owned their own home was 67% – not bad. However, fast forward to 2014 and this had declined to 36%. Similarly, for those aged 16-24, home ownership plummeted from 26% in 1991 to 9% by 2014.
But fret not! According to the ONS, almost 75% of people aged over 65 in England own their own home outright. Thank God.
Generally speaking, older generations have benefited from a political economy that has privileged their interests across a range of policy areas. Britain’s burdensome planning system has put the promise of home ownership out of reach for young people and of course, thanks to the triple lock, older people can expect their pensions to rise each year either by 2.5%, average wage growth, or inflation. Whichever is highest.
This is despite the fact that 27% of pensioners live in millionaire households. And while one audience member pointed out that this wealth is usually held in bricks and mortar, Emma Revell rightly responded ‘the point is, you’ve got bricks… I’d love a brick!’.
Interestingly, as Damien Green pointed out, the lack of supply not only hurts first-time buyers, but also forces older people, who may have recently waved their children off to university, to remain in houses that are now too big for them. Building more homes would, in one fell swoop, give young people the security and confidence that comes from owning your own home, and allow people to grow old in environments that fit their needs.
These intergenerational issues have raised a wider conversation about the social contract – and many young people feel as though they are paying for an ever-expanding welfare state that is primarily taking care of the old.
The slogan for this year’s Conservative Party Conference was ‘Long-term decisions for a brighter future’, but nothing screams political short-termism like neglecting the young to win favour with the old. If the government was truly committed to making tough, long-term economic decisions, they would pass the systemic planning reform this country needs and which, at the end of the day, will benefit everyone from babies to baby boomers.
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