by Jamie Cater 18th May, 2018
3 min read

The Generation Game

In the year since the general election, prompted in no small part by the ‘youthquake’ that fuelled Jeremy Corbyn’s surge in popularity, the question of fairness between different generations has moved to front and centre of British politics.

The final report from the Resolution Foundation’s Intergenerational Commission, published last week, is the latest contribution to the debate over how to address the concerns of millennial voters who feel they are losing out compared to previous generations.

The proposal that dominated media headlines was the suggestion of giving an endowment of £10,000 to every UK citizen when they turn 25, which could be used to fund further education and training, a deposit to purchase a home, an entrepreneurial venture, or a pension. The Foundation is not the only organisation to have proposed such an idea; just last month, the left-leaning Institute for Public Policy Research (IPPR) argued for the creation of a ‘Citizens’ Wealth Fund’ from a reformed inheritance tax which would pay a capital dividend of £10,000 to all 25 year-olds from 2030.

While this has inevitably generated much debate, the idea points to a widely-held concern over the disparity in wealth and assets accrued by different generations.

Data published last year by the Office for National Statistics on economic wellbeing shows that those aged between 60 and 62 in 2014-16 had 17 times more property wealth than 30-32 year-olds, with the latter group owning 67% less property wealth than they would have a decade ago.

That older generations are in a better position than younger ones in this regard is not new or unusual, but concerns that a range of aspects of public policy are widening the gap – whether interventions in the housing market, funding arrangements for adult social care, the cost of higher education or regulation of flexible working – are pushing policy-makers to consider where they can act to resolve it.

The weight of demand on public services as the British population grows and ages is also prompting debate over what contribution different generations should make to ensure their future viability, and last week’s report also demonstrates the difficulty that politicians face in implementing policies on the scale it proposes.

The recommendations on reforming adult social care funding are not drastically different from those put forward in last year’s Conservative manifesto; the poor reception from the electorate to the policy, and the past failure of policy-makers to work constructively together on an issue that most agree needs to be addressed, bode ill for any government seeking to make these ideas work in practice.

Older people contributing their greater housing wealth to their own care costs may make sense from the perspective of attempting to solve inequality between the generations, and is arguably preferable to younger generations bearing the growing cost of elderly care through increased taxes, but Theresa May knows the politics of addressing this can be deadly. Reforming inheritance tax and council tax as the report suggests are also likely to be too controversial for most politicians in government to want to countenance, but there is a growing sense that some change may be necessary.

The labour market is among the key areas that the Resolution Foundation focuses on, and where the Government has been able to take action following the Taylor Review. One of the solutions the report proposes – requiring companies to make pension contributions for their self-employed contractors – is another of the more ambitious solutions floated, but begins to address another of the fundamental questions of the generational divide.

With younger workers disproportionately engaged in what is termed ‘atypical’ work, and those in ‘typical’ work earning a lower minimum wage until they reach 25, how can policy-makers reform the system to ensure that this group benefits from greater security and stability? Where once the Conservatives were more concerned with policies such as protecting the triple lock on the state pension and not rocking the boat for its most reliable group of voters, some in the party are increasingly anxious to turn their attention to the long-term financial security of younger workers.

For some sceptics, the Resolution Foundation’s suggestions may be considered nothing more than indulging the ‘entitled’ attitude of millennials, or simply unworkable, but the outcome of last year’s general election has given a fresh impetus for politicians to examine again the gap between different age groups in terms of wealth, assets and opportunities, and how this might be practically addressed.

Whatever the political and institutional barriers to implementing policies as radical as those proposed last week, the new electoral dividing line of age nevertheless looks set to drive social and economic policy-making over the coming years.

For more information on how GK can help you understand and mitigate potential political risks, contact jamie@gkstrategy.com

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