The game of life is rigged against young people.
In the 1970s, "The Generation Game" was a British TV quiz show in which families young and old competed for prizes. At the end of the show, one team member watched prizes pass by on a conveyor belt, and their team shared every prize they could recall in 45 seconds. Since the 1970s, Britain has increasingly allowed the older generation to scoop up all the prizes and the young are disadvantaged by government policy, the cost of housing, and our pension system.
The post-war baby boom created the most powerful demographic group of our time (known as the Boomers), a generation with unprecedented electoral influence and financial clout. The Boomers’ collective leverage has influenced government policy for decades and the benefits have piled up. Examples include the Winter Fuel Allowance, a flat payment of up to £300 given to everyone over 66 regardless of income, and an ongoing commitment to generous annual increases in state pensions. More insidious, though, are additional burdens on the young, particularly university tuition fees. Before 1999, university was free and many students received grants to cover living costs. Today, annual tuition fees of £9,250 result in average graduation debts of over £40,000, which balloon because of interest rates that are greater than the rate of inflation.
Welcome to the housing ladder if you’re young
For Britons, home ownership is an important indicator of success. But in most areas, particularly South East England, taking the first step up the housing ladder is unaffordable for the young. Imagine a successful graduate in their late 20s who earns £50,000 (the median income is £27,000) and has scraped up a £50,000 deposit. Since the average one-bed flat costs £456,000, they would have to borrow more than eight times their salary or wait until they earn £100,000 to buy that flat. No wonder Generation Rent is disaffected.
They’re all right, Jack
On pensions, it’s heads you lose, tails you lose. Boomers gave themselves gold-plated pensions linked to their peak salaries and handy annual increases — but those are long gone. So too are the generous pensions tax benefits that came later. Building a meaningful pension fund will be much harder for this generation; consequently, they will retire much later. Finally, adding insult to injury, Boomers’ state pensions are paid out of current taxes, so working youngsters will have to pay those before they start saving for their own retirement.
Protecting the elderly from Covid-19 has rightfully taken centre stage. But, while Boomers have saved money and worked from their spacious homes, the young have lost more jobs and spent their time camping out in cramped bedrooms. Not only that: losing 12 months of education and social activity is a cost that can’t be counted and may never be recovered. The bill for Covid-19 will come over the next 20 years, and you can guess who’ll be paying.
Business as usual
Efforts are being made to address this inequality, but they’re too small and too few. Boris Johnson is talking about turning Generation Rent into Generation Buy via government support for home-buyers. And since 2020, a TV licence subsidy worth £157 has been withdrawn for the over-75s. The government is believed to have considered introducing wealth taxes that would have hit Boomers, but this has been rejected. So it’s pretty much business as usual.
And all this without even mentioning Brexit (which young Brits didn’t vote for) or climate change. In a recent speech, Greta Thunberg, an 18-year-old environmental activist, said: “You say you love your children above all else and yet you are stealing their future in front of their very eyes.”
Greta was talking about climate change, but her words apply equally to other areas that will dramatically affect the lives of the next generation.
Adrian Gill - 4th April 2021