Renewing the intergenerational contract could be as important to future generations as a successful EU exit

Published on

We have become very sensitive to inequities of class or race or gender. But we have been ignoring a growing new problem – unfairness between the generations. When I wrote The Pinch six years ago it was the first book looking at Britain from the point of view of the different generations. Since then it has become more and more clear that it is increasingly difficult for our children to enjoy the same kind of opportunities we baby boomers have enjoyed. Fairness between the generations has become one of the big political issues of our time.

The evidence is stark. Millennials entering work have so far earned £8,000 less during their 20s than the generation before them. Young workers used to boost their earnings by moving on and up but their opportunities now appear limited by a low-mobility, low-training jobs market. Getting started on the housing ladder is more difficult than ever – baby boomers were 50 per cent more likely to own their home at 30 than millennials are. And the other big personal asset we build up – our pension scheme – is much less generous, with the added kicker that young workers generate revenues to plug deficits in the company schemes that have closed their doors to them.

In many ways government has exacerbated the growing generational wealth divide rather than address it, not least in its decades’ long failure to build more homes. So it is very significant that in her very first major speech as Prime Minister Theresa May explicitly recognised that “there is a growing divide between a more prosperous older generation and a struggling younger generation.”

This kind of recognition of the problem is itself massive progress. But it does not mean that change will be easy. That is what our efforts now have to focus on. How do we get more houses built and make housing more affordable? What kind of changes in the labour market do we wish to promote? How do we ensure a fairer allocation of pension wealth? What innovations in savings vehicles might help younger people?

These kind of deep policy issues can only be addressed by developing well-informed proposals resting on robust evidence. And today the Resolution Foundation is launching a new Intergenerational Commission to do just that. Leading figures from British public life have come together in recognition of the scale of the problem and the need to tackle it. Carolyn Fairbairn of the CBI and Frances O’Grady of the TUC are both Commissioners. Alongside our own experts at the Foundation, leading figures such as Paul Johnson of the IFS and John Hills of the LSE will ensure we have the highest standards of analysis.

We will work over the next eighteen months or so under my chairmanship. With the combined expertise and experience of this group, I do think we have the best chance of finding a way forward to tackle this problem.

One final point. We will not be promoting generational conflict. Lots of baby boomers worry about our children and what we can do for them. Sometimes indeed we are so worried about them that we may not think of the others – we are better parents than we are citizens. But I do not believe there are bad generations and good ones. Intergenerational unfairness has been caused by a failure to recognise how a contract between the generations holds a society together, not by real malevolence or hostility to the young. But we now have a Prime Minister with her eyes on this problem, and a Commission to provide the evidence base and road map for renewing the intergenerational contract. It could provide a legacy just as important to future generations as a successful exit from the EU.

This post originally appeared in The Times Red Box