Family fortunes

There’s been a recent spat in the press and amongst the twitterati/literati about a war between the generations. The basic idea is that those who were born into the post-war world – the ‘baby boomers’ – have led a privileged life, enjoying incomes, resources and property that will have to be paid for by their children.  It seems to have started with “The Pinch”, a book by David Willets, who combines a career as a Conservative politician with a reputation as a bit of a thinker – “Two Brains” is the nickname.  Ed Howker and Shiv Malik took up the baton with “Jilted Generation: How Britain Has Bankrupted Its Youth” (though their follow-up articles are balanced and sensible). The argument is picked up when a newspaper columnist is short of something to be outraged about, and is sometimes mixed in with the nonsense about the burden of National Debt we are passing on to the next generation.  Matthew Parris in The Times on June 15 for example, confessed how shamefaced he was when a young activist at a Conservative meeting upbraided him about the fact that she had to pay for an education that was free to an older generation.

The reaction has been mixed.  Some oldies look at their shoelaces and mutter “fair cop, guv”.  Others feel able let us know how they worked for every penny they own, and tell you how the frost formed on the inside of their bedroom windows when they were kids.  I certainly do.  It may be tedious for binge-drinkers to hear about teenagers in the 1960s whose night out involved keeping one pint of lager-and-lime going for a couple of hours, or who had three wearable shirts and one set of shoes, but it’s the truth.  So is the £50 limit on overseas holidays.  However, once you get beyond reminders of genuine austerity, there is some frankly selfish stuff from affluent oldies to the effect that any government trying to cut their benefits would have to rip the bus pass from their cold, dead hands.  There have been some decent responses – for example, from Bryan Appleyard – but generally the debate is on a yah-boo level, and seems to me to miss the points that are being made.

First, education.  It is true that my higher education was free, in the sense that I paid no fees.  However, when I got my first job I paid 33% income tax.  Today’s graduates pay 20% income tax, which might be increased by 9% if they exceed a certain threshold, to pay for the cost of university education.  It does not need an accountant to see who is doing best out of these arrangements.  In any case, the costs of education in the fifties and sixties – teacher salaries, buildings, libraries, canteens – were paid by taxpayers at the time. They could do that because fewer than 5% of the population went to university then: so even if you resent the 1960s students who got free higher education, there weren’t many of them.  The remaining 90+% of oldies got no benefit at all. But no-one seems to say that those who went to secondary moderns – more than ten times as many as went to HE – or paid their way through technical college – without scholarships or grants – deserve some sort of rebate.

Second, housing.  The thesis is that the older generation own all the houses, so that youngsters have to buy costly houses from the old, or rent.  Well, yes.  But this is how it has always been.  Not many 25 year old singletons owned houses when I was a spring chicken.  And the shortage of affordable housing is due to policy mistakes – outstandingly overblown mortgage funding to boost demand, and selling off social housing, and restrictive planning laws to restrict supply.

Thirdly, the National Debt.  Now, government finances matter, and one burden that will be passed on is found in the Private Finance Initiative, which prevents local councils and health authorities borrowing money cheaply to build roads, schools, hospitals and roads, but instead insists they have to go to the financiers and city shysters to fund them. An overpriced motorway or stadium is indeed a burden, and politicians could stop the idiocy straight away, and show some sincerity in their worries about the future.  But they don’t.  Instead, they drone on about the straightforward ordinary National Debt which is not much of a burden in any meaningful sense, as long as the spending it supported has been wise (and it hasn’t all come from foreigners).  We have, I know, been here before, but just remember that the ‘privileged’ 1945 generation inherited a National Debt of 240% of the GNP – compared to 70% today.  We paid it down so that by 1968 it was around current levels.  It made no difference to national prosperity either when it was above current proportions, or below.  And if you worry that the next generation will ‘inherit’ the National Debt, well, they will inherit all the bonds and premium bonds and national savings certificates and Treasury Bills that make it up, too.

Indeed, the wealth created by the work of the baby-boomers will greatly enrich the coming generation, either directly through inheritance or indirectly via the Bank of Mum and Dad. Most of the kids I know, sons and daughters of friends, have been helped onto the property ladder with parental help.  Many will inherit substantial amounts of property. The government is even promising to ensure that this bounty is not soaked up by social care costs, which I think is a policy mistake, but there it is.  As part of the gilded post-war generation, I inherited no property at all from my parents, apart from a cutlery set.   Remember too the vast social inheritance my generation will leave.  Who do the commentators believe paid for Heathrow, or the National Grid, or the motorway system, or the hospitals and bridges and schools that Generation X uses ?

None of which implies that we should load money onto the poor old pensioners.  I wrote earlier that I have some sympathy for the proposal that high earning pensioners should no longer receive, as of right, free travel, heating subsidies and TV licences. But this isn’t part of a guilt payment on behalf of the privileged older generation, but an acknowledgement that richer people, whatever their age, should pay more into social funds than poorer.  In fact, it is the complete opposite of the generation war – it is a statement that age is not a good criterion for anything much.  Give up a seat on the bus to a disabled person by all means. They may be an oldie with arthritis, but could be a youngster with a war injury: the point is disability, not age.  Make sure no-one is too poor to heat their home, because there are poor pensioners – Alice Thomson points out in The Times (26 June) that 1.7m pensioners live below the poverty line, and 26% have savings of less than £1,500.  But the point is poverty, not age: we are too rich a society (and the energy companies make too much money) to leave anyone shivering.  Ensure no-one is trapped in their home by transport costs: the point is access, not age.

A couple of final points.  It is important to realise that we are living longer, and this will create the need for different arrangements for retirement and pensions.  But this isn’t about a selfish generation grabbing all the goodies, and our attempts to manage the position will not be helped if we think it is.  And remember this, too.  Climate change and environmental despoliation really are a malign inheritance for the next generation.  We should leave our children a sustainable and beautiful world.  But the reason this seems unlikely is not about generational selfishness,  but about the profit-mad world of the neo-liberal marketer, the hedge funder and the corporate chief exec.  Those buggers have much to answer for, and many of them are under forty.

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