The House of Lords’ Select Committee report entitled Tackling Intergenerational Fairness, published on 25 April 2019 is just the latest in a long line to argue for the scrapping or means-testing of universal pensioner benefits, on the premise that older people are no longer living in poverty. The report also argues that concessions such as the bus pass or winter fuel allowance are “outdated” and unfair to young people, and that government should rightly do more to support younger generations in the housing and employment market. This briefing paper therefore summarises the report and offers an analysis of its main arguments.
The 114 page report covers areas such as housing, lifelong learning, extending the working life, the role of communities and intergenerational taxation and produces a number of recommendations directly affecting older people, including:
The report also includes some wider recommendations:
Like many of these reports, there are specific issues or recommendations with which almost everyone would agree. In this respect, the acknowledgement of the insecure nature of the world of work for many younger people, the need for greater employment rights and protection and the lack of affordable or suitable housing are all worth noting. However, many of the arguments affecting pensioners repeat those originally set out in the Resolution Foundation report, entitled A New Generational Contract, which was published last May.
One of the key drivers of the report is the idea that the amount a generation contributes in taxation over a lifetime should be broadly in line with what it receives.This is linked to a criticism that recent social security spending has been focussed more on older people, than those of working age. In particular, this argument rests on the triple lock – and the way in which the basic state pension has a guaranteed 2.5% annual increase compared to wage rises that have recently been lower. However, the Select Committee fails to acknowledge that despite the triple lock being in existence for eight years, the UK state pension remains the least adequate in the developed world, and pensioner poverty has risen in the last year to 1.9 million.
What’s also interesting is the report’s acceptance that the main inequality in society is inside generations, rather than between them, but says that as this was not part of the remit of their inquiry they have not considered it. Such an approach therefore severely undermines the credibility of some of their findings.
In addition, there are specific issues that need to be countered:
scrapping Winter Fuel Payments for older people would raise £2.16bn of government spending – less the cost associated with changes in behaviour by older people using less heating and the ensuing cold-related healthcare costs. However, if this money were distributed to those aged 16-30, this would give each individual approximately £181. By any standard this amount of money is unlikely to have any noticeable impact on the long-term prospects of this younger generation. Moreover, rather than benefiting younger people now – it effectively removes their right to receive such benefits when they eventually retire.
More than at any other period in our history, our society is being divided and categorised in terms of the generation into which you were born. Such a divisive and simplistic approach incorrectly assumes that all those born into the same generation have the same life experience and outcomes. Like all age groups, health, property wealth and income are not evenly or equally distributed. Of course, there are specific policy issues that would assist younger generations to secure better economic prospects, but they do not involve reducing the pensions or benefits of the older generation.
Since 2008, households across the UK have experienced unprecedented falls in their living standards. However, contrary to much of the public debate, it is actually those of working age, rather than pensioners, who are currently most likely to be wealthy, with a very large proportion of our national wealth held by a very few households, regardless of age. Solutions to young people’s problems will not therefore be found by reducing entitlements for pensioners. Instead, improving the new generation’s chances requires profound changes in how we structure our economy and distribute wealth.
A copy of the House of Lords’ Select Committee report can be found at: https://publications.parliament.uk/pa/ld201719/ldselect/ldintfair/329/32902.htm
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