Intergenerational fairness Contents

2The intergenerational contract under strain

Demographic context

A large and long-living baby boomer generation

7.Assessing intergenerational fairness must begin by defining different generations. This necessarily entails an element of arbitrary choice. Those born immediately before a generational dividing line may well dispute their implicit association with those born twenty years before but not those born one year later. A common approach is to define generations with reference to trends in birth rates, as shown in Figure 2. During the post-war baby boom of 1946 to 1965, the children of which are now aged between 51 and 70, there were around 800,000 to one million UK births per year. In the ‘Generation X’ phase that followed, the UK went from ‘baby boom’ to ‘baby bust’–the number of births per year fell below 700,000 by the latter half of the 1970s. Subsequent generational phases are characterised by between 700,000 and 800,000 births in most years.

Figure 2: Number of births per year, United Kingdom

Sources: ONS Birth Characteristicstable 8: live births by sex, 1838 to 2014; ONS Birth Summary Tables England and Wales table 1: summary of key live birth statistics 1938 to 2015; NISRA Northern Ireland Live Births 1887 to 2015; National Records of Scotland Births Time Series Data. Adapted from: Resolution Foundation Stagnation Generation, 18 July 2016

8.The advent of a large baby boomer cohort has been accompanied by substantial rises in life expectancy. For example, a boy born in 1955, in the middle of the baby boom, had an 83 per cent chance of living to at least 65, compared with 45 per cent of those born in 1895.10 An ever greater proportion of people are living deep into old age, as demonstrated by Figure 3:

Figure 3: Improving survival rates at age 50 and beyond, UK

Source: ONS, Past and projected data from the period and cohort life tables: 2014-based, UK, 1981 to 2064 (life tables principal projection for England and Wales and UK)

9.The combination of trends in birth rates and life expectancy will result in substantial change to the age structure of the UK population over the next 25 years. Figure 4 shows Office for National Statistics ‘population pyramids’ illustrating the UK’s age structure in 2014 and 2039:

Figure 4: Age structure of the UK population, mid-2014 and mid-2039

Source: ONS National Population Projections: 2014-based Statistical Bulletin

The share of the population aged 65 and over is projected to grow from 18 per cent in 2014 to 24 per cent in 2039, while the proportion 80 and over is expected to grow from 5 per cent to 8 per cent over the same period. Increases will be proportionately highest in the oldest age groups.

10.The Intergenerational Foundation identified these demographic trends as an important driver of intergenerational imbalance:

The number of Baby Boomers and the unprecedented longevity which they are set to enjoy means they will require a bigger financial contribution from the next generation to support them in their old age than they provided for the generation which came before them, yet at the same time there is abundant evidence to suggest that today’s young workers are enduring a lower standard of living than today’s pensioners did when they were the same age [ … ].11

Old-age dependency ratio

11.One measure of the extent to which the working age population supports pensioners is the dependency ratio, the number of pension age people per working age person. Figure 5 shows projected trends in the dependency ratio, adjusted for changes in state pension age (SPA). The ratio was stable in the decade leading up to the mid-2000s, at which point the large baby-boomer cohort began the transition into pension age. Without the programme of SPA increases that began in 2010, the number of pensioners per 1,000 working-age people would have passed 400 by the middle of the next decade. Scheduled increases in the SPA until 2028 are projected to keep the dependency ratio at around 300 pension-age people per 1,000 working-age people. After then, a sharp rise to 375 per 1,000 is expected. The scheduled rise in the state pension age to 68 in 2044–46 then temporarily brings the ratio back down to 350 per 1,000, at which point it begins to increase again.

Figure 5: Crude dependency ratios for pensioners and children projected to 2060, UK

Source:ONS mid-year population estimates and 2014-based population projections. Shaded areas denote years when state pension age (SPA) is currently scheduled to increase -does not include potential longevity-linked accelerations of the schedule.

12.The dependency ratio is a crude measure, as it does not assess the extent to which pensioners are truly dependent on financial transfers from their younger counterparts. As shown in Figure 6, the last 15 years have seen a substantial increase in the employment rate among those aged 65 and over, which has more than doubled from around 5 per cent in 2001 to over 10 per cent in 2016.12 This trend was apparently resistant to the 2008–09 recession.

Figure 6: Employment rates among people aged 65 and over, UK, 1992–2016

Source: ONS Labour Market Statisitcs:Labour market by age group (seasonally adjusted)

13.Though the rise of the older worker blurs the distinction between working age and pension age, these employment rates remain far below those for younger age groups: 74 per cent of the UK population aged 16–64 are in employment, rising to 84 percent of people aged 35–44. A further closing of that gap holds out the prospect of larger numbers of people in their late sixties and even seventies working and helping to shoulder the fiscal burden of an ageing population. Analysis by the Government Office for Science, however, shows that gains in healthy life expectancy and disability-free life expectancy at age 65 have not been keeping pace with the rises in overall life expectancy at that age. Average disability-free life expectancy remains below 65 in many areas of the country, constraining the ability of over-65s to prolong their working lives as SPA increases. 13

14.Demographic trends have placed considerable stress on the intergenerational contract. The post-war baby boomer cohort entering retirement is particularly large and people within it will tend to enjoy longer retirements than was anticipated. This puts a strain on the working age population. Increases in the state pension age reduce the ratio of pensioners to working age people and therefore have counteracted demographic trends. For many people, however, working into their late sixties or seventies is not an option.

Private wealth

Homeownership and housing costs

15.Homeownership represents not just a major financial investment—for most people the largest they will ever make—but also a secure and stable basis to bring up a family, to live rent-free in retirement and ultimately pass a legacy to the next generation. A large majority of renters aged under 35, particularly those in the growing private rented sector, remain attached to the aspiration of ultimately owning their own home and expect to become homeowners at some point in the future.14 For many, however, rising house prices and rents have “dashed their justifiable expectation of an affordable home”.15 This is a particular concern in London and the South East, where house prices are highest and have tended to grow fastest.16 Generation Rent, a campaigning group, described the “hoarding” of property wealth by property speculators at the expense of would-be homeowners.17

16.The Resolution Foundation, a think tank, estimated that the time required for low to middle income households to save a deposit for a typical first time buyer purchase has increased from between three and five years during the 1980s and early 1990s to over 20 years now.18 In the meantime, increasing numbers are renting privately or remaining in the parental home. James Sefton, Professor of Economics at Imperial College London, told us that “as the young’s main resource is their current and future labour income, whereas the old have a significant share of the wealth invested in real estate, implicit in this price appreciation is a large intergenerational transfer from young to old”.19

17.This overall pattern disguises a considerable degree of variation. Many of those baby boomers who own property may have suffered price falls and perhaps negative equity in the late 1980s and early 1990s, and may well have paid far higher interest rates than borrowers today.20 The Ready for Ageing Alliance cautioned that a quarter of people aged 55–64 in England are renting while just under half fully own their property.21 Dan Wilson Craw of Generation Rent told us that people in middle age with little prospect of getting a mortgage were increasingly renting privately and having to claim housing benefit in work. This puts increasing strain on the housing benefit bill.22

18.There are, however, clear generational differences in homeownership. Research by the Institute for Fiscal Studies (IFS), a think tank, shows how homeownership rates have declined in successive birth cohorts. Someone born in the mid-1960s, for example, had a 45 per cent chance of owning a home aged 25. This fell to 34 per cent for the mid-1970s cohort and 21 per cent of those born in the mid-1980s. The rate has therefore halved in 20 years. The difficulties in buying a home experienced by those born in the early 1980s contribute to such people being markedly less wealthy than the previous generation were at the same age. The IFS recently found that people in their early 30s have average household wealth per adult of £27,000—about half the average wealth holdings that people born in the 1970s had at the same age (£53,000).23

Figure 7: Homeownership rates by birth year and age

Source: IFS (2014) Living Standards, Poverty and Inequality in the UK: 2014, IFS written evidence IGF0023

19.Lord Willetts told us that the housing market is characterised by increasing proportions of renters and people who own their homes outright. The proportion who own with a mortgage, “the getting started bit”, is falling.24 The Institute for Fiscal Studies (IFS) said that intergenerational effects could be compounded if house prices continued to rise:

The decline in homeownership rates might be thought a cause for concern in itself, but it also has the potential to affect the wealth accumulation of younger generations over their lifecycle if the (leveraged) returns on housing continue to exceed those on other assets, and younger generations are unable to access those returns.25

20.For those who do own a property its market value may in reality be secondary to its function as a family home.26 Steve Webb explained that realising increases in property values, through downsizing and equity release, was still rare.27 Ultimately, of course, the housing stock currently held by older generations must pass into the ownership of younger generations. The intergenerational transmission mechanism of property is, however, likely to be increasingly based on inheritance ever later in life, or in parental assistance to children in financing house purchases (the ‘bank of Mum and Dad’).28 This could exacerbate inequality of asset wealth within generations as those lacking parental financing or the prospect of an inheritance risk finding themselves permanently locked out of homeownership.29

21.We heard that acting to reduce the cost of housing could have a “transformative” effect, both on intergenerational fairness and on the wider performance of the economy.30 Philip Booth, of the think tank the Institute of Economic Affairs (IEA), told us “there are not many things that are a silver bullet when it comes to policy but housing comes very close to that”.31 The proposed solutions focused on increasing the supply of housing, through an expansion of housebuilding, a relaxation of planning laws and making more efficient use of under-occupied housing.32 Ashley Seager, co-founder of the Intergenerational Foundation, advocated more innovative solutions, such as incentivising downsizing by the over-60s by removing stamp duty and adjusting the planning system to facilitate “downsizing-in-situ”, whereby a house is split into two flats and the occupier remains in one of them.33 These policy proposals lie outside the Work and Pensions remit, though should measures not be taken to increase the supply of housing the cost of housing benefit is likely to continue to increase.

22.Housing is central to intergenerational fairness. Rapid and sustained rises in house prices, most marked in London and its surrounding areas, have concentrated wealth in the hands of those who have owned property for decades. At the same time far too many young people have been priced out of homeownership. High private rents make it difficult to save for a deposit. The opportunities that were open to baby boomers to buy a home with a relatively small deposit are closed to today’s young. Though wealth will be passed to younger people through inheritance, this risks exacerbating inequality within generations. Successive governments have palpably failed to act effectively on the housing market. Alongside housebuilding, there is a strong case to consider innovative policies to encourage downsizing and to more efficiently distribute the existing stock. Such measures lie outside our remit. The manifest problems in the housing market, however, form the backdrop to much of this Report.

Savings and occupational pensions

23.Historically low interest rates and loose monetary policy since the 2008–09 recession have reduced returns on savings. Saga told us that this disproportionately affects older people, who are more likely to be dependent on savings income, while younger people with mortgages are benefitting from lower interest rates.34 Steve Webb emphasised that many current pensioners had been “stuffed” by very low annuity rates.35

24.Conversely, the relatively generous final-salary defined benefit (DB) pension schemes which were commonplace during the working lives of the baby boomer generation are now all but completely closed to new entrants. As a result, less than 10 per cent of private sector employees born in the early 1980s were active members of a DB scheme in their early 30s, compared with nearly 40 per cent of those born in the 1960s at the same age.36 Younger workers now tend to be enrolled on defined contribution (DC) schemes instead.37 These typically attract much lower levels of employer contribution: in 2015 the average employer contribution rate to private sector DC schemes was 2.5 per cent of pensionable earnings, compared to 16.2 per cent for DB schemes.38 DC schemes make no promise as to the value of the pension pot upon retirement, meaning that employees bear the full risk of investment performance.39 At the same time, the cost of servicing rapidly increasing DB scheme deficits—exacerbated by low investment returns—is placing an ever greater burden on UK firms. The Office for National Statistics estimates that in 2015 companies made special deficit repair contributions to DB schemes of £11 billion in addition to ordinary employer contributions of £20 billion.40 This may constrain their ability to increase employment or engage in productive investment.41 Today’s younger workers are therefore faced with supporting the inadequately-funded DB schemes of their older colleagues and retired predecessors, while being denied the opportunity to accrue pension entitlements on the same basis. Paul Johnson, Director of the IFS, told us that this was tantamount to a “very clear redistribution” between generations.42 Our ongoing inquiry into defined benefit pension schemes will consider intergenerational fairness in that context.43

Public expenditure and tax

Generational accounting

25.Public expenditure tends to be concentrated on younger and older age groups. Education expenditure is unsurprisingly skewed towards childhood while expenditure on health and social care is, on average, highest for the oldest people. Spending is lowest on working age people, the time when an individual’s tax contribution typically peaks. Figure 8 shows the Office for Budget Responsibility (OBR) model of such effects:

Figure 8: Representative profiles for tax, public services and welfare spending

Source: OBR Fiscal sustainability report – June 2015

26.The Intergenerational Foundation argued that the primary function of the welfare state is to distribute resources across lifetimes, rather than between generations. Within each generation, fiscal contributions (tax receipts shown in red) and withdrawals (total spending shown in purple) should tend to balance.44 The alternative is one generation effectively subsidising another over the course of their respective lifetimes. Michael Johnson, of the think tank the Centre for Policy Studies, argued that the bill for the “vast unfunded promises” made to baby boomers, notably in state and public sector pensions, would have to be footed by the millennial generation.45

27.Generational accounting is a forward-looking assessment of the balance of fiscal contributions and withdrawals that people are set to make over their remaining lifetimes. Where this balance is negative, this implies a fiscal burden that current policies would, unchanged, impose on future generations.46 It also provides an indication of the policy reforms needed to achieve generational balance, in which future generations face the same lifetime net tax rates as current generations.47 The most recent UK Generational Accounts, published in 2011, estimated the intergenerational budget imbalance to be £7.6 trillion in aggregate terms. Future generations will, in effect, inherit net liabilities of just over five times annual GDP.48 The rise in tax revenue (or reduction in expenditure) needed to plug the gap would be around six per cent of GDP.

28.The 2011 UK Generational Accounts set out future contributions and withdrawals by age group. Without any changes in policy, children currently aged 0–4 would on average contribute around £70,000 more in taxes than they enjoyed in services and benefits. People currently aged 65–69 would on average have a net withdrawal of more than £220,000 over the remainder of their lifetimes.49 In order to achieve fiscal balance by the end of today’s infants’ lifetimes, as yet unborn people would each need to contribute an average of £160,000 in net terms.50

Fiscal balances over lifetimes

29.Generational accounting only assesses the future profile of taxes and withdrawals for different generations over their remaining lifetimes. A complete life-cycle assessment would need to include past taxes paid and benefits received. The IFS argued that this would be “a more sensible tool for policy analysis”.51 The most prominent attempt to assess and compare the past and future contributions of different generations over the whole life course remains that published by Professor John Hills in 2004, based on 2001 calculations.52 Professor Hills compared past and future tax contributions and expenditure on health, education and social security for each five-year birth cohort over the course of their lifetimes. His estimates are shown in Figure 9:

Figure 9: Projected lifetime receipts from health, education and social security, and taxes paid towards them by cohort

Source, J Hills (2004), ‘Distribution and redistribution’, chapter in Inequality and the State. Calculations based on actual spending patterns to 2001 and projections from 2001 to 2051. Takes no account of post-2001 policy changes to the profile of tax and spend.

30.Professor Hills estimated that people born between 1951 and 1956 will receive in services 116 percent of what they contributed in tax, while people born between 1956 and 1961 will receive 118 per cent.53 Lord Willetts used these data to argue that baby boomers “have received much more from the welfare state than they put in”.54 By contrast, the last cohort Professor Hills analysed, those born between 1971 and 1976, were projected to be net contributors. This valuable research is now more than a decade old and does not take account of subsequent developments in the economy and government policy.

Benefit spending

31.As has long been the case, the majority of social security spending in Great Britain is directed towards pensioners.55 This in itself is not an indicator of intergenerational inequality in the distribution of government expenditure. In 2009–10, pensioners accounted for 52 per cent of total social security spending in Great Britain, rising to 55 per cent in 2016–17. This figure is projected to rise further, to 57 per cent by 2020–21, despite increases in the state pension age.

Figure 10: Welfare expenditure (incl. state pension, benefits and tax credits), Great Britain

Source: DWP Benefit expenditure and caseload tables 2016. Inflation adjusted using GDP deflator.

32.The relative decline in the non-pensioner share of expenditure is partly driven by increased rates of employment among working-age people. Policy choices have, however, also contributed. Measures affecting social security and tax credits announced since May 2010 are estimated to have saved a total of £22 billion a year by 2015–16. These include a cap on working age benefit indexation, and cuts to child benefit, housing benefit and Universal Credit. The ongoing effect of these measures, combined with the further £12 billion cuts to working age benefits legislated for in this Parliament, mean that total in-year savings are estimated to rise to £40 billion by 2020–21.56 These savings are almost entirely derived from cuts to working-age entitlements while pensioner benefits have been protected.57 Lord Willetts told us that per person by 2020, working-age benefits will be 9 per cent lower, child benefits 12 per cent lower and pensioner benefits per pensioner 19 per cent higher compared with pre-crisis levels.58 We consider the state pension “triple lock” in the next chapter.

33.These savings do not include those from increases in the state pension age legislated for in the Pensions Acts 2011 and 2014. In 2014 the then Chancellor, George Osborne, described those changes as “bigger than any other saving I’ve made anywhere else in government”.59 Saga told us that, in total, they will reduce expenditure by £100 billion.60 In annual terms, however, the savings are small relative to the cuts to working age benefits. For example, the state pension age increases in the Pensions Act 2011 will by 2020 save the DWP £4 billion per year (in 2011 prices) in spending and increase tax and national insurance receipts by £1 billion.61 Furthermore, future increases to the state pension age will only affect today’s working-age cohorts.

34.It is often argued that the focus on working-age welfare spending as a source of savings is at least in part motivated by political concerns about pensioners’ higher propensity to vote. Ashley Seager, for example, told us:

We think you only have to look at the adjustments that have happened since the financial crisis in terms of austerity, where benefits to those of working age and the young have been cut sharply but they have risen sharply for older generations—for the grey vote, if you like—and we think that should certainly stop, because it is progressively getting worse.62

Baroness Altmann, former Pensions Minister, among others cautioned that retired people are less able to increase their incomes in response to benefit reduction than working age people.63

35.After the substantial package of savings implemented in the last Parliament, it has proven increasingly difficult for the Government to make further cuts to working-age welfare. In late 2015 the Government scrapped plans announced in the 2015 Summer Budget to cut tax credits for working families in April 2016. This came after we urged a reconsideration of the proposal in light of the sudden and substantial reductions in income that they would have inflicted on large numbers of working families.64 Proposed changes to Personal Independence Payment (PIP, a disability benefit) assessment criteria in relation to aids and appliances were also reversed in March 2016, just days after they were announced.65 The Government subsequently declared that there would be no further welfare savings measures in this Parliament beyond those already legislated for.66

36.More work is required to assess the intergenerational distribution of tax contributions and public spending on services and benefits. What research exists suggests that today’s young will be net contributors to the welfare state, while the baby boomer generation will be net beneficiaries. The effect is likely to have been exacerbated by policy decisions to protect pensioner benefits while targeting welfare cuts on working age payments. The limits of that approach have been reached. If further measures are needed to ensure the fiscal sustainability of welfare spending in the medium to long term then pensioner expenditure should not remain out of bounds.

Incomes and poverty

37.The UK had a crisis of pensioner poverty. By the end of the 1980s, pensioners were around twice as likely as the population as a whole to live in relative poverty—over two-fifths lived in households with incomes 60 per cent below the median. Figure 11 shows the remarkable turnaround in the quarter-century since then. Before housing costs are taken into account, pensioners are now no more likely to be living in relative poverty than the population as a whole. After housing costs are taken into account, the percentage of pensioners living in relative poverty (14 per cent) is substantially lower than working-age adults (21 per cent) and children (29 per cent).

Figure 11: Percentage of individuals in relative low income (below 60% of contemporary median net income)

Source: DWP Households Below Average Income (HBAI) 2014 15

38.The last quarter-century has also seen a vast improvement in average pensioner incomes relative to non-pensioners (see Figure 12). After housing costs are deducted and adjusting for household composition, median pensioners household net incomes are now estimated to be just above the working-age average, having been below 70 per cent of the working-age median in the late 1980s. Shiv Malik, a journalist specialising in intergenerational issues, noted “pensioners take home more from not working as people who do work, which is an astounding proposition.”67

39.Increases in pensioner income have been driven mainly by real increases in the value of their benefits and state pensions, higher incomes from private pensions, and increased employment rates. The rate of ‘catch-up’ was particularly fast during periods of recession, as the negative impact on earnings was mainly felt by working-age households. 68

Figure 12: Median equivalised household income of pensioners relative to non-pensioners since 1979 (GB)

Source: IFS (Belfield et al) Living Standards, Poverty and Inequality in the UK: 2015, fig 3.6

Shiv Malik described the relative rise of pensioner incomes as “the greatest mitigation of poverty since the creation of the middle classes in the developed world”.69 This is, of course, to be celebrated. Mr Malik cautioned, however, that “if it is coming at the cost of the next generation then we have problems”, particularly as economic and welfare systems tended to be built on the implicit premise that the next generation would be better off than the last.70

40.Reductions in incomes associated with the 2008–09 recession have been felt particularly acutely by the ‘millennials’, who constitute the youngest segment of the workforce. IFS analysis shows that in 2014–15 the real median income of the 22 to 30 age group was still 7 per cent below its 2007–08 level whereas for 31 to 59 year olds the median income had recovered to its pre-recession peak and for those aged 60 and over incomes were 11 per cent higher in real-terms.71 The IFS also found that average incomes of those born in the early 1980s are slightly lower than those of the 1970s cohort at the same age - the first time for at least 50 years that a cohort has begun their working-age lives with average incomes no higher than those of their predecessors.72 The Resolution Foundation found that millennials are “the first generation that has so far earned less than the one before at every age” and that if productivity growth remains low, “millennials are at risk of becoming the first ever generation to record lower lifetime earnings than their predecessors”.73 Even optimistic assumptions suggest that “millennials will record much lower generational pay progress than their predecessor generations did”.74

41.Great strides against the scourge of pensioner poverty have been made over the past 25 years. After housing costs, pensioner households are far less likely to be in poverty than households of working age, particularly those with children. Pensioner incomes have also rapidly caught up those of other households. This is a triumph. This success, however, has implications for policy. This is particularly true at a time when people in their 20s and 30s may struggle to attain—never mind exceed—the incomes of their forebears.

42.The economy has become skewed in favour of baby boomers and against millennials. Unless governments adapt to these changed circumstances the intergenerational contract that underpins the welfare state is under threat.


10 This is largely the culmination of a half century of massive progress in reducing infant mortality. Life expectancy is projected to continue increasing for subsequent generations due to improving survival rates at later ages - on current projections, boys born in 2015 are four times as likely as those born in 1955 to live to 100.

11 Intergenerational Foundation (IGF0010)

12 This should not simply be attributed to SPA increases, as the SPA is not scheduled to rise above 65 until 2018.

15 Dr Jay Ginn (IGF0028)

16 Independent Age (IGF0048)

17 Generation Rent (IGF0059)

18 Q61 [Lord Willetts] and Corlett, Finch and Whittaker, Living Standards 2016: The experiences of low to middle income households in downturn and recovery, Resolution Foundation, 2016, pp40–41

19 Professor James Sefton (IGF0075)

20 Centre for the Study of Financial Innovation (IGF0068)

21 Ready for Ageing Alliance (IGF0017)

23 IFS, The Economic Circumstances of Different Generations: The Latest Picture, Briefing Note BN187, September 2016, pages 2 and 9

25 Institute for Fiscal Studies (IGF0023)

26 Dr Jay Ginn (IGF0028)

28 Centre for the Study of Financial Innovation (IGF0068)

29 For example, United for All Ages (IGF0045), Grandparents Plus (IGF0058)

30 Q241 [Shiv Malik]

32 For example, Q230 [Shiv Malik], United for All Ages (IGF0045)

34 Saga (IGF0069)

36 IFS, The Economic Circumstances of Different Generations: The Latest Picture, Briefing Note BN187, September 2016, p13

37 For example Institute for Fiscal Studies (IGF0023)

38 ONS Occupational Pension Scheme Survey UK, 2015. The average contribution for career average schemes was 12.9 per cent of pensionable earnings. The average employer contribution rate to DC schemes is set to rise as the rollout of automatic enrolment reaches completion, but this will only bring the minimum employer contribution rate up to 3 per cent by April 2019.

39 See, for example, ShareAction (IGF0050)

40 ONS Occupational Pension Scheme Survey UK, 2015. The Intergenerational Foundation estimated £35 billion of DB scheme special deficit repair contributions by a credible methodology. See Intergenerational Foundation, DB Pensions: Choking Hazard, June 2016.

41 Intergenerational Foundation, DB Pensions: Choking Hazard, June 2016

44 Intergenerational Foundation (IGF0010)

45 Michael Johnson, Who will care for generation Y?, Centre for Policy Studies, 2015

46 Cardarelli / Sefton / Kotlikoff, Generational Accounting in the UK, NIESR, April 1999

47 Cardarelli / Sefton / Kotlikoff, Generational Accounting in the UK, NIESR, April 1999

48 McCarthy / Sefton / Weale, Generational Account for the United Kingdom, NIESR Discussion Paper No. 377, 15 March 2011, p.14. This figure comprises the £6.8 trillion present value of future net transfers (expenditures minus tax) to be paid by the government plus net government debt of £0.8 trillion.

49 ibid, table 2 (page 15). Expressed in net present value terms at 2008 prices.

50 Ibid, tables 1 & 3 and page 14

51 Banks et al, What can we learn about pension reform from Generational Accounts for the UK?: Institute for Fiscal Studies Working Paper W99/16, Oct 1999

52 John Hills, ‘Distribution and redistribution’, chapter 8 in Inequality and the State, OUP 2004; analysis reproduced in John Hills, Good Times Bad Times: The Welfare Myth of Them and Us, Policy Press, 2015, ch. 13 fig 3.13.

53 David Willetts, The Pinch, 2010, p 162 - citing Hills, ‘Distribution and Redistribution’, p 199.

55 See DWP Benefit Expenditure and Caseload Tables 2016, GB Welfare table. Northern Ireland has devolved powers over social security but benefit rules and rates operate according to a principle of parity with Great Britain.

57 For example, Q74 [Ashley Seager]

58 Q7 [Lord Willetts]

60 Saga (IGF0069). Based on: £30.6 billion total net reduction in DWP spend (2011–12 prices) over the period 2016–2026, sourced from DWP Pensions Act 2011 impact assessment Annex A: State Pension Age (updated 21 November 2011), page 8, table 3; and £73.5 billion total net reduction in DWP spend (in 2013–14 prices) over the period 2026–2036, sourced from DWP Pensions Act 2014 impact assessment Annex B: Long term State Pension sustainability: increasing the State Pension age to 67, page 9 table 2

62 Q100 [Ashley Seager]

63 Baroness Altmann’s oral evidence to the Committee on 19 October 2016, Q3264. See also Institute of Economic Affairs (IGF0031).

64 Work and Pensions Committee, Third Report of Session 2015–16, A reconsideration of tax credit cuts, HC 548

66 Secretary of State for Work and Pensions statement on not going ahead with changes to Personal Independence Payment, HC Deb 21 Mar 2016 col 1268

67 Q252 [Shiv Malik]

69 Q237 [Shiv Malik]

70 Q237 [Shiv Malik]

71 IFS, Living standards, poverty and inequality in the UK: 2016, pp 3 and 12. See also Resolution Foundation, Stagnation Generation, 2016, pp 10–11

72 IFS, The Economic Circumstances of Different Generations: The Latest Picture, Briefing Note BN187, Sep 2016, p6. There is some contradictory evidence - ONS data shows that median equivalised disposable income in households in which the chief economic supporter is aged 20–29 was 34% higher in real terms in 2014–15 than in 1994–95. However, the same measure rose by 63% for the 60+ age group. See ONS Bespoke analysis of Effects of Taxes and Benefits on Household Income, 10 October 2016.

73 Resolution Foundation, Stagnation Generation, 2016, pp 10–11

74 Resolution Foundation, Stagnation Generation, 2016, pp 5–6




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4 November 2016