Tackling intergenerational unfairness Contents

Chapter 1: Introduction

Intergenerational fairness and provision

1.Previous work on intergenerational fairness has sought to define generations by year of birth. The Intergenerational Commission defined the post war generations as the Baby Boomers, born between 1946–65, Generation X, born 1966–80, Millennials, born 1981–2000, and the Latest Generation, born since the year 2000. Whilst these neat birth cohorts are useful for statistical analysis, they do not fit with the reality of people’s experience or changes in demography over time. They do not take account of recent or future improvements in life expectancy or changes in social and policy expectations. For example, young people are entering the workplace later and a generally healthier population is blurring the barrier between retirement and working life. This approach has led to a failure to appreciate the changing needs of the so-called 100-year life1 and to plan accordingly.

2.As a result, we take a broader definition of generations, grouping together people by their current stage in life and their common lived experience rather than by their year of birth. We define intergenerational fairness as the idea that each cohort should retain a fair expectation of social improvement and can have a fulfilling life without being unduly harmed by the actions of a previous or subsequent cohort.

3.Each generation contributes through the state and our communities, as well as having the opportunity to receive the benefits of state and community action. As the challenges faced by each generation change, the nature of this contribution and the benefits our collective institutions provide will necessarily change. But, to sustain a positive relationship between generations without animosity, there should be a broad equivalence, and a sense of equivalence, about what is contributed over a lifetime and what is received. This sense of fairness must also extend to generations just born, or about to be born, who have no voice to advocate for them. Policy based on the expectation that future generations will disproportionately pay for present or past consumption cannot be considered just or sustainable.

4.The good news from our inquiry is that a strong and positive relationship does exist between generations even though there are serious concerns about fairness in public policy. We found in our research little public support for the idea that older people are to blame for the woes of younger generations or that one generation has wilfully robbed another. Such language is unhelpful.2

5.As part of our inquiry we brought together representatives from different ages to tell us how they felt about intergenerational fairness as part of a Contact Group. The message we heard was of strong bonds between people at different parts of their life. Young adults told us how much they appreciated the support that they received from their parents and how much they treasured their grandparents. Parents told us their concerns about their children’s futures. Older people expressed concern about the difficulties younger generations faced. No group that we heard from blamed other generations for the problems that they encountered in their own lives. The intergenerational compact flows from this positive feeling. We define that compact as each generation helping those that came before and those who follow after as they themselves are helped by other generations.

6.The strength of the intergenerational compact can also be seen in the vast amounts of practical, emotional and financial support passed within families. Research from the Social Market Foundation (SMF) finds that 27 per cent of parents with adult children provide them with regular financial help.3 Nigel Keohane, SMF’s Director of Research, told us that most of this assistance is helping people cope day to day with rent, bills and other regular costs.4 Although many first time buyers are receiving help from the so-called ‘Bank of Mum and Dad’ to help them with deposits, this represents a minority of the cash support that individuals receive from other generations, with help to cover the general costs of living being substantially more common.

7.Alongside these cash transfers individuals also give a substantial amount of time to support other generations.5 The millennium cohort study found that grandparents provided at least some care for 42 per cent of families with a 9 month old infant, rising to 71 per cent of families where the mother was in employment or studying.6 This informal care is not distributed evenly within families however, with women providing much of the effort that holds the intergenerational compact together. People commit so much time and money in helping other generations because they have strong bonds with them, within families, and, often, within communities. We have seen no evidence of the desire to reach across generations diminishing. This is a social good which should be recognised, respected and sustained.

8.Whilst the spirit of intergenerational support is willing, the ability to provide this help is weakening for many. Members of our Contact Group told us that they worried about whether they would be able to help younger generations in the same way that they had been helped by their parents. The intergenerational compact is vulnerable if the needs of one generation are beyond the amount that can be supported by others. The needs and disappointed expectations of the current younger generations in housing and the workplace are the greatest near-term dangers to the intergenerational compact, with the looming costs of social care in old age a further danger, as generations move through their life.

9.Intergenerational fairness should offer the opportunity of a fulfilling life. This is based on the principles that each generation should be able to access a working life that offers fulfilment and can provide for their family, and a secure and affordable home in which to live. It is not the case that all younger people have a worse chance of achieving these aims than the generations before them but rather that the increasing proportion who are struggling to meet these aims may lead to intergenerational resentment if no action is taken.

10.We have been particularly concerned by the problems and perceptions of younger people. Younger generations worry that they are facing the end of generation on generation income progression and there is some evidence to suggest that they are right.7 Since the Second World War each generation that entered the labour market has seen higher real wages than those preceding it. However, young people who entered the labour market since the mid-2000s have seen similar wages to the generation before them. This may be a result of entering the workforce just before the financial crisis. However, there were some indicators of these problems before the crisis set in and generational wage progression has not resumed in the decade since.

11.Previous generational increases in wages were partly driven by increased educational attainment and skills development. Access to good education is the soundest basis for progress in life. We are concerned by the UK’s relative underperformance on many recent international measures. We consider that a failure to improve training for those who do not go to university is an endemic long-term policy failure, which would inevitably contribute to wage slow down in a more competitive and open world. That is why we focus in Chapter 4 on skills, training and technical education. In preparation for the world of work, Further and Higher Education are poorly balanced, student finance flawed and the apprenticeships system incoherent. The problems of an insufficiently skilled workforce risk being amplified by wider socio-economic changes including increased global uncertainty and the decline of growth in western economies.

12.As well as experiencing a wage slowdown, younger generations also report increased insecurity in work. We heard concerns from our Contact Group and others that it is more difficult for young people to find permanent secure employment. We look at this aspect of the world of work in Chapter 5.

13.The other pressure affecting younger people is the continuing decline in home ownership and the affordability of housing. Each generation born since the 1960s has spent more of their income on housing and is less likely to own their home than the generation born before them.8 The generation that has recently retired has had a mostly more benign experience of the housing market than generations currently in the labour force. They were more likely to achieve a secure home either through substantially higher home ownership rates or a much larger socially rented sector. Throughout their life, on average, they spent a smaller proportion of their income on housing costs than any generation since has at the same age. However, this positive experience of the housing market was not uniform within older generations, as many suffered from the effects of persistent high interest rates and inflation. Some experienced negative equity, a problem that could recur once the present policy of artificially depressed interest rates ends.

14.Younger generations are increasingly living in the private rental sector, which takes up more of their income and provides no long-term security. Short-term insecure tenancies are especially a problem for young families, as children are particularly affected by frequent moves. The private rented sector plays a valuable role, but poor standards and arbitrary treatment of tenants have resulted in insecurity for many. There has also been a large increase in the numbers of young people living with their parents either by choice or due to an inability to access a home of their own.9 The supply of local authority and other social housing has fallen dramatically. These concerns are discussed in Chapter 3. While some of these pressures are felt differently across the country, with London more acutely affected than other areas, these generational challenges pose problems for large numbers of young people.

15.Meanwhile, older generations face their own challenges in a society that is ill-prepared for their numbers and needs as they age. The generation born between 1946 and 1965 is substantially larger than subsequent or preceding ones. We have heard that there is an inadequate supply of housing that is adaptable or specialised to meet the needs of this larger cohort as their care needs increase. There also has been insufficient preparation to meet their social care needs. Social care for the ageing population is the current focus of an inquiry by the House of Lords Economic Affairs Committee. We do not intrude on that inquiry. However, we recognise this is a vast issue, not only intergenerationally, but for each generation in its lifecourse. It requires a lifecourse approach, which focuses on an individual throughout the course of their life rather than looking only at specific points in time. Social care costs cannot unfairly be loaded on the young, or remitted, in public debt, to future generations. A balanced approach to meeting rising costs must be found in which all those receiving public support make a full and fair contribution.

16.Alongside these challenges to specific age groups the increased atomisation of our society also poses a threat to intergenerational fairness. The breakdown of common institutions has allowed loneliness to proliferate in both young and old people as well as creating a breeding ground for ill-informed stereotypes about other generations. Modern technologies and social media provide more ways to communicate than ever before. This is a major benefit, not enjoyed by past generations. However, thriving and attractive public space, a shared sense of place and physical daily contact will always remain a basis for healthy communities and positive contact across the generations. Community activity can help bring generations together to strengthen the bonds between groups and tackle loneliness. In addition, we heard examples of the ways in which communities can directly tackle the problems with housing and employment that afflict different generations. This is our focus in Chapter 6.

17.Government tax and benefit policies have an impact on intergenerational fairness. Some policies which specifically raise intergenerational questions are the focus of Chapter 7.

Looking forward and taking a lifecourse approach

18.Each of these individual problems can be viewed in isolation as problems in themselves. We have drawn on several recent Select Committee inquiries for analysis of specific issues.10 Others have looked at intergenerational issues, for example the House of Lords Select Committee on Public Service and Demographic Change11 and the House of Commons Work and Pensions Committee’s short inquiry into intergenerational fairness which focused on social security.12 Our work has also been informed by the work of several other organisations including the large amount of illuminating data and analysis produced by the Intergenerational Commission convened by the Resolution Foundation.

19.Where we hope to add value to this large volume of material is by taking a forward-looking approach that looks at fairness across the lifecourse for each generation. We look at what today’s young people can expect to experience as they become tomorrow’s old people. We recognise that financing present public expenditure through creating an unsustainable financial burden for future generations would damage the intergenerational compact. Taxation must be fair between different generations. Our goal is for the intergenerational compact to be as strong, if not stronger, in 20 years’ time as it is today.

20.We must anticipate the large scale social, economic and technological changes that will reshape our society in the coming decades. The UK population is getting older. This is not just a result of the uneven size of different generations but of recent increases in life expectancy. Old age has changed, both in the perception of who we see as old and in the fact that a boy born in 2015 will have the same chances of dying at 75 that a boy born in 1955 had of dying at 65.13 Longer lives mean that we should rethink some of our expectations of what the lifecourse should look like. This potentially represents a large gain. More people enjoy varied career opportunities and more years of healthy living. A 100-year life will not resemble the same education, work, retirement pattern of recent decades. At the same time, technological change, including the growth of artificial intelligence, is reshaping what will be needed from the workforce. This technology has the potential to improve quality of life by providing new products and services. But it calls for lifelong education and training that can help all generations adapt to it, something on which we focus in Chapter 4.

21.The 100-year life also poses questions on how we combine longer working lives with support for different generations. Maintaining the intergenerational compact will call for increasing flexibility from employers to allow people to take time off for caring responsibilities, not only in the middle of their life as parents but in later careers when they may be caring for a partner or parent. This leads to our focus on the need for flexible working in Chapter 5.

22.Responsible government requires long-term vision and a clear assessment of how policy choices will affect different generations in the future, as well as today. As we discuss in Chapter 2, successive governments have failed to consider the needs of different generations and failed to plan for the long-term. This lack of foresight lies behind many of the problems we see in housing, education and the workforce. We believe this is a fundamental and continuing failure in public policy-making and the process of government. It must be urgently addressed.

23.There is a structural shift taking place, with younger generations not seeing the increase in living standards enjoyed by previous generations. At the same time older generations face a society that is not prepared for their numbers or their needs as they age. Many young people, their parents and their grandparents worry about younger people being able to afford a home and achieve a secure well-paying job. This is not due to older generations deliberately or selfishly profiting at their expense but is instead a result of the failure of successive governments to plan for the future and prepare for social, economic and technological change.

24.If society continues on its current trajectory, and the Government takes no action, there could be a breakdown in the intergenerational compact. If no action is taken now, over the coming decades some young people could grow to resent older people for having the property security that they lack and having benefited from a lifetime of well-paid secure employment of which younger generations can only dream. Our recommendations will not fix all the problems we have outlined, but they point the Government in the right direction so that it has the tools necessary to keep our intergenerational compact strong by ensuring security for all generations.

25.Much of the evidence that we have received has stressed that each generation is not a homogenous group. We acknowledge the many intragenerational issues that exist. However, in accordance with our remit, we have had to focus on the areas where we believe the unfairness is between generations rather than within them and that remit has guided our inquiry.

The Committee’s work and acknowledgements

26.Our Committee was appointed on 9 May 2018 with the broad remit “to consider the long-term implications of government policy on intergenerational fairness and provision”. In reply to our call for written evidence we received 72 submissions. We heard oral evidence from 55 witnesses, and from some of them we received supplementary written evidence. The witnesses are listed in Appendix 2. We are most grateful to all of those who sent us their ideas or spoke to us in person. Their evidence was invaluable and forms the basis of our work. We are likewise deeply grateful to all of those who came to speak at two informal seminars, to the members of our Contact Group and the people who contributed to their discussions, and to those we visited in Doncaster. Full notes of those events are in the Appendices.14 We also tender our thanks to Professor Jane Falkingham, Professor of Demography and International Social Policy at the University of Southampton, who has been our specialist adviser, for her expert help and thoughtful input.

1 The ONS suggests that one in three children born today will live to 100. Office for National Statistics, ‘What is my life expectancy and how might it change?’: https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/whatismylifeexpectancyandhowmightitchange/2017–12-01 [accessed 15 January 2019]. Professor Andrew Scott told us that this means we have to think about our lives, especially our working lives, differently. Q 57 (Professor Andrew Scott)

2 Intergenerational Commission, The Millennial Bug: Public attitudes on the living standards of different generations (September 2017): https://www.intergencommission.org/wp-content/uploads/2017/09/The-Millennial-Bug.pdf [accessed 28 January 2019] and Britainthinks, Intergenerational Fairness: A citizens’ view (February 2016): https://www.pwc.co.uk/assets/pdf/Intergenerational-fairness-report-with-britain-thinks.pdf [accessed 28 January 2019]

3 Social Market Foundation, Britain’s Family Bank: An examination of family financial support across the generations and its impact (September 2018) p 5: http://www.smf.co.uk/wp-content/uploads/2018/09/Britains-Family-Bank-1.pdf [accessed 28 January 2019]

4 Q 152 (Nigel Keohane)

5 Evidence to the House of Lords Affordable Childcare Select Committee suggested that grandparents contributed the equivalent of £7.3 billion in childcare in 2014 (Select Committee on Affordable Childcare, Affordable Childcare (Report of Session 2014–15, HL Paper 117)). Informal unpaid carers provide £57 billion worth of social care each year - Office for National Statistics, ‘Unpaid carers provide social care worth £57 billion’: https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/unpaidcarersprovidesocialcareworth57billion/2017–07-10 [accessed 28 January 2019]. This figure includes individuals caring for others in their own generation as well as including intergenerational caring.

6 Government Office for Science, Future of an Ageing Population (July 2016), p 72: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/535187/gs-16-10-future-of-an-ageing-population.pdf [accessed 28 January 2019]

7 Intergenerational Commission, Stagnation Generation: The case for renewing the intergenerational contract (July 2016) p 25: https://www.intergencommission.org/wp-content/uploads/2016/07/Intergenerational-commission-launch-report.pdf [accessed 28 January 2019]

8 Intergenerational Commission, Home Affront: Housing across the generations (September 2017): https://www.intergencommission.org/wp-content/uploads/2017/09/Home-Affront.pdf [accessed 28 January 2019]

9 ESRC Centre for Population Change, The changing living arrangements of young adults in the UK, Briefing 7 (April 2012): http://www.cpc.ac.uk/docs/BP7_Living_Arrangements_of_Young_Adults_in_the_UK.pdf [accessed 28 January 2019]

10 Economic Affairs Committee, Building more homes (1st Report, Session 2016–17, HL Paper 20), Economic Affairs Committee, Treating Students Fairly: The Economics of Post-School Education (2nd Report, Session 2017–19, HL Paper 139), Work and Pensions and Business, Energy and Industrial Strategy Committees, A framework for modern employment (Second Report, Session 2017–19, HC 352), Work and Pensions Committee, Self-employment and the gig economy (Thirteenth Report, Session 2016–17, HC 847), Housing, Communities and Local Government Committee, Private rented sector (Fourth Report, Session 2017–19, HC 440), Communities and Local Government Committee, Housing for older people (Second Report, Session 2017–19, HC 370), Women and Equalities Committee, Older people and employment (Fourth Report, Session 2017–19, HC 359)

11 Select Committee on Public Service and Demographic Change, Ready for Ageing? (Report of Session 2012–13, HL Paper 140)

12 Work and Pensions Committee, Intergenerational fairness (Third Report, Session 2016–17, HC 59)

13 ESRC Centre for Population Change, The changing meaning of old age, Briefing 31 (February 2016): http://www.cpc.ac.uk/docs/BP31_The_changing_meaning_of_old_age.pdf [accessed 20 March 2019]

14 Appendix 4 to see more about our visit to Doncaster, Appendix 5 to see more about the Contact Group.

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