Summary of conclusions and recommendations
Introduction
Looking forward and taking a lifecourse approach
1.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. (Paragraph 23)
Accounting for the future
Improving Government processes
2.The Government must think better about the long-term in order to tackle intergenerational fairness. It should create a fiscal rule that addresses the whole of the Government balance sheet, in addition to that focusing on its current spending deficit. It should also improve transparency and accounting of the spending review process by publishing the analytical assumptions behind each department’s initial requests at the start of the spending review to show its perception of the country’s needs over the course of the next spending period. There should also be an independent validation of these assumptions, for example by the National Audit Office. (Paragraph 43)
Data on intergenerational fairness
3.The UK Statistics Authority should prioritise improving generational statistics. This work should begin by the Office for National Statistics introducing a generational breakdown of the Effects of Tax and Benefits on Household Income data set and releasing a backdated time-series of this data. The Office for National Statistics should also investigate ways to improve the Wealth and Assets Survey’s coverage of gifts and inheritances as well as publishing a generational breakdown of the survey’s findings in each release. In addition, the Department for Work and Pensions should introduce a generational breakdown of the Households Below Average Income data set in its annual release and publish a backdated time-series of this data. (Paragraph 52)
4.The Treasury must do more to generate and publish data on intergenerational fairness. It can immediately begin by producing a distributional breakdown of the effects of each budget by age group using the static models it already has. It should invest in developing its capacity to model the generational effects of tax and benefits policies. (Paragraph 58)
5.The Government should create Intergenerational Impact Assessments for all draft legislation indicating how it will affect different generations. (Paragraph 59)
The housing challenge
Housing supply
6.The Government is not taking the action needed to ensure that there is a sufficient supply of affordable housing. In particular, action needs to be taken to substantially increase the supply of social housing. One means of doing this is to ease the ability of local authorities to borrow to fund housing building. This lack of action on housing is primarily hurting younger generations. However, younger generations can be helped by building more housing which is accessible and adaptable for older generations as part of a wider increase in supply. (Paragraph 73)
The private rented sector
7.The Government’s proposed reforms do not create a regulatory framework that will provide private tenants the security they need. This particularly affects young people who are unable to buy and becomes a greater problem as they age. Change is needed so that renters who want a long-term secure tenancy can find one. (Paragraph 82)
Intergenerational transfer and financial products
8.Intergenerational transfers play an important role in housing affordability for many members of younger generations. There is a need for innovative, flexible products which can help address this issue. The Government and the Financial Conduct Authority have a key role to play in ensuring a regulatory framework that encourages new challenger entrants to these markets, who can shake up the existing playing field. (Paragraph 91)
Development of public sector land
9.The Government has failed to manage properly the land which it owns. It should invest in developing a central government capability to understand fully what land public bodies own, how public sector bodies use that land and where it can be disposed of. (Paragraph 97)
10.In order to increase housing supply, local authorities should be given a presumption to develop on land owned by public sector bodies. Local authorities should be empowered to ensure that development on public land takes place. (Paragraph 100)
The capacity of local authorities to deal with planning issues
11.The Government should give powers to local authorities to set their own planning fees up to cost. Local authorities should ensure that additional fees are retained by planning departments. (Paragraph 106)
12.The Government should issue guidance clarifying that extra care retirement communities fall within the C2 use class as they are capable of delivering high levels of care to older people and so should be treated as the same planning use class as care homes. (Paragraph 110)
Planning for each generation
13.The Government should issue planning guidance to recommend that local plans consider the needs of younger people alongside the existing specified demographics. (Paragraph 114)
14.The Government should ensure that local plans have specific policies to address the needs of younger and older people. If the new National Planning Policy Framework’s requirement that local authorities consider these issues does not achieve this, then the Government must take more direct action. (Paragraph 115)
Educating generations for the 100-year life
Education in schools
15.The Government should ensure that young people are provided with sufficient education about housing and other practical finance matters before leaving school. The Government should make PSHE a statutory subject inspected by Ofsted. Increased housing and financial education within PSHE would be helpful. Local organisations should, where possible, be brought into schools to signpost young people to suitable financial education resources, including relevant advisory bodies. (Paragraph 126)
Further Education
16.The apprenticeship system is confused. It is not adequately serving young people or apprentices retraining later in life. Apprenticeships should develop skills for those who need them, including routes to technical and craft careers. Resources raised via the levy should not be used to rebadge training that would occur anyway. There is too little monitoring and too little focus on quality and outcomes. We note the number of changes in the system in recent years, but do not believe failed experiments should be used as a pretext for deferring effective reform. The Government must improve the quality of apprenticeships to deliver real skills for lifelong and fulfilling careers and ensure they are focussed on those young people, and re-trainers, who are not well served by other education routes. It must review and remove reported bureaucratic barriers to the provision of apprenticeships by employers. (Paragraph 135)
17.The Government should substantially increase funding for Further Education and vocational qualifications. Many students would be better served by pursuing vocational educational pathways. The current system of funding and access is inefficient, complex and risks perpetuating unfairness between those who access Higher Education and those who do not. We must rebalance the value attributed to Higher Education and Further Education. (Paragraph 136)
Higher Education
18.The qualifications that young people leave education with do not always match the needs of the labour market. Post 16 educational providers and the bodies that regulate them should seek to link educational outcomes more closely to the labour market. (Paragraph 142)
Lifelong learning
19.Lifelong learning is a cause for serious concern. We are concerned that existing policy is inadequate and will not meet the need for growth. Lifelong learning over the lifecourse will become more important as more people lead longer working lives. The Government is failing to grasp the scale of lifelong learning required to cater for people living longer and for technological change. (Paragraph 151)
20.The Government’s National Retraining Scheme should be extended and scaled up to prepare for the challenges of an ageing workforce and technological development. This should be targeted throughout the lifecourse and must adequately reach those who are not employees. (Paragraph 152)
21.The Government should consider new incentives to encourage people in lifelong learning. The National Retraining Scheme alone will not suffice. The Government should implement a cohesive lifelong learning strategy following on from the results of the review of post-18 education. (Paragraph 153)
Working in the 100-year life
Pay progression
22.Slow pay progression is a particularly acute concern for young people. This is a real challenge, as slow pay progression can have serious consequences for progression through life. Business’ best practice for encouraging pay progression should be shared. Acting on the recommendations proposed for lifelong learning will aid progression through the lifecourse. (Paragraph 161)
Insecurity of the job market
23.Insecure employment is concentrated in the younger part of the age spectrum. While this may not be a problem if insecure work is performed alongside studies, it poses a problem when it accounts for a young person’s only source of employment. (Paragraph 166)
24.Denying workers the rights that come with worker status fails to protect them from exploitation and poor working conditions. This disproportionately affects younger people. There should be an assumption of the employment status of ‘worker’ by default, in order to make the rights and protections that come with this status enforceable, without interfering with the rights of those who genuinely wish for self-employed status to adopt it. (Paragraph 170)
25.The timetable should be released for when the research commissioned into those workers with uncertain employment status will be published and when it will make a decision on bringing forward legislation. (Paragraph 173)
Flexible working and mid-life career reviews
26.The Government should work with employers to ensure that more jobs are advertised as flexible. The public sector is leading the way in flexible working. Wherever possible, public sector jobs should be advertised as flexible. (Paragraph 177)
27.Mid-life MoTs can play an important role in preparing people for a longer working life. Mid-life MoTs cannot be a one-off, discrete event, and are most effective when viewed as part of a process of good management. The Government’s efforts to encourage mid-life MoTs are in danger of missing those most in need of support, including individuals who work for employers that lack the capacity to provide mid-life MoTs and those outside the workforce. On the other hand, providing a single statutory MoT at a fixed age to every employee would lack flexibility and might lead to waste. If MoTs are to be introduced effectively, the Government needs to give a good deal more thought to how they should operate. (Paragraph 182)
Ageism
28.Notwithstanding the increase in employment of older people, ageism remains a problem within British society and is affecting the ability of some people to continue working into later life, despite long-standing laws against age discrimination. Discrimination in recruitment is a particular problem. More should be done to recruit and retain older workers. (Paragraph 189)
All-age communities as drivers of intergenerational fairness
The power of community actions
29.Community initiatives that bring generations together are an important way of cementing intergenerational bonds. These bonds provide support to both young and old members of communities where needed. (Paragraph 201)
Facilitating community activity
30.Local authorities should share intergenerational best practice and publish practical examples and information relating to community-run services and community assets. (Paragraph 210)
31.At all levels, government should be an enabler of community activity. Both central and local government should concentrate on permitting and facilitating community activity, rather than strictly policing when and where it takes place. (Paragraph 216)
32.The Government must ensure that there are long-term sources of funding available for community activity. (Paragraph 217)
Intergenerational taxation
Age-related benefits
33.The triple lock for the State Pension should be removed. The State Pension should be uprated in line with average earnings to ensure parity with working people. However, there should be protection against any unusually high periods of inflation in the future. (Paragraph 232)
34.In our submission, free television licences for all over a certain age should be phased out. Those who can afford to pay for a television licence should do so. The poorest may be subsidised directly by the Government, if it so chooses. (Paragraph 237)
35.The Government should seek to target existing age-related benefits better at individuals outside the workforce. Age thresholds should be raised. From 2026–28 when the State Pension age is due to rise to 67, free bus passes and Winter Fuel Payments should be available no sooner than five years after the State Pension age and age thresholds should be aligned across benefits. The difference should be maintained from then on as the State Pension age rises. There should be transitional protection so that individuals who currently receive these payments continue to receive them. This should ensure that the cohort of women who have been most severely affected by changes to the State Pension age would not suffer a double disadvantage from this subsequent change. (Paragraph 241)
36.Alongside changing the age of applicability, the Government should investigate the feasibility of treating these benefits as taxable income for those above the tax threshold without requiring individuals who currently do not complete an income tax form having to fill out a form. (Paragraph 242)
National Insurance
37.The National Insurance system functions poorly. NICs do not pay for the State Pension even though they are used as a way to determine eligibility for it. They are not linked to any actual rules on the size of State Pension and the Government does not treat it as a future liability in the Whole of Government Accounts. There are strong arguments for the Government to consider greater alignment and the eventual merger of the NICs and income tax systems. (Paragraph 248)
38.The reality of longer working lives should prompt the Government to rethink the National Insurance system. It is not fair that only individuals under the State Pension age pay this tax. Individuals over the State Pension age should contribute. Older people with lower incomes could be protected from this change by aligning the NICs threshold for this group with the income tax personal allowance. (Paragraph 249)
Property taxes
39.Council Tax is an incoherent combination of a property tax and a service charge. If the Government decides it would like to continue to fund local authorities through a tax partly based on property value, then it might reform Council Tax so that it adheres to the following principles:
(1) A reformed tax should more closely mirror the value of the property than the existing Council Tax system.
(2) It should include a method for allowing individuals with low incomes but high asset values to delay payment until the property is next sold or transferred.
(3) Second homes should pay the full rate of local tax. (Paragraph 259)
40.Stamp duty has seriously distorted the housing market. The Government should review the effect of stamp duty on the liquidity of the housing market and consider how stamp duty could be reformed to improve the housing choices and availability for young families. (Paragraph 265)
Inheritance Tax
41.Inheritance Tax is capricious and not currently fit for purpose. Consideration needs to be given to whether and how assets should be taxed on death or transfer in a way that ensures fairness between generations. (Paragraph 272)