Young people in the UK are understandably despairing at the economic pressures they face and feeling that previous generations enjoyed a much fairer economic environment. Then, to add to their anxieties about home ownership and a precarious jobs market, comes the bleak announcement that UK public debt has now reached 100% of GDP.
This debt burden will have to be borne by taxpayers for decades to come: paying interest on the national debt (interest alone) currently accounts for about 7.3% of public spending, higher than defense spending (4.8%) or transportation spending (3.8%).
Some of the remaining funds will be used to fund essential public services in the future, while also addressing problems caused by historic underinvestment in water, rail and other critical infrastructure by previous generations.
Indeed, in the 1980s the UK government used its financial backing to subsidise much of its infrastructure, selling off assets such as British Gas at bargain prices, and baby boomers and older generations who could afford to buy shares often made handsome profits.
There are other costs that today’s younger generations have had to bear. During the COVID-19 lockdown, young people were forced to stay at home, mainly to protect the elderly, and universities and schools were closed. Young people lost their freedom to live and work within the EU, as 60% of retired people voted in favour of leaving the EU, while the majority of young people voted against it. Brexit also made Britain worse off.
But not everyone has become poorer: over the past 20 years, the median income of pensioners has increased by an average of more than 50%, while the income of working-age adults has increased by less than 10%. The median income of a pensioner, after deducting housing costs, now exceeds that of a household with children.
Most of the country’s wealth is now in the hands of the elderly: in 2018, one in four people over 65 lived in a household with total assets of more than £1 million. Pensioner poverty is now lower than the rest of the population.
But pensioners receive all sorts of unconditional discounts and benefits, such as free or discounted public transport, their income is exempt from paying National Insurance contributions, and their state pension has a triple fixed amount and is guaranteed to grow faster than their working income.
Until recently, the winter fuel allowance was £300 for everyone born before 1944 (reduced to £200 for young pensioners).
Baby Boomers and Catastrophe?
There is some public support for restricting fuel benefit to poorer pensioners, but the issue of taking money back from the elderly remains highly sensitive. (In 2017, the then prime minister, Theresa May, proposed using pensioners’ wealth to cover soaring care costs, but was quickly forced to reverse course.)
One reason for the reluctance to take money from the elderly may be that while most pensioners are well off (relative to the working population), the poorest are not, and some pensioners do not claim the benefits they are entitled to, and the last thing a civilised society wants is for its elderly to freeze out.
“The losers have to pay off the national debt.” fizkes/Shutterstock
But glaring economic disparities raise broader questions about intergenerational justice. What does one generation owe to the next?
And it’s not just about money: Global warming is also a problem that older people have spent most of their lives paying for, while the burden of repairing environmental damage falls primarily on younger people.
Perhaps a fair philosophical approach is that it is OK to leave certain costs for the future if future generations can generally expect to enjoy greater consumer choice and comfort, a better quality of life, and live longer, healthier lives.
But that doesn’t seem to be the case at the moment: Incomes are stagnant, life expectancy is stagnant, and house prices have not been that high relative to incomes since the 19th century.
In that sense, many people, whatever their age, would probably identify with today’s young people and might argue that it’s time for the government to focus on policies that clearly benefit young people, such as house building, different forms of taxation, and putting pension income into National Insurance.
There could also be greater investment in national infrastructure, higher taxes on fossil fuels to pay for the energy transition, and changes to fiscal rules to allow the costs of higher education to be shared more equally among all graduates, regardless of when they earned their degrees.
These changes would bring about a dramatic shift towards an economic system that seeks to redistribute wealth not only among citizens but also between generations.
