Commentators like to find big battles in otherwise unexciting Budgets. This year, they’ve seized on the return of an age-old clash – between an older generation that seems to have survived into comfortable retirement, and a younger generation that has to pay for that retirement. May I say, as one of today’s younger people, how right you were to shift more of the tax burden onto pensioners this year. They are making us pay three times over: for their retirement, for our own, and for the damage done to our economy and society under their watch.
Much has been said in defence of today’s older generation – of how they saved for their own retirement, rebuilt the nation after earlier disasters, and often have to live very modestly because of interrupted work-histories and low returns on any savings they made. But let’s not deceive ourselves. Every pension system involves a transfer from people of working age to people above it – whether it’s through the taxes we young people pay, or the profits and interest paid out by employers that therefore can’t find its way into the pockets of those they employ. And as we are a generation whose numbers will be limited by security setbacks and family-planning advances, while they have a welfare state and health service to look after them, there’s going to be increasing (and increasingly expensive) number of them in proportion to us.
Undoubtedly, many of today’s old people worked hard before they retired. But many didn’t work – owing to periods of high unemployment, and relatively low workforce participation (especially among women) until economic conditions demanded it.
We, the new generation, are keen to make a bigger contribution to the economy – and are well equipped to do so, being on average far better educated and trained than our parents or grandparents. But we are threatened with high unemployment, which will remain far worse for the 16-25 than for older age groups – if the government can’t find a way to stop the boom-bust economy that your predecessors as Chancellor claimed to have abolished, but never did.
Owing to the reforms of the past twenty years, we young people pay much higher tax rates than the previous generation, to support public spending that has been massively increased by new outlays on education, the NHS, other social services and defence. Yet many of us also find ourselves having to pay privately for some of our schooling, medical services, higher education and vocational training.
With an increasingly selective school system, fewer than half of us can now expect to get to university, even though we’re told that future work will need degree-level skills. Whereas our parents grew up in an economy that was largely sheltered from international competition, we must pursue careers in a globalising world where jobs are at risk from lower-paid and increasingly skilled workers overseas.
At home, a chronic shortage of housing – and the great difficulty of getting mortgage loans or any type of household credit – means many of us are forced to rent for far longer than we’d like, enriching our already privileged landlords. Few of us can afford to run a car, join a gym, or go on holidays abroad.
Moreover, the now-retired generation has left us with a massive public debt – effectively mortgaging our future income, and leaving us at risk of a worsening squeeze if you and future Chancellors can’t keep interest rates down. This debt will be partly wiped out by future inflation – but we will suffer from that, too, along with the worsening disruption from protests and strikes as trade unions demand that their pay keeps up with rising prices.
Of course, our parents and grandparents blame the national debt and the wide Budget deficit on the unprecedented crisis that the world has just gone through. But this calamity didn’t fall from the sky, it was the result of actions they took, along with their political leaders whom we were too young to vote for.
We are told that technological advances helped to end wars and will now bring prosperity. But the real breakthroughs still lie ahead of us, and we young people will struggle throughout our lives with unresolved problems of air pollution, infectious diseases, creaking and congested transport infrastructure, still-expensive and erratic telecoms, and computers that future generations will laugh at for their clunkiness and distance from virtual reality. We will be the ones who build (and pay for) the communication networks these miraculous devices work through, but who only get to see them in two-dimensional sci-fi films.
Before they complain that their retirement will be shorter and unhealthier than ours, let’s remind today’s older people how much more stressful our own lives will be. They have lived through a time when – the future social historians will tell us – social and natural capital were much more abundant. Our oil and gas weren’t yet burnt, our carbon sinks were still unfilled, communities hadn’t been destroyed by urbanization and commuterisation, nor jobs de-skilled by automation.
During our working lives, we will build up the nation’s physical capital – and in retirement, we’ll be the guardians of its social capital. Few of us will put our feet up, even if we could afford to. We’ll be too busy running the ‘third sector’ voluntary groups that our career-focused children don’t have time for, and who pay back in childcare – for our grandchildren – anything we ever claim in eldercare.
Worst of all, the convenient shortness of youthful memory means that future generations will ignore our lifelong sacrifices, and look only at what we cost at the end of our not-so-gilded lives. They will call us the ‘lucky generation’, and try to tap into our hard-won savings for themselves – asking for help with deposits on the houses (or repayment of the student loans) we could never get at their age, or even moving us out of the homes we eventually bought, to ‘release the equity’ to pay for our nursing care.
So, Chancellor, you are absolutely right to tax our grandparents more heavily. I rather hope you’ll push Mum and Dad into the top tax bracket as well, after I’ve managed to flee the nest.
And we can both condemn your distant successor who, fifty years from now, will have the insolence to call us excessively privileged, and hit us with a ‘granny tax’ on top of everything else. We’d never have bothered winning the Cold War, or the World Cup, if we knew we would end up as victims in this unjust intergenerational war.
A. Youngperson 28 March 1962
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