Tackling Intergenerational Unfairness (Select Committee Report)

Baroness Greengross Excerpts

Monday 25th January 2021 Grand Committee

[Baroness Greengross (CB) [V]]

My Lords, I am privileged to have been involved in this work, and I also declare an interest as chair of the Intergenerational Fairness Forum.

This report highlights many of the important intergenerational challenges that we face. One important topic that is not fully covered in the report ought to be spoken about, which is what I intend to do: the retirement prospects for Generation X and subsequent generations. The International Longevity Centre UK, which I am proud to head up, published a study in November 2020 that found that 57% of people in the UK born between 1965 and 1980—Generation X—said they would like to save more for their retirement but were struggling to do so. The Covid pandemic has resulted in the second global economic recession in 12 years. This, along with the issues highlighted in the Select Committee report, make the prospect of saving for retirement increasingly challenging for those currently working.

Recommendation 17 of the report calls for increased funding of higher education. University students in England currently pay the highest course fees in Europe. Unlike 30 years ago, when student fees in this country were low, the average student debt in England is now about £40,000—in contrast to Germany, where the average student debt is only £1,600.

Rates of home ownership have fallen in the past 20 years due to rising house prices. ONS figures for 2020 show that adults aged 35 to 45 are three times more likely to be renting and not own a home than 20 years ago. Recommendation 7 of the Select Committee report calls for policy changes to support long-term renters, while recommendations 9 to 14 call on the Government and local authorities to address planning and housing supply issues. Implementation of these recommendations is crucial to ensure that future generations are not locked out of the housing market, instead spending a significant proportion of their income on rent all their lives.

Recommendations 22 to 27 address current issues in the labour market. We know that more and more people are insecure in work. ONS figures for 2019 show that at least 3.7 million people are in roles where they have no security in relation to the hours they work or their income. For people in this position, it is not possible to get a mortgage to buy a home. Saving for one’s retirement when in insecure work is near impossible. From 2008 to 2014 was the longest period of falling wages in the UK since the end of the Second World War. The impact of the current Covid-19 crisis only a few years later will cause wages to decline further. Implementing the recommendations in this report is essential if there is to be any significant shift that will support future generations to save for their retirement. The ILC-UK report highlights that one in three members of generation X in the UK are at risk of retirement incomes that would result in minimum standards of living, increasing student debt, stagnant wage movement, growing levels of insecure employment and falling home ownership, all of which could be even worse for those born after 1980.

Policymakers have an obligation to uphold the intergenerational contract and to ensure that future generations do not see a decline in their quality of life. Unless the recommendations in this report along with other policy changes are implemented, future generations will not enjoy the same quality of life in retirement as their parents’ generation. This would be disastrous.