Intergenerational Fairness in Government Policy

Lord Tugendhat Excerpts

Thursday 26th October 2017 Lords Chamber

[Lord Tugendhat (Con)]

My Lords, my noble friend Lord Willetts declared an interest as a member of the baby boomer generation. I am older than he is, and I gather that mine is the silent generation—perhaps because it is thought that we are no longer capable of speech.

I congratulate the noble Baroness, Lady Smith of Newnham, on bringing this matter to the attention of the House. It is one of the great issues of the present time. It has been given added topicality by the report of the FCA on young people’s finances, published in the last week or ten days. I am also conscious that not only my noble friend Lord Willetts but my noble friend Lady Altmann and the noble Baroness, Lady Greengross, have great expertise in this area, which I certainly do not.

The issue can be quite simply stated. We of the older generation have, in recent years, acquired a disproportionate share of the nation’s wealth. Not only that but, because of the triple lock and various other devices, we enjoy greater protection against the vagaries of economic life than any other generation. This is the result of decisions taken in the past which were themselves designed to bring about intergenerational fairness. Previous generations of pensioners endured the hardships of the 1930s and the Second World War. When the rest of the country was getting richer, for a long time they lagged behind. Decisions were taken that enabled them to catch up and safeguard their position. At the time, those were correct decisions.

We ought now to be thinking in terms of the same generosity of spirit for the generations that come behind us. We are now in a situation where, except for the very oldest members of the silent generation, those who are drawing a pension have grown up during the years of prosperity and peace. As everybody in this House knows, we have reached a point where the typical pensioner household is now better off than the typical family of working age. That cannot be right, given the responsibilities that families of working age have and the position of people whose responsibilities have very largely been discharged. Of course, I agree very strongly with my noble friend Lord Willetts that we are not talking about intergenerational warfare but intergenerational mutual support. The older generation supports the younger generation in a variety of ways, depending on the prosperity of the families concerned, but they also look to the younger generation for other kinds of support. To achieve that support in the circumstances that now exist, some redistribution is necessary.

There has been talk recently of tax breaks for people in their 20s and 30s. I am not a fan of that device because, were there to be tax breaks for people in one decade or another, inevitably unfairness would arise. If you give tax breaks to those in their 20s and 30s, you could have people earning a great deal of money in their 20s paying less tax than people earning less money in their 50s, so I do not think that is the right way to go. However, there is scope for more inducements for hypothecated savings—for example, to save for pensions and in ways that the saver is unable to get at in the short term. There is obviously scope for reducing stamp duty but I do not think there is any point doing that unless we combine it with a considerable increase in housebuilding: otherwise, it would merely have the effect of pushing up house prices. We need to reduce stamp duty for younger people, perhaps for first-time buyers, but do it in conjunction with a much more ambitious housebuilding programme.

The findings in the recent report of the Social Mobility Commission have a considerable role to play in resolving the issues that we face today, particularly what it said about apprenticeship policy and persuading universities to link courses more directly to employment opportunities and to provide better advice to students during their university careers and when they graduate on where their education can be put to best advantage. We also need to give a good deal more thought than we have done to the other possibilities offered by tertiary education, and to the balance between different forms of tertiary education in this country.

Anything that we do to resolve this issue will cost money. There is no escape from grasping the nettle and starting to cut back some of the privileges that we of the silent generation and the baby boomers enjoy. In particular, a start must be made on phasing out the triple lock, which next year will yield a particular bonanza because of the September inflation figure.

Finally, I urge the young to vote. The reason the older generation has so many privileges that are so difficult to tackle is because old people vote and young people do not. We saw the result of that in the referendum and in a different and, from my point of view, rather less fortunate, fashion at the last general election. However, if younger people would vote in the same numbers as older people, it would be a great deal less difficult for Governments to tackle the issues that need to be tackled if we are to secure a greater degree of intergenerational fairness.