Tackling Intergenerational Unfairness (Select Committee Report)

Baroness Blackstone Excerpts

Monday 25th January 2021 Grand Committee

[Baroness Blackstone (Ind Lab)]

My Lords, this report was published in April 2019, nearly two years ago, and it makes a nonsense of the long-established system of debating Select Committee reports in the House that so much time has elapsed since its publication. It is also regrettable that the Government have rejected so many of the report’s recommendations. However, like the noble Lord, Lord Price, I thank ONS for its decision to undertake a generational breakdown of the effects of tax and benefits on household income. It is admirable that it has already begun publishing an intergenerational analysis of the data it holds, and that it is consulting on ways to improve its data on transfers between generations, as the committee recommended.

I will focus on the need to understand, and take action on, the social and economic circumstances of young people in their 20s and 30s. In order to improve their well-being and to meet their aspirations, more public expenditure should be directed at this group. To make that easier, in the context of the debt burden just described by the noble Lord, Lord Price, there needs to be a reconfiguration of the generous tax and benefits position of those over 60. There was a time when the elderly were in a relatively weak financial situation compared with younger generations in employment. This is no longer the case. In order to achieve more vertical, as opposed to horizontal, fairness, the committee recommended that the triple lock for state pensions should be removed, and that instead the state pension should be uprated in line with average earnings to ensure parity with working people. The Government’s refusal to budge is costing the Treasury huge sums each year, and in the longer term is unsustainable. The triple lock has done its job and the Government should have the courage to drop it.

The tax system is also unfair, explicitly giving advantages to those over pension age by waiving national insurance contributions even if they are still working. Anyone who is working, whatever their age, should be taxed in the same way. The mythology that national insurance is a simple contributory scheme should be dropped. Professor John Hills, who sadly died recently, told the committee that is was an “accounting fiction”. In his excellent evidence, he also commented on other age-related social security payments, telling us, for example, that winter fuel payments towards the heating bills of those over 65

“are almost the least effective way of coping with fuel poverty.”

This is another unfair policy, since single parents are much more likely to be in fuel poverty than those over 65. The fact that the Government have rejected the committee’s recommendation to abolish it is another example of them taking the easy way out by defending the status quo.

I assume that the Minister accepts that there is also a need for a realistic assessment of the impact of longevity on the need to extend working life, leading to higher age thresholds for all age-related benefits, including the state pension. There should surely be an acceleration of raising the age of eligibility for state pensions. Failure to do so will place ever-greater burdens on the younger generations, who are paying an ever-larger bill for the costs of retirement of the older generations.

Let me turn now to young people themselves. The committee largely accepted the views of the Resolution Foundation and others that they are relatively worse off than their parents and grandparents were at a similar age. To help rectify this requires a massive investment in social and affordable housing, as implied by the noble Lord, Lord Price. The supply of this nowhere near meets demand, driving younger generations into poor-quality and insecure privately rented accommodation. Again, the Government failed to respond to the committee’s recommendations. One consequence of this failure is that the lack of an adequate home is magnifying the disadvantages suffered by the ever-growing number of children of those in their 30s who are now living in poverty.

I end by reflecting on the job opportunities and the linked issue of education and training for those in their 20s and 30s, compared with earlier generations, who have benefited from full employment for most of the last four or five decades. Young people face uncertain prospects of permanent employment. This is magnified by a global pandemic, which has done untold damage to our economy. However, there were already worrying trends in the growth of the gig economy, with its many downsides, well before Covid-19. Many thousands of jobs will need to be created, in particular in the green economy, to counteract climate change. Failure to meet our net-zero target will of course affect younger generations more than those of us who have lived most of our lives.

Many of these new jobs will require high levels of skill, which will be achieved only with more investment in education and training—notably in FE, which has been decimated by this Government and their predecessor. However, I welcome the Government’s change of heart on FE, even though it is too little and too late. This is urgent, since so many young people in their 20s have already missed out. They will need to be rescued and provided with learning opportunities that they have been denied in the past through newly invigorated and properly resourced FE programmes. Finally, as the report made clear, they will need to be supported by high-quality, lifelong learning to meet the needs of a 100-year life.