Tackling Intergenerational Unfairness (Select Committee Report)

Debate between Lord Davies of Brixton and Lord Lexden

Monday 25th January 2021 Grand Committee

[Lord Davies of Brixton (Lab) [V]]

My Lords, I am happy to take note of this report and pleased that, somewhat belatedly, it is being given the attention it deserves. It represents an important piece of work and we should thank the members of the Select Committee for their efforts. There is much of the report with which I agree, particularly where it talks about the problems faced by young people. However, I am afraid that the underlying thesis, while widely held, is misconceived. What I find lacking in any discussion of intergenerational fairness is a clear exposition of the mechanics of how one generation can gain at the expense of another. We are never told exactly how it is possible for a current generation to force future generations to pay for our current consumption.

We have the independent Office for Budget Responsibility continuing to project growth in national income per head, so future generations overall are expected to be richer than we are. We are not eating the seed corn for future generations, let alone consuming now what future generations might produce. Overall, they will be better off. To the extent that there are groups within future generations who feel they are being treated unfairly, they need to look to their fellow citizens for fairness, not their parents and grandparents.

If we focus on the main conclusions of the report, a majority of them identify important social ills—but ills that have nothing to do with intergenerational fairness. There is no doubt that public services have got worse over time, so it is true that the education system

“is ill equipped for the needs of the rapidly changing labour market”

and that we need

“to directly tackle skills, care and housing shortages”.

But these problems stand by themselves; they really have nothing to do with generations having conflicting interests.

The problems we do face are real enough, but they are political in nature and looking at them within a framework of intergenerational fairness does not help in any way in finding a solution. What we have here is a confounding variable. Wealth is being conflated with age. There are clearly massive inequalities in Britain today, but they are inequalities of capital and income and have little to do with age. They will not be resolved by picking on one generation or another to bear the brunt of any solution.

It is true that not all pensioners are poor, in the same way that not all 20 year-olds are poor. While austerity measures in Britain continue to hit the poorest families hardest, those in a wealthy elite have seen their incomes spiral upwards. This is a question not of age but of social class and wealth. The answer is that as a society we should do much more to raise revenues from those who can afford it, including but not limited to the elderly, rather than relying on cuts to services, pensions and benefits that have a disproportionate impact on the poorest in society.

One of my biggest complains about the report is the statement that

“retired people have higher incomes on average than many younger groups.”

It is grossly misleading to focus on pensioners’ average incomes, because they vary widely. It is equally true that young people have higher incomes on average than many groups of pensioners. So long as there remain many poor pensioners—the millions who rely on state benefits—I will remain a strong defender of the triple lock. We should remember that the triple lock applies only to a limited part of pensioner incomes, namely the basic state pension and the new state pension, which are at only £134 and £170 a week respectively. I do not think that that is enough and, so long as that is the case, I will support the triple lock to produce a more adequate level.

It should also be understood that it is future generations of pensioners who will benefit most from the triple lock, as they will accrue higher pensions when they retire. Young people’s falling long-term economic prospects are not down to older people in society hoarding all the wealth. Increased university fees, unemployment, poorer job opportunities, lower pay and rapid house price inflation are the real causes of hardship among the young. Restricting the support that pensioners receive from the state would therefore do little to address the difficulties that young people face.

[The Deputy Chairman of Committees (Lord Lexden) (Con)]

I understand that the noble Baroness, Lady Fox of Buckley, has withdrawn, so I call the noble Baroness, Lady Wheatcroft.