Tackling Intergenerational Unfairness (Select Committee Report)

Viscount Chandos Excerpts

Monday 25th January 2021 Grand Committee

[Viscount Chandos (Lab) [V]]

My Lords, I thank the noble Lord, Lord Price, for his clear introduction to the report by the committee. I was privileged to be a member of the committee and witnessed the contribution he made, along with that of other members, many of whom have spoken or are speaking today. As the noble Lord, Lord Price, noted, the committee’s chair, the noble Lord, Lord True, has gone on to even greater things. Although I look forward to hearing the noble Baroness, Lady Penn, winding up for the Government, I can only regret that we could not see the noble Lord, Lord True, with his customary agile footwork, both introducing the debate on his report and responding to it from his position on the Government Front Bench.

The noble Lord, Lord True, would have been more likely to have been able to present the report to your Lordships if it had not taken 21 months from its publication to it being debated, as my noble friend Lady Blackstone and others have noted. Even in the turbulent time that saw the parliamentary conflict over Brexit, a general election and the onset of the Covid crisis, this delay is regrettable, as is, even more so, the anodyne and disappointing written response given by the Government in July 2019, even if it was at least prompt. That said, like others, I believe that the report’s conclusions and recommendations are as valid now as two years ago—probably more so. Although Covid has posed a far greater direct threat to the health of older people, the broader social and economic impact of the measures taken to control the spread of the virus has affected every generation, and in many respects particularly the younger ones. The broad thrust of the report therefore, after the last Labour Government’s action to address pensioner poverty, that the greatest poverty and unfairness now lies with younger working-age people, is likely to be emphasised by the effects of the pandemic-combating policies of the past year and the months still to come.

Even though a number of the report’s recommendations, such as those on the pension triple lock, free television licences and other pensioner benefits, generated concern and criticism from interested parties, the costs of those must be appraised relative to the needs in younger cohorts of the population. Some of the actions that could make the greatest difference to younger people, such as in the area of housing, would not however require much if any revenue funding. Improved rights for tenants of private landlords would provide vitally enhanced security for generations for whom home ownership is at least being delayed compared to earlier generations, and in many cases realistically ruled out for the foreseeable future. Improving the supply of affordable housing will require capital funding, whether through government or the private sector, rather than revenue funding.

I will conclude by focusing on an issue only really just touched on by the committee: the way the taxation of capital compared to that of income gives rise to some of the greatest inequity between the generations. Over the past 30 years, the value of assets relative to GDP in the UK has more than doubled, whereas average earnings have hardly grown at all. Over any period, let alone one which has seen such a pronounced increase in the value of residential housing and stock market securities, capital will generally be concentrated in the hands of older cohorts. If capital is relatively lightly taxed compared to income, as it generally is, that will inevitably favour older cohorts of the population. The report states:

“Inheritance Tax is capricious and not currently fit for purpose. Consideration needs to be given to whether and how assets should be taxed on death or transfer in a way that ensures fairness between generations.”


Inheritance tax is not the only way of taxing capital, but by definition, bequests on death and life-bound gifts are events at which time tax can be raised most easily and painlessly. The noble Lord, Lord Willetts, who has been such a powerful voice on the issue of intergenerational fairness, wrote in 2017 that

“we see inheritance as the next intergenerational frontier, particularly for those interested in the dynamic relationship between inter- and intra-generational inequalities.”

The committee’s excellent special adviser, Professor Jane Falkingham, argued early on in our sittings that intragenerational issues were inextricably bound up with the consideration of intergenerational ones. I suspect that the committee’s consensus might not have survived any attempt to define these intragenerational issues in respect of the reform of capital taxation, even if only limited inheritance tax. Until there is the commitment, courage and altruism on the part of government to address this issue, there will remain severe inequalities between generations and within them.