My generation cannot afford a flat, let alone a house. Why? Because the baby boomers are making it impossible
Three generations of my family were born in the 20th century. My grandparents could become professionals without going to university. They had no family support, yet by the time my parents were born they owned comfortable detached homes with gardens.
For my parents, degrees were more important. But they did not need money from their parents. By the time they had their first child—in their twenties—they also owned a detached house with a garden.
My generation of professionals, of course, is different. We do need degrees, and many of us need help from our parents. We cannot afford a flat, let alone a house, without it. Why? Because our collective parents are making it impossible. As the baby boomer generation—aged 45 to 65—they are the largest and most powerful political constituency in Britain. And they are using their electoral clout to prevent their children from having opportunities equal to their own. In crude terms, they are keeping too much wealth. By the time we inherit, it will be too late.
This is most obvious in housing. Baby boomers complain their children cannot afford a house—while preventing the development that would make it possible. Despite population growth, they have consistently failed to increase the supply of available land. London is expected to have 700,000 additional households in the next 20 years—the equivalent of 35,000 households per year. Yet in the last year fewer than 25,000 dwellings were created in the capital. This has been true for decades: the supply of housing has not been allowed to keep pace with demand. Unsurprisingly, house prices have skyrocketed—my parents’ house in London has quadrupled in real terms during my lifetime of 26 years—and the wealth gap between those who bought in that period and those who did not increases every year.
For baby boomers high house prices are a guarantee for the future: a significant part of their pension and a vital asset to pass on when they die. That is why cutting inheritance tax is so popular. It is also why people passionately resist new housing in their area.
For us, it is a catastrophe. The population increases, new houses are not built and the price of property continues to rise. The average person in my age bracket—between 22 and 29—cannot pay their rent and save for a deposit. It would cost on average 10 per cent more than their net monthly income. That is a key reason why a quarter of men between 25 and 29 still live at home.We are left in a situation where we cannot afford anything for decades, which in turn delays when we can have children or leave home. We may inherit—but that is merely concentrating wealth in the hands of families that are already doing well.
The answer isn’t complicated: build more. Yet no one seems willing to do it.
Then there are pensions. Baby boomers are retiring too young and do not want to work longer. If they don’t, we will not have any retirement at all—we’ll be too busy paying off the debts from theirs. Here, at least, the government is trying to move in the right direction, recognising that 40 year olds with a life expectancy of 80 cannot retire at 60 or 65. [See Paul Johnson’s article on pension reform.] Yet the opposition from unions and charities which represent the baby boomer generation—but not mine—makes the government’s success uncertain, and prevents it from taking the bolder steps needed.
Finally there is debt—particularly from higher education. Degrees are more essential for my generation than any preceding one. That is not anyone’s fault—it is a trend matched in every other major developed country. I support the concept of students paying towards university; it is manifestly unfair for those who did not benefit from a degree to subsidise those who do. But when combined with our housing policy, the result is frightening. At the point when, in previous decades, we would be saving for a mortgage, we are still paying our debts.
If a student completes a three-year degree costing £9,000 a year with a £3,500 annual maintenance loan, he or she will graduate with £37,500 in debt. This is half of a down payment on a mortgage for an average first-time buyer in greater London. There is, therefore, an enormous opportunity cost to university fees—and they are further exacerbating the inequality between the baby boomers and us.
None of these arguments is new. David Willetts’s excellent book The Pinch discussed the conflicts of the generations in 2010. Yet—except for some move from the government on pensions—no political party has really addressed them. This is unsurprising: most politicians are baby boomers. That does not make it forgivable.
Of course, it is not all bad. We have grown up in a time of peace, prosperity, and extraordinary technological change. As an educated woman in a developed country, my opportunities are greater than they have ever been. We have reasons to be optimistic about the future. But if the baby boomers are unkind to us—and so far, they have been—they cannot expect us to be kind to them.
GM williams
The big change since the 1970s has been a vast accumulation of extra wealth by the richest 1%. Plus the deregulation of finance, which means mortgages are given out much more freely, inflating prices since everyone could afford more chasing the most desirable properties. And finally the decline in manufacturing after decades of neglect, pushing more people into the crowded south and east while destroying jobs in places where house prices are low.
The author also fails to check whether the current generation aged 45 to 65 have a bigger slice of wealth than equivalent people 50 or 100 years ago. If you allowed for this generation being a larger chunk of the population than in earlier eras, I doubt you’d find much change.
Alyson King
Setting generation against generation seems a bit ungrateful to say the least! Those of us who bought our shoe-box houses in the mid 1980′s had to work hard, 2 incomes, for decades before being able to afford to have children in our late 30′s and early 40′s. Being a slave to a mortgage has at least been possible thanks to low-paid public sector work out of which we have diligently paid into pensions.
Then there are those who had their children young and are now stuck with adult children who still take the food off the table without working to pay towards the household costs. This is an increasing demographic too.
Parents want the best for their children and so don’t want to throw them out to fend for themselves, even when those children are over 25 and therefore eligible for housing benefit in their own right… Being a grown-up is tough. Retirement is tough. Being unemployed is tough. Being a slave to a mortgage is tough. There are no certainties and those who grew up believing that hard work was its own reward are also the losers, when not even gratitude is their due.
And as for Japan – the diligence and dedication of the Japanese is quite unlike the British expectation of something for nothing. The low birthrate as I understand it has arisen because of a mismatch between feudal marital relations and equality at work. Women simply don’t want to marry someone who expects to be their boss.
The world is overpopulated. Low birth-rates will even this out over time.
It might be better if the elderly were allowed to work part-time as their faculties declined, rather than them having to lose respect and become a burden when they are thrown onto the scrap heap. Yes the top 1% have creamed off the real money but everyone else is struggling for a share of the national debt.
CHRIS_KELT
What an ungrateful child of Thatcher Rachel Wolf seems to be. She might at least show some solidarity with her female forbears. Born in 1947, I just squeeze in as an elderly baby boomer. I gave up work in the 70s to raise the children and did not expect to get divorced thirty years later. This combination does not make for a well funded retirement, forced on me at an early age by ill health. Also, it’s not actually compulsory to live in the south east of England. Come to Scotland for quality of life.
Paulina Hurwitz
Simply building more isn’t the answer; making second (and third, and fourth home ownership — in other words, being a buy-to-let landlord unprofitable and socially unpopular) is. There is no real deficit of homes, it’s the accessibility of existing homes that’s created the mess we’re in.
(comment via facebook)
not a baby boomer
Great article.
Alyson King – “low-paid public sector work”. Public sector workers are paid 7.8% more than private sector staff on average – http://bit.ly/pzk1fx
Plus the author plainly states that she is grateful. But seeing as we are going to be the first generation in a long tome to earn less than our parents, it is hard to be too grateful.
James Thompson
Comparing cohorts is difficult because one has to do proper cross-lagged comparisons, in which each age band is compared with the same
age band in different historical periods. It is no good simply comparing young with old, because the old are usually richer, having paid off their debts and thus accumulating assets. That would be the case even if the young and the old were on the same wage, because even the tiniest saving rate
accumulates over the forty years of a working life.
So, we do not yet know how the students of today will compare with those of previous generations as they enter the middle of their careers, which is where most capital is accumulated. However, the government’s “Social Trends” annual publication gives us a clue: they are likely to be even richer than us, because current students are richer than students were in the ’60′s, and society
as a whole is three times richer now than it was in the ’70′s. Lifespans are also on the increase (the UK has achieved two years more life per decade since 1830, and that is continuing without the expected slowdown, hence the need to increase retirement ages). Heights are increasing because of better
nutrition, and most social indicators show solid improvement.
We do not yet know what the final asset figures will be for the current
young generation, allowing for their lifetime debts, but the same holds true
of those of our generation who have outstanding mortgages or who may have to
pay for care in old age. We might end up poorer than we imagine because of
nursing costs, though that will probably only apply to a minority, because
most of us will have a reasonably healthy old age. So, it is still a little
too early to calculate our final wealth compared to the wealth passed on by
previous generations.
However, if this seems too cautious, we might try an informal cross-lagged
design to provide one simple test we could apply. Assuming that many of us
are 65 years old or older, we could compare our lives with those of our
parents. Of course, not all of them reached 65. But if I make the comparison
myself, I don’t think my parents pulled up any ladder after themselves. (My
Dad said he would educate me and then I had to make my own way: not an
uncommon view for his generation). My life now has as many possibilities as
theirs had, and probably many more, and I am richer in terms of standard of
living. (Regarding the next generation, as a Sixties softie I hope to be
able to help my daughter when she asks me for help, which she hasn’t and
probably won’t). I expect her life at 65 will be even better than mine.
Looking at a broad range of indicators, I would say that we haven’t “used
up” the economy: we have helped made it richer. It is not a fixed size. We
haven’t “used up” education: we have helped eight times more students
participate in it. It is, as I think all we would agree, a boundless good,
whatever our motives for acquiring it.
I think it is closer to the truth that we helped build a ladder (sexual
liberation, better status for women, a belief in meritocracy, tolerance
about differences, less class consciousness) than that we pulled it up after
ourselves.
Andrew
A self pitying and superficial article. The struggle to obtain the finance in order to get a foot on the housing ladder is not a recent phenomena, though is a theme raised by each succeeding generation. A bit like the hackneyed view that new policemen are getting younger, there is a failure to recall previous events as they were, and the past becomes mytholised. What is true is that a significant section of the population in their twenties and thirties are simply having too good a time socialising, travelling and obtaining the latest clothes and gadgets, and so do not save their money.
I write this with the knowledge of the example of my two children and their friends. In their late twenties, they are exceedingly well travelled, when compared to me at their ages, and have a multitude of shiny products and clothes that have helped keep them as efficient consumers, but has done nothing to assist them hoard their money as a deposit for their first home. Yes, I recall that my generation had it different, but mostly because we were brought up to save in order to be able to get ourselves our first home and car. Today’s generation appear not to have learned the need to save, but have learned how to obtain easy finance, all of which has assisted creating the financial problems that we currently face.
David Janes
Again it should be said. Building more homes is not the answer. There isn’t a shortage of housing; there is a surplus of population.
More people = more houses = need for more water and more food and more hospitals and more doctors and more schools and more shops and more roads and more cars and more lorries carrying more goods and more f&^*king McDonalds and more landfill and more cheap labour and more council houses and more workers and more house and so bloody on.
Kevin Albertson
Why blame the baby boomers for the effects of our globalised world? Immigration increases the population and housing prices, international trade forces the workers of the world to compete against each other — leading in the long-run to a converging of workers’ conditions through the world. This is obviously great for workers in, say, China who will see their standard of living increase, but less good for the workers of the west who will see their stand of living reduced.
It is not the fault of the baby boomers, it is that they were fortunate enough, to live through the last golden years this country experienced as a result of being first in the industrialised world. Other countries now want a slice of the good life for their workers and it is well known the world has insufficient resources to support the world in the standard enjoyed by our parents.
Wildeman
The so-called ‘Baby-Boom Generation’ (those born between the mid-1940s and mid-1960s – OK, I’ll agree to call us BBs) can’t be blamed for their children’s plight – of which extortionate house-prices is but one aspect. The really ‘fortunate’ generation were/are OUR parents,who benefitted from the Attlee Government’s postwar reforms before the real costs became apparant. That generation often bought houses in the 1950s-60s (when wages were low but virtually everyone was employed)and subsequently sold them at prices which were by any rational criteria grossly-inflated. Whereas many BBs will take what I believe is referred to as ‘a severe haircut’ when house-prices plummet within the next few years -which is almost inevitable, for analysts have been warning for some time that houses are overpriced. They will have brought this ‘catastrophe’ upon themselves – but Rachel Wolf and her contemporaries will benefit, provided they’re sensible enough not to buy housing while prices remain artificially high.
However, while Rachel Wolf considers BBs responsible for her current predicament the reality is that the ‘Postmodernists’ (PMs – anyone born after 1965, when the Rolling Stones first released ‘(I Can’t Get No) Satisfaction’ – the clarion-call for Postmodernism) largely have themselves to blame. By her account no political party has addressed the worsening ‘life-chances gap’ between BBs and PMs because most politicians are BBs, whereas the fundamental reason for the lack of political action is that most voters are over the age of 40. The PMs all too often don’t vote – maybe they really do think ‘What Parliament Does The Streets Can Undo’ (Weimar Germany here we come!), perhaps they just can’t be bovvered – and so are under-represented. It’s sad but true – politicians in a democracy should represent everyone, but in practice they’ll represent those who vote.
The trend is indeed for those who benefit to have disproportionate political influence by comparison with those who pay the bills. But while politicians can get away with removing Child Benefit from ‘rich’ under-40s but wouldn’t dare deprive the over-60s of their Free Bus Passes that trend will continue. I note Rachel Woods’ view that if we BBs are ‘unkind’ to PMs we needn’t expect their sympathy or consideration, but as things are I’m not going to lose much sleep – the current political reality in the UK is that ‘oldies’ will be able to carry on screwing the younger generation, confident that they themselves will never be young again. And even if the tables were to be turned there’ll remain one inescapable fact in our favour – almost all young people will one day be old.
Frank Sutton
It’s true, demographics have dealt Rachel Wolfe’s generation a poor hand, but it’s a little unfair to accuse us BBs of unkindness, just because of an accident of birth.
The absurd price of property is due largely to the banks’ enthusiasm for making ridiculous loans.
And the equally ludicrous notion that nothing less than a degree is worthwhile has simply devalued academic qualifications – the average career prospects for a graduate today are no better than those faced by a bright school leaver with three a-levels a generation ago.
And of course that school leaver wasn’t nearly £40,000 in debt.
Rachel is right to point out that her generation are likely to put off starting a family later then earlier generations, because of financial constraints.
This doesn’t seem to apply to the teenage mums in council flats – proof that to get ahead, drop all notions of responsibility and being self sufficient.
Of course, if this carries on it will mean that responsible people will have non-bred themselves to extinction, leaving the way clear for the “entitled generation” of benefit careerists.
Still it might never happen – the looming financial Armageddon could put us all on a level playing field (albeit one on the seabed of an ocean of debt).
soros1
Everything in the article is true, but why does Britain insist on over-populating itself with ever more immigrant when there are such shortages already? It makes no sense to me.
Instead of bringing in more people who would be best left in their own countries developing their national economies, why not make the most with the people the UK has? Get young people trained in the required skills; dont try to import what you need when your own people want the chance to work.
Our immigration policies have created some of the havoc we now see. It’s time to put a stop to it and focus on our own needs.
Christian
Your article speaks the truth. I sometimes just don’t see too many reasons to look optimistic into the future, i am very pessimistic for most of Europe.
All those baby boomers had their chance to vote for real reforms in the social security systems most countries have. They did not do so, at least not enough. Mostly they all depend on a system where those who are currently working and paying for social security, fill the needs for those who currently get money out of the system. So they will demand their pensions and healthcare in 10-20 years and in most countries there will be just 2-3 working folks left to pay those demands for 1 pensionist. In Germany, by 2030 it will be 2 persons in the 20-65 age range for 1 in the over 65 age range. Both groups will suffer, even if the burden is distributed fairly.
I don’t even see any of that fairness yet though. Look at how crazy people went in France, when politicians demanded that pension start dates should be raised from 65 to 67. 75, for most, seems to be much more fair and realistic. But even 67 is not easy to implement with the majority of voters being too close to their pension start.
Carey
I should like to point out that Rachels generation has yet to contribute anything to the nation. So far they are net takers. I am so pleased that she belongs to that elitist group in detached four bedroomed houses whose parents attended university and feel so sorry that she may end up like the majority of the ‘baby boomer’ generation in a modest semi and a comprehensive education, but who have nevertheless have worked hard and paid their taxes to enable the likes of Ms Rachel to have a free primary and secondary education, health care and ema grants to attend school.
Roland Baker
“Yet the opposition from unions and charities which represent the baby boomer generation—but not mine…”. So join a trade union and ask it to represent you.
Just before Rachel Wolf gets carried away with how much my mortgage-free house is worth to me, she might like to consider the double-digit interest rates I paid on my mortgage in the 1990s and what I consequently went without. If I had my mortgage for 24 years, 3% interest (much less 11%) would double the value of it to the bank over the term and the aggregate is just about what my house is worth.
My tiny terraced house does not provide me with a pension. The only way I can raise money from it, unless I want to sleep on a park bench, is to rent somewhere else to live or borrow against it and roll up the interest. As a white man over 60 with skills, my life is not one of being retired on a prosperous pension. It is a life on dole equivalent finances because no work is available to me.
This is contrary to the position for women who had the free gift of a reduction in their contribution requirements for a state pension so a woman my age gets a full state pension and I do not, only for the fact of being a man, until I am 65. The contribution reduction was not given to women according to the facts of their career interruption for children and caring. It was given whether they cared and had children or not.
Rachel Wolf has had 11 years of state education at my expense, I assume, to no apparent effect it seems from the content of this article.
LO
“Of course, it is not all bad. We have grown up in a time of peace, prosperity…” I think this young woman resides in another country. We’ve been involved in countless wars since your birth. Obviously you only consider things that affect you directly. As for prosperity, well that’s being stripped from all of us thanks, not to a particular generation, but rather to the banking elite and the politicians who support them. Wake up. There are so many eloquent young people around – why was this person given a platform?
JaneAgatha
What a load of divisive codswallop! Or perhaps just the harsh thoughtlessness of youth born of ignorance and lack of life experience. Wouldn’t it be great if the answers to the current housing crisis were that simple: blame the Baby Boomers and make them pay for it. The housing situation is the inevitable fallout of economic liberal policies pushed by Tatcher, which have contributed to a growing divide between rich and poor. These policies were initially designed by governments decades ago to prop up an economic system that was already failing. Economic liberalism has failed too but no one has any answers about what to do next. The Baby Boomers being so maligned here are suffering as much as anyone, and most are turning their pockets inside out/putting their own future financial security at risk to help house their children – this one being an example of one who bites the hand. Some of the Baby Boomers will no doubt also end up homeless in old age, and going by the tone, the author of this piece may well be the first to kick them as they lie in the gutter.
JaneAgatha
Rachel Wolf needs to be put straight about retirement ages. In using all she can to support maligning Baby Boomers she has not checked her facts. The retirement age is going up. Many Baby Boomers can not afford to retire, even if on paper their house is worth a lot more than they paid for it; and given they are also now needing to support their adult kids many of whom live at home. That adult kids are living at home in growin numbers (like increasing retirement ages) is so is a sign of a failing society and economy, not the personal greed implied here. I doubt this young woman, if she is the new face of conservative politics in the UK, will come up with any better answers for a failing system than those supported by Thatcher.
James
As the comments to this article shows, there’s nothing that quite gets up the nose of an ageing left liberal more than the accusation that they somehow don’t ‘deserve’ the huge windfall of unearned property wealth that they now find themselves guiltily sitting on.
The (ONS & BOE) data does actually show that property wealth inequality between age cohorts has increased very significantly over the past twenty years – those over 55 experiencing a massive growth, those below 30 seeing a significant contraction (and growth of mortgage debts).
Equally, property ownership in the over 60s is now on a significant upward curve, whilst for those in the under 30s it is on a significant downward curve.
And in many ways this property wealth bonanza has been engineered by the political choices of the baby boomers – the financial deregulation of the Thatcher years (key swing voter demographic – the baby boomers), the rise of Buy to Let, the under taxation of property wealth compared to income and the active opposition to new houses (the demographic of CPRE membership is overwhelmingly grey..).
But no, empty nesters who used to listen to the Rolling Stones can’t get their head round this – ‘we were rebels right? and with a social conscience too!’. And now find themselves rattling around in 5 bed family homes whilst the younger generation get stuck renting in small city centre flats
And ready to fight new property taxes and new homes with every last fibre of their ageing bodies.
Richard
“The answer isn’t complicated: build more. Yet no one seems willing to do it.” Among the problems left to us by the first two post-war generations was that they squandered enormous tracts of land in order to build suburbia. Rachel Wolf is quite wrong in saying the problem is simple. How we build and where we build are contested issues related to the gap between collective needs and personal needs. Collectively we need higher density but individuals still aspire to models (single family homes) made possible only by unsustainable land use, geographical accident (there are only limited areas close to desirable cities) and unsustainable transport patterns. The optimum solution is to redevelop the post-war suburbs and this is not a pretty business since it means replacing superficially attractive avenues with medium density housing (think 19th century German cities rather than 1960s high rises). There are ownership conflicts, market failures and many other difficulties to overcome. The alternative is just to keep paving over the countryside as if land and fuel for transport were limitless. To suggest building more is uncomplicated shows Wolf and many others have a poor grasp of the nexus of problems related to land use and housing supply. This level of ignorance would not be accepted in an article about the economy (“Poverty? Easy, just print more money…”) so I don´t see why it is acceptable when the subject is urban planning.
Helen
Wow! I come from NZ, and have been feeling the same views expressed here for quite some time. There isn’t a shortage of housing here at all, the problem is the stupid high costs as baby boomers make hundreds of thousands on house investments that cost them a hundredth of what they sell for. My generation has been slugged by student debt, which makes getting a mortgage near impossible. Then we have to pay high rents so investment property owners can pay their mortgages. There’s no chance of saving deposits due to spiralling costs, and the necessity to keep moving house due to landlords cashing in, a costly experience in itself. (14 moves in 7 years is my own personal tally. I’ve sold or given away most of my possessions to stop paying truck rentals.) Add a temporary job market, with uncertainty lingering over our heads, low wages and voila, there’s no chance of anyone of my age (mid 30s) ever buying without parental financial assistance.
THEN on top of this, we will be paying their pensions. There is talk of raising the retirement age…in 2031, probably just as WE are about to retire, not them. I’m so, so disappointed by the current thinking of baby-boomers, the ones who hold managerial positions preventing pay rises, the ones who have several investment properties earning them a nice little extra living, the ones in government who introduced student loans, the ones who control the financial system preventing us from attaining mortgages. Their attitude seems to be that they have ‘done it’ all for free, so screw the later generations over. I had an argument with my parents over this just the other day, started when I said it was a hopeless situation, there’s nothing to aim for when you have no permanent abode and no chance of getting one. Their response (and they are relatively liberal) was, ‘oh, but you can buy cheap houses still, in Invercargill!’ Look at a map, Invercargill is at the south of the South Island, and a place noone would choose to live if they enjoy warmth, sunshine and culture. If this is the aspiration my own parents hold for me, then the attitudes of the rest will only be more dire. Thanks for voicing my own frustration!
Roland Baker
As a baby boomer, further to my first comment on this article, I would like to say how touched I have been by the gratitude shown by the younger generation in Totteham, Croydon and elsewhere for what I have contributed, fruitlessly it appears, to their education.
They have had my job, my life savings, my pension and, when I am too old to look after myself, they will have my house as well.
http://www.prospectmagazine.co.uk/2011/08/the-riots-at-the-end-of-history/
Bart Findus
What a divisive, unhelpful and ridiculous analysis of the situation, to create conflict between generations. If a commentator was to suggest a particular race or gender was to blame, they would rightly be called racist or sexist. This is ageist.
I do not know of any single generation that thinks in such a homogeneous way. In fact the social contract during many of the baby boomer years has been about working together and supporting the weakest in society. The political and economic classes have left us with a legacy changing this contract from working together to competing and has no bearing on a generational conspiracy theory. Neither is it completely tied to choice in the ballot box since for a country not to be competitive with our current global economic system is to invite decline and poverty, it will require international (and intergenerational) cooperation to change this.
I do not know any generation who holds the view that their children cannot afford a house, but doesn’t want houses to be built and votes for a single party. Wake up to this inaccurate and disingenuous argument which is used by analysts and politicians who should (do) know better
Who ever suggested the collective conspiracy of a generation is to deprive their own children of a full and happy life must have had a real bust up with their parents and wants to inflict this on the rest of us.
The value of using such an analysis to the political classes is that it conveniently shifts blame for political ideology and decision making to the population as a whole and our own families, who have a single vote each, not a major position of power or wealth.
Marianna
How selfish can you get. Still living off your parents at 29 or 30, and then telling them you can’t afford their pensions. At age 60 I’ve already worked full time for 45 years and I’ve had enough. You’re lucky your parents don’t throw you out.
Marianna
Further to my earlier comment I’d like to point out the I couldn’t become a professional without an education either. The difference is that I got my education at my OWN expense, in all that spare time I had between caring for my baby and working full time. And because that didn’t leave me much time for travel and partying, I managed to save some money and buy my first home (without a first home buyer’s grant). And at 60 I STILL have a mortgage to pay. I feel so sorry for you poor young people who can’t have everything for nothing, boo hoo
Chris
As regards the student loans, while they will accumulate to substantial sums, they are not traditional debt. They are effectively grants matched by taxation dressed up as “loans” because people understand the concept of “loans”. But the debt they create isn’t real, since it isn’t actionable. It can’t be called in, and you can’t be made bankrupt for it. Effectively, it’s a graduate tax in disguise, and personally I have no problem paying a little more in tax to cover the education I’ve gained. This is fine as long as the fees are back-loaded, and not payable up-front, and I believe this was in fact moved this way (having graduated several years ago, my fees were front-loaded, with a thread of deregistration if the residue of the year’s fees were not paid by March).
I do agree that there’s been an awful lot of “pulling the ladder” going on, and people stifling our national development for wholly petty reasons (don’t want to ruin the view from my window, don’t want to dilute the market value of my three houses, don’t want to pay for the benefit of other people, etc.) and as a result we find ourselves where young people are stung both ways – through artificially inflated property prices, they cannot afford a home of their own, and all the while their parents are spending their inheritance.
On a point of public sector wages, public sector workers are paid significantly more than private sector workers. This isn’t a result of extravagance in the public sector, but depression in the private sector. This is the same reason public sector pensions are better – they’re not brilliant, but private sector pension arrangements have worsened considerably, to the point where many private sector employees have no pension provision through their employers whatsoever.
Michael Corbishley
There are some truths in this article, but I have to agree with Richard; the basic economic analysis in this article simply isn’t up to the standard I would expect of Prospect. There are four or five major errors. Ex contributors like Tim Leunig have far more expertise in these matters but seem to have been shunted aside under the new editorship, in favour of allowing people prominent in one field to speak on matters they clearly don’t have enough knowledge of to lead a debate.
Yes there is an issue of house affordability in parts of the country, but not all. The South East and parts of the South West and East are unnaffordable, mainly because of the planning system. This is a semi-conscious policy decision to protect the green belt at the expense of allowing full economic growth in places like London, Bristol and Cambridge, and also a fear of the unintended effects of a land tax system that might gradually deliver change.
But in the North and Midlands there are few large towns with more than a pocket of high cost housing. For example Didsbury in Manchester, Stockton Heath in Warrington, almost no part of Liverpool. In fact terraces that would fetch upwards of 300,000 in Inner London are being knocked down en masse across the North, as there simply isn’t enough demand.
There are also other basic errors, withthe three that first come to mind. 1. Confusing student tuition taxes with debt. 2. The erroneous subsidisation argument which was settled at least a decade ago. In a pay in, pay out system, it would be people who have benefited from degrees who would be subsidising the younger generation to get degrees, as they are the ones now paying more tax, hence why it so desirable to get a degree! 3. It is also not the case that degrees are getting more important everywhere, for example in Denmark the wage differences have narrowed.
Michael Corbishley
Just to take up a couple of points in the comments.
Yes the property ladder has been pulled up for many, across parts of the country. But this in itself isn’t necessarily an issue. It may go on care if the equity value can be realised, but at some point these properties will be inherited and presumably sold. If we stick to just analysing a certain part of the country, the south, then the baby boomers have just delayed paying their property ‘debt’ to the younger generation.
But, there will be a transfer of wealth – from the poor to the rich. The monetary transfer will not be from young to old. It will be from the children of non property owning families, to the children of property owning families.
Some people no in their 20s will inherit huge amounts of money at some point around their 40s or 50s, and be able to pay off their debts or buy property at a later point in life. But others will not inherit anything. If they can they will be buying baby boomers homes, or subsidising their mortgages as tenants.
You could in turn argue that poorer families will likely receive a net subsidy from the state on their old age for pensions and care, having made little or no provision (able or not). And they probably havent paid much tx for the education system.
But all this shows is the smutty and degrading nature of Tory and Tory lite policies of the last 32 years. Trying to divide up wealth by who paid what, who is owed what, by who and when it should be paid. Education, property and all other policy debates should be framed around what rights people have, such as to free education or a decent home (owned or not). Blaming one generation for failing to see the implications of their actions distracts from active debate about what world the next generation should expect to live in and working out how to get there.
Andrew
The baby boomers complain that Generation Y has a sense of entitlement but in truth our aspirations are no greater than theirs. It is not unreasonable to want permanent employment, an affordable housing market or a retirement to look forward to. The baby boomers had this opportunity and I’m not just talking about professionals. Final salary pensions mean comfortable retirements for their generation from bankers to binmen.
In truth, the generation with the greatest sense of entitlement is the baby boomers. They got a lot when they grew up, from free school milk to the opportunity of a free university education. The privatisation of council houses allowed many to own their own homes and later changes to taxation made buy to let more lucrative, creating a new social class of landlord parasites. Even starting salaries were better in real terms, especially when you read stories of boomer employers billing young people for work experience and internships! The sense of entitlement still burns bright as they enter retirement expecting us to fund their pensions, both public and private (the cost of their private pensions is why your private employer can’t pay you a decent wage/pension) for decades.
What they fail to recognise is the social contact between generations. Their own parents struggled but still paid the taxes for all their goodies. When it became their turn to pay for them, they rejected them and voted for Thatcher. In their younger days the part of the contract they rejected most of all was pensions and they delinked the indexation of pensions to earnings causing their parent’s generation to live in poverty. They are now in the process of switching the social contract around, relinking pension increases to earnings and protecting this public entitlement whilst rejecting other, cheaper benefits that are more useful to society (e.g. free university education). They expect us to respect a contract that they have frequently breached in their own interests.
Of course, this kind of perversion is not something any individual endorses. It is simply the bizarre result of what happens when election after election people vote in their own interests. They are a significant voting group and that is why their interests are so well served.
I think the first thing young people should do is inform themselves of what needs to be done to redress the balance and lobby politicians to get these items on the agenda. That includes more taxation for buy to let income, demands for more building programs, means tested pensions and passing age discrimination legislation that forbids companies to keep open final salary pensions that are not available to their younger workers.
Second, make it clear to the older members of your family that you will not be able to afford to look after them in old age because of their legacy. When you could be caring for your parents, you’ll be working your second job to pay the mortgage!