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Good morning. Voting in the UK is increasingly becoming polarised by age, and with it comes growing attention towards generational fairness. Though some question the degree to which the young should subsidise benefits for the old, young people themselves have limited appetite for removing many of those generous policies for older generations. Some thoughts on why that is in today’s note.
Here’s a prediction you can make with absolute certainty: the next election will see a Keir Starmer-led Labour party promising a continuation of the triple lock pension and a host of other “pensioner benefits”. The Conservative party, regardless of its leader, will do the same. (Barring the possibility Starmer suffers some kind of midlife crisis and decides to take up pottery instead).
That was true of David Cameron and Ed Miliband in 2015, Theresa May and Jeremy Corbyn in 2017, and Boris Johnson and Corbyn in 2019. The leaders of both major parties (and, indeed, the Liberal Democrats and the other minor parties) are firmly behind maintaining the UK’s commitments to older voters, in terms of both benefits and tax arrangements.
In the latest work on generational wealth accounts, Professor James Sefton estimates that £100bn a year flows down the generations in the form of bequests. That is more than 4 per cent of national income. At least another £11bn a year comes from lifetime gifts from parents to children. Sefton estimates the net present value of these transfers is equivalent to the entire value of the UK’s housing stock.
It’s a good example of the voters having a better grasp of their material interests than (some) politicians. There is no shortage of wonks and politicians arguing there are unfair disparities between the old and young. But while there are plenty of willing sellers of narratives about “intergenerational warfare” at Westminster, this has few buyers in the country at large because most voters understand that they benefit from the wealth and inheritance of their older relatives. (I mean, no kidding.)
Ultimately, whatever you do, state spending is always going to be U-shaped. People like me, in the middle of their lives, without children or complex health needs, will always rightly be subsidising people at the beginning or the end of their lives. The actually important debate is over the degree of subsidy, not the fact the subsidy exists.
And the majority of people like me also benefit from that subsidy: at the end of our lives, we benefit, obviously, from young people subsidising and directly providing our care. But as Chris notes, we also benefit from an indirect subsidy as well as a direct one.
Private intergenerational redistribution does not stop there. Unpaid childcare is worth £132bn a year. And although official estimates are a little dated, they suggest that unpaid social care of sick or elderly adults is worth £57bn a year. In total, this “private welfare” of nearly £300bn a year is more than the public welfare bill for pensions and other social security of £261bn in 2022-23. No one should think of the state as the only provider of a social safety net in Britain or anywhere else.
That’s not to say the status quo is perfect: far from it. While it is a decent deal for anyone who benefits from either direct or indirect cash transfers from the 70 per cent of “boomers” who own property, it is a very bad one for those who don’t. That so many people are dependent on wealth transfers via inheritance does, I suspect, lead to people having smaller families than they otherwise would.
But as I’ve argued in my column before, it’s a misread to see UK wealth inequality as a product of generational unfairness. It’s just the same old story of wealth inequality. It looks like generational unfairness because advances in medicine in general and cardiovascular treatment in particular make it look that way, but that’s not the real story. As Jane Green of Nuffield College, Oxford, and the University of Reading’s Roosmarijn de Geus have found, the real political divide that matters is between the “will haves” (people who will either inherit wealth or benefit from family wealth in the present day) and the “won’t haves” (who do not have a family inheritance to look forward to or to draw down on).
At the moment, for the most part, the “will haves” vote along the same lines as the “won’t haves” — to the benefit of the Labour party. It’s possible in the future that the “will haves” may vote in their own interests, against those of the “won’t haves”, to the benefit of the Conservatives.
Regardless of the electoral politics, as Chris notes, the important challenge in social policy is helping people who won’t benefit from wealth transfers from wealthy relatives, rather than engaging in fantasies about “generational warfare”. What matters is not generations, but class.
Now try this
I very much enjoyed the latest short film from our video team. Capture, starring Jodie Whittaker of recent Doctor Who fame, is a gripping 15-minute story about children and online privacy. You can watch it on YouTube here or on the FT website.
However you spend it, have a wonderful weekend.
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