Young people should stop complaining - it's the baby boomers who are really suffering

Enough of the sob stories about Generation Y: when you look at the facts, you see that older people in the UK have come out just as badly from the recession

Mary Dejevsky
Thursday 23 July 2015 18:26

Have you reached, or are you approaching, a certain age? Are you feeling beleaguered? Me too. It was around 2010 that the post-war generation first faced a battering for supposedly having it too good. The Conservative MP, David Willetts, wrote a book called The Pinch, subtitled How the baby boomers took their children’s future, and why they should give it back. A couple of young media bucks – Ed Howker and Shiv Malik – stirred the pot with their cri de coeur about being the “Jilted Generation”.

Five years on, the offensive has been reopened. The tone is sharper now, the resentment deeper, and the consensus broader. The “boomers” – how I hate that word – are getting it in the neck from both ends of the political spectrum, and on both sides of the Atlantic. The evidence marshalled against them ranges from the mega to the micro, from the vast debts being piled up as a result of social spending and pensions, to free TV licences, winter fuel payments and bus passes in the UK.

The latest contribution comes from a conservative US scholar at the Manhattan Institute, Diana Furchtgott-Roth. In an article for the Thatcherite UK think tank, the Centre for Policy Studies, she backs the call for a government office for inter-generational responsibility that would test all new legislation for its effect on “generation Y” (those born in the 1980s and 1990s). Those under 24, she said, are three times more likely to be unemployed than the rest of the population and even graduates from “top universities” can no longer expect to own their own homes.

Meanwhile, the UK’s Intergenerational Foundation published its annual “fairness index” this month. It identified “a 10 per cent deterioration in the prospects of younger generations relative to older generations” since 2010. It blamed pension costs, stagnant pay for young people, and the declining affordability of housing. It cited ONS figures to show that incomes of “retirees” (another of my pet hate words) had risen by 5.1% between 2007/08 and 2011/12, while those of “typical” working households had fallen by 6.4%. Findings from the Institute of Fiscal Studies were even starker, with incomes of people in their 20s falling by 12% over the same period, while those people in their 60s and 70s had continued to rise.

And then, of course, there was the first all-Conservative Budget for 17 year - universally slated by the left as inimical to youth. What had the young done to deserve being “monstered”, while age was rewarded with protected pensions and a new inheritance tax break? Answer, regrettably, came there none.

But there are answers, and they should be heard. Here are mine:

First, the argument that older people are favoured because they are more likely to vote is specious. I am not aware of anything that prevents younger people from voting, except their own sense of priorities. There are other, economic and moral, reasons why older people should be largely shielded.

Meanwhile, the current state pension in the UK is lower than in much of Europe - so low that many recipients also qualify for credits. A 5.1 per cent rise of not very much over five years is not very much. Those in the public sector or past beneficiaries of final salary pensions tend to think everyone receives a proportion of their salary on retirement. Many receive far, far less, if anything.

And though the overall inflation rate may be low, prices have risen sharply in some areas that particularly affect older people, such as fuel bills and care costs.

So, except for the most entrepreneurially-minded, those who have reached state retirement age or who lose their jobs in their fifties have very little prospect of improving their circumstances. Their financial situation is fixed, according to savings and pension contributions they may or may not have made in the past. The young, by and large, have time to improve their prospects.

Anyway, those reliant on pensions and savings have suffered far, far more than others from the negligible interest rates of recent years. Their calculations were based on an expected yield of around 5 per cent; that was the advice from those supposed to know. Wise stewardship, though, has benefited today’s younger pensioners not at all. If anyone has stolen anything from anyone in recent years, it is those in debt from those in credit. The strong bias in tax and interest rates remains in favour of debt.

We hear constantly that it is so hard for the young to buy a house. Well, that depends where your comparisons lie. Generation Y needs to recognise that the New Labour decade was the exception and that easy credit helped generate the financial crisis they are now dealing with the effects of. And while prices were lower in proportion to salaries, today’s absurdly low borrowing rates make the annual cost more comparable than it might first look. In fact, the old are as affected by the housing shortage as the young. The UK is decades behind many other countries in its provision of retirement housing of all kinds.

Criticisms of government policy as anti-youth are so often misplaced: who exactly benefits from lower inheritance tax? Not the deceased, but the next generation(s). Some of those whose estates might still have been liable to inheritance tax will have less to leave because the Government has just postponed the introduction of a £72k cap on payments for care. Who says the old are not contributing?

I’m not sure the assumption of intergenerational discord is valid, anyway. Looking around, I observe more solidarity in families than strife. As we sit in our rocking chairs scanning our i-Pads, let’s not apologise too much. I, for one, am not convinced that the debts we bequeathe will outweigh the assets.

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