Young people in Britain could be forgiven for despairing at the financial pressures they face – and feeling that previous generations enjoyed a much fairer economic environment. Then just to add to their worries about home ownership and a precarious jobs market, along comes the gloomy announcement that the UK’s public debt is now .
Author
Renaud Foucart
Senior Lecturer in Economics, Lancaster University Management School, Lancaster University
That will have to be carried by tax-payers for decades to come. Paying the interest – just the interest – of the country’s debt currently accounts for . That’s more than defence (4.8%) or transport (3.8%).
And while some of what’s left will go to towards essential future public services, it will also go towards fixing problems caused by a historic (less money being spent by previous generations) in , and other crucial infrastructure.
In fact, in the 1980s much of that infrastructure was used by the UK government to help finance itself, with assets including British Gas sold off . Those baby boomers and older generations who could afford to buy shares often .
There are other kinds of costs that today’s younger generations have had to bear too. During COVID lockdowns, universities and schools were closed as the young were , predominantly to protect the elderly. They have lost the freedom to live and work in the EU after 60% of retired people , while most young people voted against. Leaving Europe has also made the UK .
But not everyone is poorer. In the last 20 years, the average income of pensioners has increased on average by , while that of working-age adults has risen by less than 10%. The median income of pensioner households is after housing costs than that of households with children.
Most of the country’s wealth is now of older people. In 2018, one in four people aged over 65 was living in a household with a total wealth of . Poverty rates of pensioners are than for the rest of the population.
Yet pensioners receive all sorts of unconditional discounts and benefits, such as free or . Their income is from national insurance contributions, and there is a on state pensions, which is guaranteed to grow faster than work income.
Until recently, the meant that anyone born in 1944 or before received £300 (reduced to £200 for younger pensioners).
Boomer and bust?
While there is for to , the question of recouping money from older people remains . (Back in 2017, the then prime minister Theresa May had to when she suggested using pensioners’ wealth to finance the .)
One reason for this reluctance to prise money from older people may be that while most pensioners are doing better (compared to the working population) this is not true of the . Also, some pensioners do not claim the benefits , and the last thing a civilised society wants is to let its older people freeze.
But the apparent economic divide raises a broader question about . What does one generation owe the generations that follow?
And it’s not just about money. is another thing older people have not spent most of their lives having to pay for, with the burden for repairing environmental damage again falling .
Perhaps a fair philosophical approach would be that it’s OK to leave certain costs to be paid in the future if the next generation can generally expect to live longer and in better health, with more consumer choice and comfort, and an improved quality of life.
But this does not seem to be the expectation right now. , and so has , while housing prices have not been so expensive relative to earnings .
In that sense, many people, however old they are, would probably sympathise with young people today. And they may even argue that it’s time for the government to focus on policies that explicitly benefit the young – like house building, or subjecting pension income to .
There could also be a change in to allow for more investment in , higher taxes on fossil fuels to pay for the , or sharing the cost of funding higher education more evenly among , regardless of when they .
Such changes would provide a dramatic shift towards an economic system which seeks to redistribute wealth not just among citizens – but between the generations.
