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The generation game

‘Intergenerational fairness’ is simply the latest cover for envy

5 November 2011

5:00 PM

5 November 2011

5:00 PM

‘Intergenerational fairness’ is simply the latest cover for envy

Towards the end of last month, a gang of youthful policy wonks started beating up the elderly. This is something we will have to get used to. The proposal from the Intergenerational Foundation to ease over-60s out of their three- or four-bedroomed houses to make way for younger families was just the first of a series of pernicious policies the think-tank is preparing as it opens up a new front in the politics of envy.

‘Intergenerational fairness’ is a seductive piece of branding. Who would declare themselves against fairness? In theory, it should have a particular appeal for conservatives. The idea that each generation is both beneficiary and trustee, with a moral obligation to the future, is as old as the conservative disposition. Edmund Burke pictured society as ‘a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born’. Successive generations of Conservative politicians have taken up this theme, culminating in David Willetts’s 2010 book The Pinch, a provocative and engaging account of how the selfish and irresponsible baby-boomers ate all the pies.

In the Conservative mind, ‘intergenerational equity’ is comprehended as a duty of good stewardship and underpins a healthy reluctance to burden tomorrow’s taxpayers with the bills for today’s consumption. The coalition is eager to show its commitment to levelling the generational playing field. There was that Tory election poster: ‘Dad’s nose. Mum’s eyes. Gordon Brown’s debt.’ And last year Nick Clegg said, ‘There is nothing fair about denying you have a problem and leaving it for the next generation to clear it up. Would you ask your children to pay your credit card bill?’

Of course you wouldn’t. But fine-sounding statements too easily transmute into strident calls for state intervention to correct largely imagined social wrongs. The IF’s policy programme seems to suggest that any inequality between generations is an outrageous injustice crying out to government for remedy. Just as looking through the prisms of ethnicity, gender or sexual orientation tends to produce a distorted picture of the world, so does seeing everything in terms of age.

Thus, the IF announces that ‘NHS spending is weighted heavily towards the elderly, with 50 per cent of the total budget going to the over-65s’ — inviting us to greet this with the same indignation we’d feel on learning of a seven-figure bonus going to a director of a bailed-out bank. It does then concede that healthcare costs will tend to be higher when we are old, sick and close to death. But by then, the rhetoric has done its work, leaving us vaguely anxious that some terrible injustice is being inflicted upon the young.

Turning to the workplace, the foundation is most sniffy about the abolition of the default retirement age, which since the beginning of October has allowed the over-65s to stay in their jobs, if they wish to. The think-tank subscribes to a zero-sum approach to employment, where every oldie who remains in post is denying recruitment to a youngster. But the labour market is dynamic, not static. Those mature workers are creating wealth, paying taxes and fuelling the growth that will expand employment to provide new opportunities for the young.

The foundation’s housing report deploys a series of tables and graphs to show that the bulk of our housing wealth is in the hands of older people. Well, of course it is; and rightly so. There is no structural injustice in the fact that most property belongs to people who have worked for 40 or more years to pay off their mortgages. Nevertheless, that some older people live in houses with empty bedrooms, while young families with children have to squeeze into flats, will strike some as an inefficient use of a scarce resource. Certainly, the media are now talking about ‘empty-nesters’ and ‘bedroom-blockers’. But this is by no means the full picture. Last week, during half-term, many of those houses were resounding to the sound of children’s laughter as their elderly occupants fulfilled their roles as grandparents and had the family to stay.

‘Memories’, ‘the space for grandchildren to visit’, ‘remaining in one’s local community’ and ‘the desire to keep a garden’ are all acknowledged by the IF as reasons why older people might prefer to stay in their homes; but in the next breath are dismissed as ‘sentimentality’. In the foundation’s view, the generations should be segregated, with nappy valleys full of larger houses and blocks of modest flats for geriatrics. It wants the government to remove the single occupancy concession for council tax and deny universal benefits to those living in houses worth more than £500,000. The foundation employs the terminology of Thaler and Sunstein’s ‘nudge theory’ to describe its approach; but many elderly people would experience these policies as a violent shove.

And there is no guarantee that the economics of the IF’s proposal would work. The plan is that if older couples, elderly widows and widowers were all to downscale, the price of three- and four-bedroomed houses would drop, allowing younger families to afford them. But what if the demand for flats were to ramp up the value of smaller properties? There is no telling how the market would adjust, and it’s a fair bet differentials would soon be restored. For this half-baked policy, the possibility of unintended consequences approaches certainty. Surely the simpler solution would be to just build more big houses?

Not content with evicting oldies, the intergenerational zealots have an envious eye on their nest eggs, too. They note that savings tend to be disproportionately held by older people (no surprise there, either) and call for increased taxes on savings income. This is a potentially disastrous policy path — if prudence is not properly rewarded, why would anyone save?

Yet the government seems partial to IF’s outlook. There are well-founded rumours in Westminster that, in the Treasury, Britain’s soaring inflation rate is being partly justified on the grounds of intergenerational equality. The old have benefited from decades of booming property prices, runs the argument, while the young can’t afford to buy homes. Seen in this light, inflation, which ruins savers but helps debtors, becomes a way of promoting fairness. Another worry here is that government policy is usually formulated by 30- to 40-year-olds — peers of the IF wonks. These are often men and women with young families and mortgages. They can hardly be relied upon to be neutral in matters of inter-generational fairness.

Though hypersensitive to present inequalities, the IF appears reluctant to look back and acknowledge the discrepancies of lived experience between the generations. Many of today’s elderly can remember rationing, utility clothing and national service. Some will have had to find grimy and dangerous work down coalmines, while others will have paid confiscatory rates of income tax to Labour governments in the 1970s. A significant number will have risked imprisonment because of their sexual orientation or have been turned away from lodgings by those ‘No Blacks, No Irish’ signs that were common in the 1950s. The IF does not enter these past privations into its ledger to be balanced against the freedoms, relative affluence, social progress, technological gadgetry and cushy working conditions that the young often take for granted. The foundation prefers to disregard the past and declare a Year Zero, focusing on the relative positions of the generations as they stand today. It is basing its judgments solely on the most recent throw of the dice.

Like its conceptual sibling ‘socia
l justice’, ‘intergenerational fairness’ is best kept as a principle to be borne in mind when looking at the general thrust of public policy, rather than as a tool to design specific measures. It should not be allowed to become an ideological obsession, propagating social audits, impact assessments and the mean-spirited enumeration of each and every inequality of outcome between age groups. That way is sure to lead to the proliferation of injustices, not their remedy. Judging people by their group averages, instead of as individuals, always does. By all means, let this age-old precept spur us to do away with deficits. But we should not seek to divide our society along generational fault lines or, by relentlessly carping about the few consolatory advantages they enjoy, begin to demonise the elderly.

Old people tend to worry enough already about whether they are burden to their families or the wider society without organisations like the IF nudging them closer to euthanasia’s door. The invaluable contribution senior citizens make to economic, social and family life should be recognised with cheers and toasts. If some of them have managed over the years to establish a home and a cushion of cash to keep the fear of penury at bay, then good luck to them. We should be wishing them a long, happy and — yes — prosperous retirement.

The young may in future have to fund more of their university education (a privilege denied to all but a tiny minority of their elders) and pick up the tabs for PFI, unfunded pensions and Gordon Brown’s profligacy. But they should know by now precisely whom to blame for that — and it isn’t Grandma.

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