Here’s what you need to know
A new generational contract is needed to tackle the big challenges Britain faces for young and old, covering a better funded NHS and care system, a radically reformed housing market, and a new citizen’s inheritance to boost the prospects of younger generations. This is according to the final report of the Intergenerational Commission published today (Tuesday).
Over the last two years and via 22 reports, the Intergenerational Commission – chaired by Lord Willetts and including TUC General Secretary Frances O’Grady and CBI Director-General Carolyn Fairbairn – has investigated the stresses and strains on Britain’s contract between generations, and what can be done to renew it.
The generational contract reflects the fact that we judge the success of a society by how it treats its old, and believe strongly that each generation should have a better life than the one before.
However, the Commission warns that the public are increasingly questioning whether Britain is offering young people the prospects previous generations have enjoyed. This is not just confined to younger generations either, with healthcare now the most pressing area of worry for British adults.
The Commission finds that much of this pessimism is borne out by the evidence it has uncovered:
Income and wealth progress for young adults has stalled
- New analysis shows that the disposable incomes of millennials at age 30 are no higher than the generation before them (generation X) at that age – despite the economy growing by 14 per cent over the last 15 years. In contrast, the incomes of baby boomers at age 30 were more than one third higher than the generation before them.
- Millennials are half as likely as the baby boomers were to own their own home by 30, and are four times as likely to rent in the private sector.
Millennials are being held back because they are bearing far more risk at work and at home
- Millennials in their 20s are more likely to be in insecure work, are 25 per cent less likely to have moved jobs than generation X were at the same age, and are missing out on big pay rises as a result.
- The number of families bringing up children in the private rented sector has trebled in the last 15 years, to 1.8 million.
We risk not providing older generations with the health and care they deserve
- State spending on health, care and social security is set to increase by £24bn by 2030, and by £63bn by 2040. This increase needs to be funded in a way that is fair to all generations.
However, while Britain’s contract between generations is under severe strain, the Commission argues that it can be repaired. Indeed, families are already doing this, with the number of adults caring for elderly relatives up 11 per cent since 2001 and the ‘Bank of Mum and Dad’ helping up to half of all first-time buyers in recent years.
The Commission says that the state now has to rise to this challenge, and sets out a radical blueprint of over 35 recommendations to build a new generational contract, including:
Giving older generations the health and care they deserve, need and expect
- The Commission proposes a £2.3bn NHS levy to put it on a firmer financial footing. This would be funded by applying National Insurance Contributions to pensioners’ earnings and, at a lower rate, to the income of richer pensioners, rather than raising NICs for working age people.
- Rescuing our social care disaster with a £2.3bn funding boost from replacing council tax with a progressive property tax, including deferred payments for asset-rich, income-poor families. A new model for care provision should also ask those able to contribute towards their care to do so, but subject to strict limits.