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Tackling Intergenerational Unfairness HOUSE OF LORDS Select Committee on Intergenerational Fairness and Provision Report of Session 2017–19 Tackling intergenerational unfairness Ordered to be printed 26 March 2019 and published 25 April 2019 Published by the Authority of the House of Lords HL Paper 329 Select Committee on Intergenerational Fairness and Provision The Select Committee on Intergenerational Fairness and Provision was appointed by the House of Lords on 9 May 2018 “to consider the long-term implications of Government policy on intergenerational fairness and provision.” Membership The Members of the Select Committee on Intergenerational Fairness and Provision were: Baroness Bakewell (resigned July 2018) Lord Holmes of Richmond Lord Bichard Baroness Jenkin of Kennington Baroness Blackstone Lord Price Viscount Chandos (appointed 19 July 2018) Baroness Thornhill Baroness Crawley Lord True (Chairman) Baroness Greengross Baroness Tyler of Enfield Lord Hollick Declaration of interests See Appendix 1. A full list of Members’ interests can be found in the Register of Lords’ Interests: http://www.parliament.uk/mps-lords-and-offices/standards-and-interests/register-of-lords- interests Publications All publications of the Committee are available at: http://www.parliament.uk/intergenerational-fairness Parliament Live Live coverage of debates and public sessions of the Committee’s meetings are available at: http://www.parliamentlive.tv Further information Further information about the House of Lords and its Committees, including guidance to witnesses, details of current inquiries and forthcoming meetings is available at: http://www.parliament.uk/business/lords Committee staff The staff who worked on this inquiry Committee were Judith Brooke (former Clerk), Olivia Crabtree (Clerk), Tim Stacey (Policy Analyst) and Hannah Murdoch (Committee Assistant). Contact details All correspondence should be addressed to the Select Committee on Intergenerational Fairness and Provision, Committee Office, House of Lords, London SW1A 0PW. Telephone 020 7219 4384. Email [email protected] Twitter You can follow the Committee on Twitter: @LordsIntergen CONTENTS Page Summary 3 Chapter 1: Introduction 5 Intergenerational fairness and provision 5 Looking forward and taking a lifecourse approach 9 The Committee’s work and acknowledgements 11 Chapter 2: Accounting for the future 12 Improving governmental processes 12 Data on intergenerational fairness 16 Chapter 3: The housing challenge 21 The rising cost of housing 21 Figure 1: Proportion of income spent on housing costs by generations: GB 21 Figure 2: Generational home ownership rates by age: UK 22 Housing supply 23 Figure 3: Trends in tenure (proportions), 1980 to 2017–18 24 The private rented sector 26 Intergenerational transfers and financial products 28 Development of public sector land 30 Box 1: Proposed reform of public land development 32 The capacity of local authorities to deal with planning issues 32 Housing for older generations 34 Planning for each generation 35 Chapter 4: Educating generations for the 100-year life 37 Education in schools 37 Further Education 40 Box 2: Changes in apprenticeship policy since 2015 42 Higher Education 43 Lifelong learning 45 Chapter 5: Working in the 100-year life 48 Pay progression 48 Figure 4: Median real weekly employee pay (CPIH-adjusted to 2017 prices), by age and cohort: UK, 1975–2017 49 Insecurity of the job market 50 Box 3: Common job market terms 50 Flexible working and mid-life career reviews 53 Ageism 55 Figure 5: Age 65+ UK Employment Rate, 1992–2018 56 Box 4: EHRC definition of ageism 57 Chapter 6: All-age communities as drivers of intergenerational fairness 59 The negative social consequences of age segregation 59 Figure 6: Reported frequency of loneliness by tenure (proportion) 60 The power of community action 62 Box 5: Innovative ways community run activities are tackling intergenerational divides 62 Facilitating community activity 63 Box 6: Community assets 65 Box 7: Community libraries 66 Chapter 7: Intergenerational taxation 68 Distribution of income and wealth 68 Figure 7: Average net effect of the tax and spending by age of household representative 68 Figure 8: Total direct and indirect taxation by age of household representative 69 Table 1: Median income after housing costs by household type adjusted for household size (2015/16–2017/18) 70 Table 2: Median total household wealth by household type 2014 to 2016 70 Age-related benefits 72 National Insurance 75 Property taxes 77 Inheritance Tax 81 Summary of conclusions and recommendations 84 Appendix 1: List of Members and declarations of interest 90 Appendix 2: List of witnesses 92 Appendix 3: Call for evidence 98 Appendix 4: Note of Committee visit to Doncaster: 14 November 2018 100 Appendix 5: Contact Group for the Inquiry 104 Appendix 6: Acronyms and abbreviations 111 Evidence is published online at www.parliament.uk/intergenerational- fairness/publications and available for inspection at the Parliamentary Archives (020 7219 3074). Q in footnotes refers to a question in oral evidence. TackliNG INtergeNeratioNal UNfairNess 3 SUMMARY Intergenerational fairness is an increasingly pressing concern for both policy makers and the public. It is exacerbated by an ageing population, the global financial crisis and successive government policies that have failed to consider generational issues. We believe the issue of intergenerational fairness needs to be addressed. The relationship between older and younger generations is still defined by mutual support and affection. However, the action and inaction of successive governments risks undermining the foundation of this relationship. Many in younger generations are struggling to find secure, well-paid jobs and secure, affordable housing, while many in older generations risk not receiving the support they need because government after government has failed to plan for a long-term generational timescale. Our report has reached six main conclusions: (1) Lack of political will has meant that data is not published on generational differences in income and wealth, nor on the potential effects of policy on different generations at the time policy is being considered. Both the Government’s fiscal rules and the way it conducts spending reviews encourage an often damaging short-term approach. They need to be reformed with a new fiscal rule focused on the Government’s generational balance of debt and assets and a more transparent spending review process. There should be a broad equivalence, and a sense of equivalence and fairness, about what is contributed over a lifetime and what is received by successive generations. (2) Many younger people are struggling to secure affordable housing. This is caused by the failure of successive governments to ensure a sufficient supply of affordable homes to buy and to rent. Although the Government states that housing supply is one of its priorities, it is still not doing enough to address this problem. It could go further by giving local authorities much stronger powers to develop housing on publicly owned land and to borrow to fund house building. It has also failed to ensure that the private rented sector is a viable tenure for people to live in for the long-term. Tenants in the private rented sector need much greater security and stability. (3) Younger people are also disadvantaged by an education and training system that is ill equipped for the needs of the rapidly changing labour market and all generations will need support in adapting to technological change in the course of what will be longer working lives. Post-16 vocational education is underfunded and poorly managed. The Government’s apprenticeships strategy is confused and has not achieved the desired effect. In addition, the options to retrain and reskill in later life are incoherent and underfunded. Much more investment is needed in both vocational education and lifelong learning to prepare younger generations for a 100-year life. (4) Pay progression has slowed for younger generations. They are unlikely to enjoy the same generation on generation income gains that their predecessors received. Younger generations are also more 4 TackliNG INtergeNeratioNal UNfairNess likely to find themselves in insecure employment, without the rights that come with worker status. The Government should ensure that employment rights cover all those in genuine employment by ensuring that worker status is the default position. Longer working lives will require greater consideration for initiatives such as flexible working, mid-life career reviews and tackling ageism in the workforce. (5) Active communities have a key role to play in meeting these generational challenges. Communities and a strong sense of place strengthen intergenerational bonds by bringing generations together and sustaining shared loyalties. Communities may also help to directly tackle skills, care and housing shortages through innovative local initiatives. (6) The tax and spending policies of successive governments have failed to pay sufficient regard to longer term policy consequences. This is an endemic failure of policy making. It has undermined intergenerational fairness, including for generations yet to be born. Successive governments have failed to make proper provision for the costs of social care in old age for the large post war cohort who are now entering a lengthy retirement and who will rely on smaller, younger generations to pay for them. More recently, governments have prioritised social security spending for older people.
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