That the Grand Committee takes note of the Report from the Select Committee on Intergenerational Fairness and Provision Tackling intergenerational unfairness (HL Paper 329, Session 2017–19).
Thank you. I first declare an interest as set out in the register. I am delighted to open this debate on behalf of my noble friend Lord True, who was chair of the committee. Due to his good work, he is now a government Minister, which should be a warning to all of us. The committee comprised the noble Baroness, Lady Bakewell, the noble Lord, Lord Bichard, the noble Baroness, Lady Blackstone, the noble Viscount, Lord Chandos, the noble Baroness, Lady Crawley, the noble Baroness, Lady Greengross, the noble Lord, Lord Horlick, my noble friends Lord Holmes of Richmond and Lady Jenkin of Kennington, the noble Baroness, Lady Thornhill, and, last but not least, the noble Baroness, Lady Tyler of Enfield, who proposed the committee. On behalf of my noble friend Lord True, I thank all noble Lords for being on the committee and for their service. I also, on behalf of the committee, thank the officials: the clerk to begin with, Judith Brooke, and then Olivia Crabtree; Tim Stacey, Hannah Murdoch and our special adviser, Professor Jane Falkingham from Southampton University. Of course, on behalf of the committee, I also thank all those who came to give evidence.
The debate on the intergenerational fairness report, although late, is now more prescient. Its good intention came from wanting to examine the impact on the different generational cohorts in the decade that followed the financial crisis of 2008 and to recommend actions if required that would ensure a more equitable contribution to society going forward. It is worth remembering that, at the height of the financial crisis in 2010, the Government borrowed £150 billion in that financial year and that, in spite of tax rises and public spending cuts, our national debt rose from around £500 billion in 2007 to £1.8 trillion in 2018. In this financial year, the Government will borrow around £450 billion—three times the level of the peak of the financial crisis in 2010—taking our national debt to £2.1 trillion. Next year there are forecasts of another £200 billion of borrowing.
While some will argue that servicing this level of debt with low interest rates is affordable, it is worth remembering that our national debt repayments are currently the fourth-highest area of government spending. The Government in time will need to address our country’s debt and borrowing and, when they do, I hope that they will revisit this report and ensure a fair proportion of the repayment burden falls across all generations. I am delighted that the Office for National Statistics accepted the committee’s recommendation and is now reporting new intergenerational analysis and looking to do more. Only by having and sharing this data can we achieve the broad equivalence and fairness of contribution and receipt by each generation that the committee wanted to achieve.
The committee highlighted six conclusions: on data, housing, active communities, tax and spending, and two on the younger generation. It is on these final areas that I will focus my remarks. It was clear from the evidence we received that, post the financial crisis, pay progression for those in their 20s slowed compared to that of previous generations, and employment became less secure, with more temporary work, zero-hours contracts and unskilled work. As a consequence, it is now unlikely that this group will enjoy the generation-on-generation income gains seen in the past.
My Lords, this report was published in April 2019, nearly two years ago, and it makes a nonsense of the long-established system of debating Select Committee reports in the House that so much time has elapsed since its publication. It is also regrettable that the Government have rejected so many of the report’s recommendations. However, like the noble Lord, Lord Price, I thank ONS for its decision to undertake a generational breakdown of the effects of tax and benefits on household income. It is admirable that it has already begun publishing an intergenerational analysis of the data it holds, and that it is consulting on ways to improve its data on transfers between generations, as the committee recommended.
I will focus on the need to understand, and take action on, the social and economic circumstances of young people in their 20s and 30s. In order to improve their well-being and to meet their aspirations, more public expenditure should be directed at this group. To make that easier, in the context of the debt burden just described by the noble Lord, Lord Price, there needs to be a reconfiguration of the generous tax and benefits position of those over 60. There was a time when the elderly were in a relatively weak financial situation compared with younger generations in employment. This is no longer the case. In order to achieve more vertical, as opposed to horizontal, fairness, the committee recommended that the triple lock for state pensions should be removed, and that instead the state pension should be uprated in line with average earnings to ensure parity with working people. The Government’s refusal to budge is costing the Treasury huge sums each year, and in the longer term is unsustainable. The triple lock has done its job and the Government should have the courage to drop it.
The tax system is also unfair, explicitly giving advantages to those over pension age by waiving national insurance contributions even if they are still working. Anyone who is working, whatever their age, should be taxed in the same way. The mythology that national insurance is a simple contributory scheme should be dropped. Professor John Hills, who sadly died recently, told the committee that is was an “accounting fiction”. In his excellent evidence, he also commented on other age-related social security payments, telling us, for example, that winter fuel payments towards the heating bills of those over 65
I am pleased to follow the noble Baroness, Lady Blackstone, who demonstrated her mastery of the art of diplomatic disagreement and tenacity in some passionate exchanges during our discussions. This was the first Select Committee that I have been on since coming into your Lordships’ House, and I will confess to being both excited and nervous when I saw who were going to be my colleagues. I looked everyone up and knew that it would be a privilege to work with such a distinguished group.
I was also pleased to find another cheerleader for local government in the shape of our chairman, the noble Lord, Lord True. His experience and understanding of the role that local government can play in this area helped me in my role. I pay thanks and tribute to our community contact group, who gave up their time to come to Westminster on several occasions and contribute to our work. It certainly gave us a reality check to balance against the theories of our expert witnesses.
There is good news from our inquiry: that a strong and positive relationship exists between generations, even though there are serious concerns about fairness in public policy. Any policy based on the expectation that future generations will pick up the tab and pay disproportionately for present or past consumption cannot be considered either fair or just. Generations should not be unduly harmed by the actions of a previous or subsequent cohort, and there is a reasonable expectation that life should improve for the next generation. This is certainly a wicked issue, and the complexities and interrelatedness of so many of the questions raised led us to feel that all policy should have to answer at least two questions. What impact will this have on future generations in the short and long term, and how can we take this into account in setting policy? We were left in no doubt that this was an important aspect of all policy-making.
It is. I thought I was being unmuted. I have now unmuted myself, and I apologise to Members for that.
If I may continue, I will say that I share the frustration and disappointment already expressed about the delay in bringing this report to the House. But I also agree with the noble Baroness, Lady Thornhill, that when you come to reread the report now it seems, in many ways. more relevant than when we wrote it two long years ago, and I want to focus on two issues where that is particularly the case.
Some people will have been surprised that the committee concluded that what we call “the intergenerational compact” remains strong. However, we found little evidence that one generation blamed another for the problems that it faced, and much evidence that different generations were providing each other with support, especially within communities and families. In a world that has become much more polarised during the pandemic, we should value and protect that compact. As the divisions between rich and poor, black and white, north and south, and leave and remain have become more pronounced, we really cannot afford to overlay them with intergenerational rifts.
Yet some generational groups will exit the pandemic harbouring a sense of injustice and looking to be reassured. As the report points out, to sustain or rediscover a positive relationship between generations, there needs to be
“a broad equivalence, and a sense of equivalence, about what is contributed … and what is received”
from the state during a lifetime. Quite simply, generations need to feel that they are getting a fair deal. For that to be achieved, Governments need to be—at the very least—aware of and able to explain the consequences of new policy proposals across the generations, as well as the changing impact of existing policies. That is why the committee made what I think are some very straightforward and simple recommendations. For example, it suggests:
My Lords, I welcome this key report on intergenerational unfairness and this debate. It is a privilege to take part. I want to focus my contribution on three issues.
The first concerns education and training. I welcome the report’s perspective and recommendations; as others have said, they are even more relevant now. However, as we know, the landscape is shifting significantly beneath our feet because of the immediate demands of the pandemic and the likely longer-term shifts in working patterns created by the fourth industrial revolution. We are sorely in need of creative, imaginative, cross-party and cross-society intergenerational thinking on education for life, not simply for work.
Last week, I spent some time listening to colleagues whose role it is to support more than 280 Church of England schools in the diocese of Oxford, together responsible for the education of almost 60,000 children. While they reported the extraordinary creativity and commitment of their heads, teachers and governors, they also report that morale and energy in our schools are absolutely at rock bottom. Will the Government act to restore and build up the morale of the teaching profession at the moment? Will teachers be prioritised in the vaccination programme to enable schools to begin on-site teaching again more widely? Will the Government act to bring together the best minds of the day to focus on the challenge of all-age education through a royal commission or similar?
The second issue is that of the changing world of work and the rise of the gig economy. Many gig workers in our country are without rights; this disproportionately affects young adults. The proportion of the workforce in zero-hours and gig work is increasing. Low-paid workers in the UK are more than twice as likely to lose their jobs in the pandemic. The Government have accepted the need for a good work plan and have committed to legislating to improve the clarity of employment status. The need is even more urgent now than a year ago, yet there is still no new employment strategy and no apparent progress to remedy a situation that is getting worse every month.
My Lords, I congratulate the Select Committee on an informative and constructive report on tackling intergenerational unfairness. I appreciate that there is overlap with other Select Committees in both Houses, which has an impact on the issues raised on the subject. However, I want to discuss in greater detail one important policy area that is touched on in the report: the lack of focus on the importance of active aging and the impact of providing opportunities for an active lifestyle to bridge the generational gap, with a particular focus on the elderly.
This is relevant to the committee’s findings on facilitating community activity. In paragraph 210, the report states:
“Local authorities should share intergenerational best practice and publish practical examples and information relating to community-run services and community assets.”
It adds:
“At all levels, government should be an enabler of community activity.”
This should be clearly linked to the importance of addressing loneliness. The report disappointingly notes in paragraph 15 that
“older generations face their own challenges in a society that is ill-prepared for their numbers and needs as they age. The generation born between 1946 and 1965 is substantially larger than subsequent or preceding ones.”
In paragraph 16, it states:
“Alongside these challenges to specific age groups the increased atomisation of our society also poses a threat to intergenerational fairness. The breakdown of common institutions has allowed loneliness to proliferate in both young and old people as well as creating a breeding ground for ill-informed stereotypes about other generations.”
Sadly, the section on the power of community action also notes, in paragraph 199:
My Lords, I thank the noble Lord, Lord Price, for his clear introduction to the report by the committee. I was privileged to be a member of the committee and witnessed the contribution he made, along with that of other members, many of whom have spoken or are speaking today. As the noble Lord, Lord Price, noted, the committee’s chair, the noble Lord, Lord True, has gone on to even greater things. Although I look forward to hearing the noble Baroness, Lady Penn, winding up for the Government, I can only regret that we could not see the noble Lord, Lord True, with his customary agile footwork, both introducing the debate on his report and responding to it from his position on the Government Front Bench.
The noble Lord, Lord True, would have been more likely to have been able to present the report to your Lordships if it had not taken 21 months from its publication to it being debated, as my noble friend Lady Blackstone and others have noted. Even in the turbulent time that saw the parliamentary conflict over Brexit, a general election and the onset of the Covid crisis, this delay is regrettable, as is, even more so, the anodyne and disappointing written response given by the Government in July 2019, even if it was at least prompt. That said, like others, I believe that the report’s conclusions and recommendations are as valid now as two years ago—probably more so. Although Covid has posed a far greater direct threat to the health of older people, the broader social and economic impact of the measures taken to control the spread of the virus has affected every generation, and in many respects particularly the younger ones. The broad thrust of the report therefore, after the last Labour Government’s action to address pensioner poverty, that the greatest poverty and unfairness now lies with younger working-age people, is likely to be emphasised by the effects of the pandemic-combating policies of the past year and the months still to come.
20 of 58 shown
Furthermore, housing became more expensive and difficult for young people to buy as a result of QE, which made money cheaper for the older and more stable in society, fuelling house and share price growth. Looking to today and our handling of this pandemic, we see stamp duty temporarily suspended and QE again boosting house prices by circa 7% in 2020, once again making it even harder for those joining the labour market to afford a home of their own.
The pandemic will lead to more flexible working: two-thirds of employees completing the Happiness@Work survey said that they wanted a mix of office and home working, while 18% of mainly older employees do not want to return to the office at all. In the same research, under-29s were concerned for their career development and training in lockdown and beyond, and young managers were far less happy than their older counterparts as training, advice and guidance are now less easy to receive, as middle management is stripped out and work pressures increase.
Jobs in hospitality and retail have been decimated—sadly, we have seen more evidence of that again today—and these are often places where the young start their careers. As the report points out, there is also a need for more structured mid-career training to help employees adapt to the new world, and that is true now more than ever. And, with unemployment predicted to rise rapidly, there is a need to get the young who are leaving school and university into work, as well as on in work. For example, schemes such as Kickstart should be welcomed, but they need to be more available to SMEs if they are to make a substantive impact.
So now would be a good time for the Government to reassess the work of the Intergenerational Fairness Committee and the recommendations in its report. I beg to move.
“are almost the least effective way of coping with fuel poverty.”
This is another unfair policy, since single parents are much more likely to be in fuel poverty than those over 65. The fact that the Government have rejected the committee’s recommendation to abolish it is another example of them taking the easy way out by defending the status quo.
I assume that the Minister accepts that there is also a need for a realistic assessment of the impact of longevity on the need to extend working life, leading to higher age thresholds for all age-related benefits, including the state pension. There should surely be an acceleration of raising the age of eligibility for state pensions. Failure to do so will place ever-greater burdens on the younger generations, who are paying an ever-larger bill for the costs of retirement of the older generations.
Let me turn now to young people themselves. The committee largely accepted the views of the Resolution Foundation and others that they are relatively worse off than their parents and grandparents were at a similar age. To help rectify this requires a massive investment in social and affordable housing, as implied by the noble Lord, Lord Price. The supply of this nowhere near meets demand, driving younger generations into poor-quality and insecure privately rented accommodation. Again, the Government failed to respond to the committee’s recommendations. One consequence of this failure is that the lack of an adequate home is magnifying the disadvantages suffered by the ever-growing number of children of those in their 30s who are now living in poverty.
I end by reflecting on the job opportunities and the linked issue of education and training for those in their 20s and 30s, compared with earlier generations, who have benefited from full employment for most of the last four or five decades. Young people face uncertain prospects of permanent employment. This is magnified by a global pandemic, which has done untold damage to our economy. However, there were already worrying trends in the growth of the gig economy, with its many downsides, well before Covid-19. Many thousands of jobs will need to be created, in particular in the green economy, to counteract climate change. Failure to meet our net-zero target will of course affect younger generations more than those of us who have lived most of our lives.
Many of these new jobs will require high levels of skill, which will be achieved only with more investment in education and training—notably in FE, which has been decimated by this Government and their predecessor. However, I welcome the Government’s change of heart on FE, even though it is too little and too late. This is urgent, since so many young people in their 20s have already missed out. They will need to be rescued and provided with learning opportunities that they have been denied in the past through newly invigorated and properly resourced FE programmes. Finally, as the report made clear, they will need to be supported by high-quality, lifelong learning to meet the needs of a 100-year life.
The report had at its heart the concept of the 100-year life course, which runs through all our themes. One in three babies born today will reach their 100th birthday. We are living longer and are mostly healthier for longer, but does public policy really take account of this? Do we take account of it in our own lives? All our assumptions were questioned and tested by our witnesses.
We learned that there is a structural shift taking place, with younger generations not seeing the increase in living standards enjoyed by previous generations. At the same time, older generations face a society that is not prepared for their numbers or needs as they age. Many young people, and their parents and grandparents, worry about whether they will be able to afford a home or achieve a secure, well-paying job. This is the result of a failure of successive Governments to plan for the future and prepare for the social, economic and technological changes that are rapidly taking place. Across all the themes in the report, from education to housing through taxation and benefits, work and skills, our evidence demonstrates that this is rarely taken into account.
Perhaps it was no surprise, then, to find that witness after witness commented on the lack of meaningful and appropriate datasets and statistical evidence for their work—although, as we have already heard, the Office for National Statistics is to be thanked for its immediate response to the report in which it accepted all the committee’s recommendations that were pertinent to it. It has since begun publishing new intergenerational analysis of the data it holds and has committed to including that analysis in future data releases. This was encouraging—unlike the Government’s response, which was disappointing to say the least. The Government responded to only 29 of our 41 recommendations, and of those 29 they rejected 21, thus rather proving the point of the core finding of our evidence: that intergenerational fairness is not currently considered relevant or pertinent to policy-making.
This indifference has been further heightened by the 18 months taken to bring the report to the House. Although I accept that Brexit and the pandemic have clearly had to be priorities, it is still disappointing. Reading through our recommendations to prepare for this debate, I was forcefully struck by the fact that many have been made more pertinent and urgent by both these events, as amplified by the noble Lord, Lord Price. The pandemic has changed forever the way that we work. Closing and opening schools has worsened inequalities. The impact of the coronavirus will be one of the defining features of a whole generation of British schoolchildren. The Chartered Institute of Housing recently warned that the UK is ill-prepared to deal with the housing needs that have now been made so much worse, that it is young households which will suffer the most, and that the crushing debt our society now carries will have to mean a serious rethink of who pays for what, and how, in the future. Now, more than ever, it is time to think in terms of intergenerational fairness.
“The Government should create Intergenerational Impact Assessments for all draft legislation … invest in developing its capacity to model the generational effects of tax and benefits policies”
and focus more on the long term. As the report says, to tackle a problem properly you need to understand it. I think we were saying that we do not yet have the data to understand it well.
As has been said, the Government’s response to these proposals has been, frankly, disappointing. The emphasis on reduced borrowing to lessen the debt burden on future generations never addressed the report’s recommendations and now looks sadly out of touch with the reality of public finances. The promise to continue to publish “a full Spending Review” at the conclusion of any comprehensive spending review does nothing to deliver the longer-term focus that the committee argued was needed, and the reference to the Treasury’s Green Book does little to respond to the simple suggestion that there should be intergenerational impact assessments. As has been said—I will not labour the point—the ONS response was much more positive. Is it too much to ask the new Government to look again at the committee’s recommendations on accounting for the future? I hope not.
The other section of the report that I want to touch on is chapter 6 and the importance of communities, about which the committee felt strongly. It stated:
“Community initiatives that bring generations together are an important way of cementing intergenerational bonds”
and tackling social problems such as loneliness and rough sleeping. They certainly are. The Government should therefore enable, rather than police, community activity. This theme was picked up on very strongly by the Public Services Committee in its recent interim report. The committee felt that what we saw were a series of initiatives on community activity but not a coherent strategy. I fear that that is still the situation and will remain the case until we get the long-awaited devolution White Paper. We are still not giving sufficient emphasis to places, communities and devolution. I hope that we will do so in future, and that this report will help us in that.
The third issue is that of all-age communities. I welcome the survey and recommendations, especially the part played in the report by the people of Doncaster—part of my former diocese, Sheffield. However, the report and the Government’s response seem to be blind to the impact of churches and faith communities in building all-age social capital across communities and generations. The value of the services and support that church buildings alone provide, and the health and well-being that they create, has been calculated at £12.4 billion per annum. Churches were involved in running more than 35,000 projects before Covid, including food banks, parent and toddler groups, night shelters and breakfast clubs. Mosques, synagogues and gurdwaras are making a similar contribution within and across generations. Will the report’s authors and the Government give greater recognition to the vital role that faith communities play in the social fabric of the nation as builders of intergenerational fairness?
“We are encouraged that there has been a recognition of youth loneliness but are eager that there should be more focus on … intergenerational connections. Our request to hear from a DCMS Minister on this and other intergenerational issues was rejected, despite the ministerial team on the loneliness strategy being located in that department. When we questioned Ministers from the MHCLG, the DWP and the DfE, none of them was able to answer questions on the Government’s loneliness strategy other than stating that there would be cross-departmental working. They were also not aware, until we prompted them, who was the lead on delivering the loneliness strategy since the previous Minister for Loneliness resigned. The current ministerial responsibility lies with the Minister for Civil Society, who at the time this report was published was Mims Davies. That suggests, despite the Government’s written evidence stating, ‘Central government will provide national leadership on this [loneliness] agenda’, it is not a priority for the Government and cross-departmental working has not been successfully achieved.”
The disappointment of the committee at this response is now magnified significantly as a result of Covid-19, the lockdowns, and the absolute priority which should be attached to addressing loneliness in this context. The key component of how we should help people remain independent and active as they age is a recognition that as people are living longer, we need to improve their quality of life. The toll taken on healthcare and social security systems can be significantly reduced. It is my view that loneliness and an active lifestyle should be considered together, and that government, health providers and professionals should take a lead if we are to achieve the goals of reducing loneliness and ensure that healthy older persons remain a resource to their families, communities and economies.
The World Health Organization’s report Active Ageing: A Policy Framework addresses these challenges. It recognises that active ageing is the process of optimising opportunities for health, participation and security to enhance quality of life as people age. Guild Living’s report Why is Social Connectedness Important? states:
“One way of achieving this is by creating mix-use areas in urban environments. These areas boast shared services (e.g. healthcare centres) alongside the later living options, which encourage increased social connections. Adding a weekend market, commuter route or a gym facility to a mix-use community area can quickly influence people’s daily activities and routines within a city. In doing so, we can then begin to reduce age segregation and decrease isolation in the third age.”
Clearly, intergenerational living can have a multitude of benefits, from reducing individual isolation at a personal level to improving the urban environment more broadly: a society that values quality human relationships but also helps to create versatile communities. In 2019, almost 4.5 million older people claimed to be lonely in the UK, with over half a million of those claiming that it stops them going out and about in everyday life. There is a very real social issue, so it is vital that we create communities with social connectedness and interaction at the forefront of the design to help reduce this isolation. By creating intergenerational community gardens, libraries, public parks and retail spaces as part of these developments, we can increase cross-generational interaction and encourage a more balanced society in general.
In closing, there is social prescribing, sometimes also referred to as community referral, as a means of enabling health professionals to refer people, not least the lonely, to a range of local, non-clinical services. Schemes delivering social prescribing can involve a range of activities, including, for example, volunteering, arts activities, group learning, gardening, nutritional advice and a range of sports.
What is missing in this excellent report is a focus on loneliness and a focus and a plan on the importance of an active lifestyle to bridge intergenerational gaps, loneliness and unfairness.
Even though a number of the report’s recommendations, such as those on the pension triple lock, free television licences and other pensioner benefits, generated concern and criticism from interested parties, the costs of those must be appraised relative to the needs in younger cohorts of the population. Some of the actions that could make the greatest difference to younger people, such as in the area of housing, would not however require much if any revenue funding. Improved rights for tenants of private landlords would provide vitally enhanced security for generations for whom home ownership is at least being delayed compared to earlier generations, and in many cases realistically ruled out for the foreseeable future. Improving the supply of affordable housing will require capital funding, whether through government or the private sector, rather than revenue funding.
I will conclude by focusing on an issue only really just touched on by the committee: the way the taxation of capital compared to that of income gives rise to some of the greatest inequity between the generations. Over the past 30 years, the value of assets relative to GDP in the UK has more than doubled, whereas average earnings have hardly grown at all. Over any period, let alone one which has seen such a pronounced increase in the value of residential housing and stock market securities, capital will generally be concentrated in the hands of older cohorts. If capital is relatively lightly taxed compared to income, as it generally is, that will inevitably favour older cohorts of the population. The report states:
“Inheritance Tax is capricious and not currently fit for purpose. Consideration needs to be given to whether and how assets should be taxed on death or transfer in a way that ensures fairness between generations.”
Inheritance tax is not the only way of taxing capital, but by definition, bequests on death and life-bound gifts are events at which time tax can be raised most easily and painlessly. The noble Lord, Lord Willetts, who has been such a powerful voice on the issue of intergenerational fairness, wrote in 2017 that
“we see inheritance as the next intergenerational frontier, particularly for those interested in the dynamic relationship between inter- and intra-generational inequalities.”
The committee’s excellent special adviser, Professor Jane Falkingham, argued early on in our sittings that intragenerational issues were inextricably bound up with the consideration of intergenerational ones. I suspect that the committee’s consensus might not have survived any attempt to define these intragenerational issues in respect of the reform of capital taxation, even if only limited inheritance tax. Until there is the commitment, courage and altruism on the part of government to address this issue, there will remain severe inequalities between generations and within them.