Young people in Britain can be excused for feeling hopeless about the financial strains they are under and for believing that earlier generations had a more equitable economic climate. Subsequently, the dismal news that the UK’s public debt has reached 100% of GDP only serves to heighten their concerns regarding property ownership and an unstable labour market.
For many years to come, taxpayers will have to bear the weight of that debt. Approximately 7.3% of public spending is currently allocated to paying the interest alone on the nation’s debt. That is greater than the amount spent on transportation (3.8%) or defence (4.8%).
A portion of the remaining funds will also be utilised to address issues brought on by a historical lack of public investment in water, railroads, and other vital infrastructure, as well as important future public services.
In actuality, the UK government utilised a large portion of that infrastructure in the 1980s to help finance itself by selling off assets like British Gas at a deep discount. Older generations and baby boomers who could afford to purchase shares frequently turned a healthy profit.
The boomer advantage: Rising wealth and unintended costs for the young
The younger generations of today have also had to pay various types of costs. Universities and schools were shuttered during COVID lockdowns, forcing the young to stay at home primarily to protect the elderly.
The majority of young people voted against Brexit, while 60% of retirees voted in favour of it, meaning they no longer have the right to live and work in the EU. The UK is now less wealthy as a result of leaving Europe.
Still, not everybody is in poverty. While working-age individuals’ incomes have climbed by less than 10% over the past 20 years, seniors’ typical incomes have increased by more than 50% on average. After housing costs, the median income of senior households has surpassed that of child-bearing households.
The majority of the nation’s wealth is currently held by the elderly. In 2018, one in four individuals over 65 lived in a household with more than £1 million in total wealth.
Compared to the general population, pensioners currently have lower rates of poverty.
However, seniors are entitled to a plethora of unrestricted discounts and benefits, including free or heavily subsidised public transportation. Their earnings are not subject to national insurance contributions, and their state pensions have a triple lock that ensures their growth will outpace their income from employment.
Until recently, the winter fuel allowance was £300 (£200 for younger seniors) for anyone born in 1944 or before.
Boomer and bust?
Although there is some public support for restricting the fuel allowance to lower-income retirees, recovering money from senior citizens is still a very touchy subject.
(Then-prime minister Theresa May had to swiftly backtrack in 2017 when she proposed leveraging seniors’ assets to pay for the soaring expense of care.)
The fact that most retirees are doing better than the working population may be one factor contributing to this reluctance to take money from the elderly, although this may not be the case for the poorest pensioners. A civilised society does not want its elderly to freeze, yet some seniors do not seek the benefits to which they are entitled.
However, a more general concern about intergenerational justice is brought up by the seeming economic divide. What is the duty of one generation to the next?
Furthermore, it goes beyond money. Another issue that older people have not had to pay for for most of their life is global warming, with the young bearing the majority of the responsibility for fixing environmental harm.
A reasonable philosophical stance would be that if future generations can generally be expected to live longer, in better health, with greater consumer choice and comfort, and with a higher quality of life, then it’s okay to leave certain costs to be paid in the future.
However, it does not appear that this is the current expectation. Life expectancy has stagnated along with incomes, while housing costs are at their highest point about salaries since the 1800s.
In that regard, a great deal of people—regardless of age—would undoubtedly identify with today’s youth. They can even contend that the government should now concentrate on measures that specifically help the youth, such as national insurance for pension income, various taxation schemes, or the construction of new homes.
Fiscal regulations might also be changed to permit increased spending on national infrastructure, higher taxes on fossil fuels to finance the energy transition, or more equitable distribution of the cost of paying for postsecondary education among all graduates, irrespective of when they received their degree.
These adjustments would result in a significant move toward an economic structure that aims to transfer wealth not only among individuals but also across generations.
(Tashia Bernardus)