Britain's youth are steadily being treated worse and worse

Intergenerational index spikes at 128 for 2010

Britain's intergenerational unfairness was 28 per cent worse in 2010 than it was in 2000, and over 50 per cent worse than it was 1990, according to new research from the Intergenerational Foundation. The increase from 2009 to 2010 alone was almost 6 per cent.

The IF created the intergenerational index to measure, in a systematic way, the extent of intergenerational unfairness. Normalised so that the year 2000 has an intergenerational index of 100, we can see the steady increase throughout the early noughties turn into a sharp spike following the crash:

Looking at the breakdown of the index reveals the reasons for the recent spike. The IF look at nine different areas: Unemployment, housing, pensions, government debt, participation in democracy, health, income, environmental impact and education. Of the nine, only environmental impact has been consistently getting better, with the UK's greenhouse gas emmissions dropping 15 of the last 20 years. Every other measure has been getting worse.

There are some questionable choices in the index, however. Worst of all is the measurement of government debt. It is not clear whether increasing government debt is intergenerationally unfair at all. Right now, for instance, the absolute best thing for young people in Britain would be for government debt to increase as the coalition u-turns on austerity. The generalised excuse, that debt is borrowing against future generations to spend now, doesn't mean that all debt is bad for future generations; yet the index treats it as such.

Similarly, the chosen measures for "participation in democracy" are average age of councillors and turnout of 25 to 34 year-olds. It seems odd to take what is definitely a choice on the part of young people not to get involved in politics and pretend that it is on the same level as, say, the precipitous drop in housebuilding to the lowest levels since the second world war:

Much of the recent spike, however, comes from components of the index which are inarguably on-topic. The large increase in government debt between 2009 and 2010 raised its part of the index by almost thirty points, but three other areas also rose by over ten points each. As seen above, the housing situation has got worse rather sharply, leading its part of the index to rise from 120 to 130.

The index also highlights pensions as a growing problem. The cost of state pensions in relation to the size of the workforce, and the cost of unfunded public sector pensions, pushes the pension section of the index up by another 13 points.

But one of the worst changes is that of education. A spike in the average private contribution to tuition fees – and this is for 2010, so that increase is nothing to do with this government – meant that education went from a steady contributor to intergenerational fairness, with costs going down and standards increasing, to a component as bad as it has been since 1999.

The full affect of the various components is broken down:

Laurence J. Kotlikoff, a professor of Economics at Boston University, ends his foreword:

As the Intergenerational Foundation's vitally important Intergenerational Index makes vividly clear, the UK is failing miserably. . . The Index can be viewed as an Adults' Report Card, and it shows a failing grade.

For all the methodological problems, the conclusion seems clear: when the recession hit, the response of the Labour government was to pile the costs on to young people and future generations, while saving those who were deemed to have already contributed from too much hardship. Many of the component measures can only have gone down in the last few years, but how far remains to be seen.

Pensions may be one of the largest contributors to intergenerational inequality. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty Images
Show Hide image

There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR