No party can afford to ignore the “sandwich generation”

Tensions are rising over the care of the elderly and the prospects of the young. Both the coalition

The north-facing windows at the back of 10 Downing Street look over immaculate lawns on to Horse Guards Parade - a view of imperial pomp that matches the baroque chandeliers and ornate cornices inside. This makes the scene from the west windows all the more incongruous: a wooden climbing frame, a slide and scattered toys in the garden of No 11. The paraphernalia of childhood are a reminder that this seat of power is also a family home.

All three main party leaders have young children, which puts a peculiar complexion on power. When the Chinese premier, Wen Jiabao, arrived for a visit to the UK on 26 June, Nick Clegg had to leave a frenzied family water fight in his back garden for a dreary diplomatic dinner. Ed Miliband's leadership of the Labour Party got off to a faltering start last year partly because he disappeared on paternity leave shortly after winning the job.

David Cameron, Clegg and Miliband can hardly claim to have lives that resemble those of most voters but the dominance of Westminster by these middle-aged parents of young children reflects a profound social change. Or rather, the elite's privileges offer an ironic commentary on the challenges facing their peers. Our economy relies increasingly on the labour of harried fortysomethings who, unlike cabinet ministers, can't afford nannies and don't have grace-and-favour properties. They are the "sandwich generation" - pressed between the need to support children and pay for the long and often ill-financed retirement of their parents.

Caught in a trap

A report published on 29 June by the think tank Reform describes the problem in depressing detail. Over the next five years, the number of people aged 65 and over will increase by 1.4 million; the number of those over 85 will go up by 235,000; the size of the working population under 50 will decrease by 160,000. There aren't enough economically active people to fund the rising cost of medicine, social care and pensions. According to Reform's projections, these trends could hollow out the public finances in the next parliament, even if George Osborne meets his target of eliminating the structural deficit within the next four years.

At the same time, many of those who are working see their incomes being shaved away by rising childcare costs, while public-sector cuts erode access to help.

These problems, long in gestation, are finally arriving on the political agenda. On 4 July, Andrew Dilnot, economist and broadcaster, will present the findings of an independent inquiry commissioned in July 2010 by the Department of Health to look at social-care funding for the elderly. At present, anyone with assets worth more than £23,250 pays the full cost of support in old age. Dilnot is expected to recommend a cap of £50,000 on the amount that any single person is charged for care. The state or private insurance would cover the rest.

That means public investment up front, the thought of which provokes allergic reactions in the Treasury. It would also be tricky for the Health Secretary, Andrew Lansley, to endorse Dilnot's proposal if, as looks likely, it closely resembles a Labour idea that he attacked in opposition as a ghoulish "death tax". "[Lansley] can't possibly propose the same thing he was campaigning against," says one senior government adviser. So the long grass beckons for Dilnot.

As the Department of Health puzzles over what to do with the elderly, across Whitehall, officials at the Department for Work and Pensions (DWP) are fretting over the young. The problem lies in Iain Duncan Smith's ambition to tidy the tangle of existing benefits into a single "universal credit". The goal is to eradicate the problem of the unemployed losing more in welfare than they gain in wages when they start work - the "benefits trap". But DWP officials are struggling to find ways to compensate parents for cuts to childcare assistance that Duncan Smith signed up to in last year's Spending Review. This means the universal credit could end up penalising single parents who want to work but rely on benefits to pay for nursery places. There is also a potential loss of income to families when a second earner goes back to work after having children.

The rest of the government looks on with concern. "There's a trap there. Not a lot of people have noticed it yet," one Tory minister says. A Lib Dem minister is scathing about the DWP's calculations: "Its models are all over the place."

The coalition is struggling to maintain the fiction that "We are all in it together" as the social safety net is trimmed. That should help Miliband in his pitch to the "squeezed middle" - those whose modest incomes are stagnating as the cost of living rises. The risk for the Labour leader is that the most vocal opposition to cuts is now coming from trade unions defending benefits that are far from universal. It is the job of unions to protect their members but the impact of strikes is felt by sandwiched private-sector workers long before it puts pressure on the coalition. Solidarity with teachers is strained when you have to take a day's leave or pay for childcare because the school is closed.

Ju-jitsu grapple

Polls show that the public is quite evenly divided on whether strikes to protect public-sector pensions are justified. The government is betting that walkouts will force private-sector workers to examine the deal that public-sector workers currently get and the changes on offer and then resentfully compare both to their own meagre pensions - if they even have them. One cabinet minister talks about a "ju-jitsu" grapple with the unions, referring to the martial art that uses an opponent's strength against him. The more disruptive the industrial action, the more the government expects to win sympathy.

The union model of social solidarity includes no invitation to many of the voters Miliband needs to win over if he is to become prime minister. The consolation for Labour is that the coalition is also failing to offer a persuasive vision of solidarity with people who are squeezed by the cost of living and between generations.

Cameron might be juggling the demands of a busy job and young children but his charmed life could end up mocking the pressures faced by struggling households. If he doesn't find a way to ease their burden, they will find a way to let him spend more time with his family - and not in the Downing Street garden.

Rafael Behr is chief political commentator of the New Statesman