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.