Demographics· Intergenerational Centre· Political parties and elections My Generation, Baby: The Politics of Age in Brexit Britain 29 March 2019 by Laura Gardiner and Torsten Bell Laura Gardiner Torsten Bell Generational politics is nothing new, but the extent of the profound generational cleavage that has emerged in British electoral politics is novel. The Brexit vote and the 2017 general election put generational politics centre‐stage, eclipsing in some ways the traditionally dominant role of class. Our two main parties now rely on age‐based coalitions of support—on the votes of the young in the case of Labour and the old in the case of the Conservatives. Both are severely constrained in their ability to spread their support to other age groups and, partly as a result, to form a government with a significant majority. This matters for understanding the cut and thrust of British politics today, but its importance only grows when we look ahead. Both sides may be tempted to view this as an equilibrium they can live with, as Labour believes it has the voters of the future and the Conservatives rely on the age groups most likely to actually vote. But the risk is that this ‘generational lock’ on our politics blocks a much‐needed progressive governing shift for post‐Brexit Britain—a shift to address two crucial, but generationally charged, economic challenges. First, the need to support young people’s living standards, because the expectation of each generation doing significantly better than their predecessors is not being met for younger cohorts today. And second, delivering and, crucially, paying for the health and care that a growing older population will need as the large baby boomer generation retires. Such a governing agenda will involve trade‐offs that a generationally polarised politics hinders at best, and blocks at worst. These generational political divides and economic challenges are not simplistically causally linked—there is more going on than angry young voters choosing the party that opposes what they see as a broken economic system. Culture matters as much as economics in the age‐based voting patterns we see today, meaning the age of places matters too, as Will Jennings and Gerry Stoker’s discussion of geographical polarisation in this issue sets out. But whatever their related but separate causes, generational rifts in our politics and our economy currently sit centre‐stage. This paper first examines their contours, before turning to what they might mean for the shape of Britain’s post‐Brexit political economy. Political divides The difference in political preferences between young and old is a defining feature of today’s politics, shaping coalitions of support for our main political parties to an unprecedented extent. Crucially, this age divide is neither the sudden event many interpreted it as in the aftermath of the 2017 general election, nor something that is likely to fade soon. Initially, Labour’s success in exceeding (low) expectations in 2017 was credited to a sea‐change in engagement among twenty‐somethings. The assumption was that activity by young activists on social media and at rallies had produced something broader and more important: they and their peers voting. The collapse of Theresa May’s majority was explained by a so‐called ‘youthquake’ of surging turnout among the youngest electors benefitting Labour. Labour partisans interpreted this youthquake as a vindication of a strategy of targetting ‘unlikely’ voters, while some Conservatives responded with existential angst about a landmark change in turnout patterns. While some early evidence pointed in this direction, this youth turnout‐focussed interpretation didn’t age well. Exit poll‐based estimates demonstrated not a sea change in turnout, but a general continuation of the post‐1992 pattern of higher voting likelihood among older groups. In this respect, far from 2017 marking a watershed in turnout by age differences, it actually looked remarkably similar to 2015. The exception was a small relative turnout increase among thirty‐somethings, a more established group of voters than the younger cohorts that drew the initial attention. Insofar as turnout rates shape political parties’ approaches, they continue to encourage prioritisation of older voters. So, if there was no youthquake, should the talk of generational political divides be put to bed? Far from it—the age‐related shifts underway are staggering. However, they are not about turnout but about party choice. And far from being just about the 2017 election, they have been building throughout the twenty‐first century. The scale of this shift is brought out by a comparison of the 2017 election with the last time Labour and the Conservatives both commanded around a 40 per cent vote share without either winning a landslide victory—October 1974. Back then, the likelihood of voters aged between thirty and seventy supporting Labour was very similar, with only a slightly stronger age gradient in Conservative support. But by 2017, age had become a key driver of preferences. A thirty‐year‐old was almost twice as likely to vote Labour as a seventy‐year‐old, with an opposing shift in Conservative support: a seventy‐year‐old was 2.2 times more likely to vote for the party than a thirty‐year‐old in 2017, compared to just 1.4 times as likely in October 1974. These stark age divisions in partisan preferences were not new in 2017, but rather have been growing from the start of this century, so predating the focus on older voters in the electoral strategy of George Osborne and David Cameron. This suggests that these divides are about wider differences in social, political, and (to some degree) policy attitudes of age groups—meaning they have happened to, as much as being created by, political parties. Age divides were also visible in both the Scottish and Brexit referendums, with older voters proving decisive in the No and Yes votes respectively. In the case of the Brexit vote, the stark age divide in preferences for the single biggest political shift in half a century is shaping the politics of what form of Brexit is delivered, but also risks exacerbating generational political divides long afterwards, a subject we return to below. The emergence of age‐based divisions has eroded, and partially replaced, the division that dominated twentieth century British politics: class. For consistency, we can again compare the divide in voting preferences in October 1974 and 2017. The change over the past four decades is, if anything, starker, but in the opposite direction, with huge divides in party preference by class in 1974 but only marginal gaps in 2017. The decline in class‐based divides in partisan preferences does not mean that class does not retain a major role in politics—just that it does not play the same or as dominant a role as it once did. Its ongoing role is visible, for example, in the fact that turnout declines since the 1990s have been driven by the working class. This in turn interacts with age, with lower turnout particularly marked among younger parts of lower socio‐economic groups. Economic challenges Big divides in party preferences are far from new and may not be overly concerning. But in some circumstances, they can hinder desirable governing agendas—for example when a package of trade‐offs across the very groups supporting different parties is required. Therefore, the combination of these partisan divides with Britain’s generational economic challenges is far from straightforward. It is to the nature of these economic challenges we now turn. Younger generations today have access to more information, entertainment, travel and educational opportunities than ever, yet pessimism about their prospects is widespread. Behind this is the fact that the significant increase in living standards from each generation to the next that we came to expect in the twentieth century has slowed or actively gone into reverse, owing to a number of related but distinct trends. We touch on three in this paper: weak asset accumulation, a slowdown in earnings progress, and a too‐often ignored pattern of risk transfer from firms and the state onto individuals. The single biggest driver of public concern for the prospects of younger generations today is the marked slowdown in home ownership, with millennials (born 1981 to 2000) half as likely to own their home at thirty as the baby boomers (born 1946 to 1965) were. Along with a major decline in access to social housing, this means that at the age of thirty, millennials are four times more likely to be renting privately than baby boomers were. Bolstering the idea that young people are experiencing capitalism without much capital, they are also less likely to have access to generous defined benefit pension schemes that form a substantial proportion of wealth in older generations. While an increasing number of young adults are saving something into a pension (firms are now required automatically to enrol employees earning above a relatively low threshold into a pension unless they explicitly opt out), the decline of defined benefit schemes is now all but complete outside the public sector. Private sector membership around age thirty‐five more than halved for those born in the early 1980s compared to those born around 1970. While wealth accumulation challenges have been building for decades, more recent shifts have deepened generational concerns, not least the fallout from the financial crisis. Smaller than expected rises in unemployment meant that young adults have not had to deal with worklessness on the scale that previous generations or their counterparts in southern Europe faced. But unemployment increases were more skewed towards younger people than in the recessions of the 1980s and 1990s, and young workers were hardest hit by the earnings squeeze that has characterised the decade since. In the immediate aftermath of the crisis, pay fell by 11 per cent for those in their twenties compared to just 2 per cent for employees in their sixties. The subsequent pay recovery has been weakest for today’s thirty‐somethings. Weak earnings have also undermined common myths that millennials are spending a fortune on avocado toast or city breaks: while young adults were spending the same as fifty‐five to sixty‐four‐year‐olds back in 2000, they are now spending 15 per cent less. Yes, they have more access to low marginal cost technology than previous generations had at their age, but most would be happy to swap that for a house and a pay rise. The pay experience of the young is one half of a profound twenty‐first century shift, with pensioner living standards overtaking those of the working‐age population. The introduction of more generous means‐tested benefits in the mid‐2000s and, more recently, higher employment and private savings levels, mean pensioner incomes have performed strongly and pensioner poverty has fallen by a third. These welcome improvements require us to change how we think about need today. While many (particularly older, female) pensioners remain poor, working‐age and working poverty have grown just as pensioner poverty has fallen. The nature, not just the pay, of the work that younger generations are doing raises wider questions of where risk lies in our society. Market forces and policy decisions have together left younger adults bearing significant risks that their predecessors were less exposed to. Young people are disproportionately likely to work on a zero‐hours contract or find themselves in lower‐qualified self‐employment. When it comes to housing, the number of children being brought up in the insecure private rented sector has trebled in the past fifteen years. And the decline of defined benefit pensions means individuals increasingly shoulder the risk of varying investment returns while saving, as well as the uncertainty around how long they may live. The first of these is suboptimal, while the second is indefensible. Importantly, these insecurities may undermine the appetite of young people to take on more desirable discretionary risks, exemplified by millennials having been 20–25 per cent less likely to voluntarily move jobs in their twenties than was the previous generation. This has implications for their pay progression and also for the economy as a whole, as the quality of matching of individuals to jobs is reduced. It is not just challenges facing young adults that should be central to a governing agenda for post‐Brexit Britain. Another long‐looming challenge with big generational implications is now coming home to roost—the cost of maintaining our welfare state and, in particular, providing the health and care that older generations rightly expect to receive. The retirement of the large baby boomer generation means growth in the older population, even before factoring in increased life expectancy. Combined with other pressures on health costs, this means spending on health, care and social security would need to rise by £36 billion by 2030 and by £83 billion by 2040 simply to maintain existing service levels. While these funding pressures are in the future, the implications of a system under strain are visible today. Healthcare is the most pressing area of worry for British adults: 42 per cent place it in their top three concerns, significantly above international norms. Increasingly underfunded social care provision in England means the number of older people who do not get the care they need has doubled since 2010. The status quo proves forcibly that policy failures can let down older generations too. However, addressing cost pressures carries generational challenges: the usual approaches of higher borrowing or taxes on working age income would bear down on the same younger generations at the sharp end of recent living standards pressures. So, today’s challenge is to give older generations the health and care they need, deserve and expect in a generationally fair way. That is easier said than done technically, and significantly harder politically. A bad equilibrium Ways of addressing these two economic challenges should be central (although far from exclusive) components of the governing agenda into the 2020s. But we can’t be certain that they will be, or that the right answers will be found. The political divide we started with could impose what we term ‘generational locks’ on both parties’ attempts to rise to these challenges. One well‐established lock is higher turnout at older ages, discouraging parties from focussing on younger adults’ needs. But in future, generational locks may operate more broadly, with parties highly reliant on one age group for support finding it hard to ask that group to engage in necessary trade‐offs—after all, the point of winning is that you win. So, the best strategy for voters at the other end of the age spectrum is to wait for their team to return to power. Generational locks can also operate in more complex ways. The inability or unwillingness of a party to address a generational issue can engender a lack of creativity or radicalism in their opponents, even when addressing that issue is core to their voters’ needs. And any attempt by parties to ask their own voters to make sacrifices can be easily lampooned by other parties as an abandonment of their base—an obstacle to attempts at lock‐breaking. It’s easy to see such generational locks operating in practice. Youth home ownership started falling from 1989, but continuing ownership increases for older families and their higher turnout at elections meant that it wasn’t until the financial crisis two decades later that housing moved centre‐stage. This is part of a wider trend of older wealth insiders benefitting from policy shifts when they happen, but also benefitting from the status quo. For example, there has been no growth in wealth taxation since the 1980s despite huge wealth increases over that period. Perhaps unsurprisingly, the Conservative party has chosen not to address this challenge and even actively to cut some wealth taxes, including inheritance tax. With no engagement from the Conservatives on the tricky issue of taxing assets, Labour has shied away from thinking creatively about significant reforms to wealth taxation. More recently, two clear examples of generational locks leading to bad outcomes stand out. First is the burden of welfare cuts since 2010. Reliant on older generations’ votes, the Conservatives majored on the protection or enhancement of pensioner benefits, meaning the focus of benefit cuts is on the thirty‐somethings who were worst affected by the financial crisis in their twenties. That is not to say that young people were particularly opposed to welfare cuts, even when bearing the brunt of their impact, but that the Conservative party’s reliance on older voters undermined the promise that ‘we are all in this together’ from a generational perspective. The second example is social care. All parties accept that the status quo is awful, and yet both have played a role in ensuring that no change takes place. George Osborne labelled Labour’s 2010 proposals for collective insurance drawing on the wealth in older people’s estates a ‘death tax’. Similar criticisms were then thrown in the other direction by Labour following the 2017 Conservative manifesto proposal that better‐off individuals contribute more towards their care costs from their assets. This was a case of the Conservatives asking an age group it relies on for support to engage in generational trade‐offs (admittedly, with flaws), leaving the party open to criticism from an opposition able to ‘hit them where it hurts’. In both cases politicians were (rightly) not prepared to ask younger voters to pay to resolve the situation. So, the social care crisis has dragged on. Failure in future to address these generational challenges—all the more likely if generational locks are tightened by an ongoing politics of blame or credit for the Brexit decision—would deliver similarly unattractive results. For example, the health funding challenge may echo the social care deadlock. However, widespread support for the NHS could mean that rather than nothing happening we settle for some, but insufficient, additional funding paid for in generationally unfair ways (such as national insurance on the working‐age population). The government’s announcement in June 2018 of £20 billion extra for the NHS, with no detail on the source of funds, raises this possibility. The result would be older generations let down on the quality of their healthcare, and young generations’ living standards squeezed again. On the needs of younger generations, their support for Labour been matched by a focus on some issues, such as tuition fees, but caution remains in other areas. On housing, the party went into the 2017 election with a more conservative council tax policy than in 2015, while Sadiq Khan explicitly ruled out action on green belt constraints during his London mayoral election campaign. Feeling little threat to their youth support from the Conservatives, Labour may feel worryingly comfortable in this position. Finally, it’s worth considering who will be hit hardest if generational economic challenges continue to be sidestepped. The least well‐off older people suffer most in our broken social care system, and those in younger generations without parental assets face the bleakest housing prospects. The irony might be that a partial shift in political divides from class to age puts locks on policy that mean that class‐based challenges are deepened, as well as generational ones enduring. Better outcomes While this bad equilibrium is clearly possible, it is far from certain. Luck, supply‐side responses in the form of more ambitious party strategies, or demand‐side pressure for change, could all precipitate better outcomes. Luck (or an unprecedentedly successful economic strategy) could trigger the return of meaningful productivity growth. This would directly support income progress for younger adults, help to maintain the existing welfare state without tax rises, and ease the political economy of generational trade‐offs by reducing the zero‐sum nature of choices. It is also possible that age‐based cultural cleavages will ease over time, opening up political choices. This could happen structurally as current younger cohorts age or, more optimistically, it could be because individual issues diminish in salience. On the latter, see Rob Ford and Maria Sobolewska’s discussion elsewhere in this issue of a range of such scenarios on migration. But such shifts would not be a panacea, and there may be pressures in the other direction. For example, productivity growth, while crucial in supporting young adults’ living standards, is unlikely to address a lack of asset accumulation. And while Brexit may reduce the political salience of divides on migration, it has to‐date reduced earnings growth and may entail significant new pressures on resources, exemplified, for example, by recent public commitments to a UK‐only satellite programme to replace the Galileo project. If luck does not solve these challenges then a supply‐side response from parties might, with political strategies beyond current superficial attempts such as the Conservatives’ offer of a millennial rail card and Labour’s promise to keep free pensioner bus passes. This would involve breaking out of current age coalitions to form a majority that allows the internalisation of trade‐offs in the combination of a generationally fair health and care funding solution and a wider package of reforms to make Britain work for the young. That is easier said than done. Labour may believe it has the best chance of such a breakthrough: after all, if this Parliament lasts, it will be running against a twelve‐year incumbent. However, much more sensitivity on issues of values and culture that appear to have reduced Labour’s support among older voters will likely be required. For the Conservatives, a sensible focus would be on those in their thirties and forties, rather than students who are unlikely to provide high volumes of support. Such a Conservative breakthrough hinges on youthful Labour support proving to be a life‐stage—rather than cohort—effect, with more optimistic scenarios for home ownership potentially underpinning middle‐age switching of party allegiance. Importantly, to achieve such a breakthrough, either party would need to establish a post‐Brexit political narrative that avoids all future outcomes and choices being refracted through the age cleavage that defined the Brexit decision itself. The parties could also tap into strong wells of generational harmony and support—we do not see the country as divided between generations, even if our politics is. There is already evidence of generational coalitions building for change, even where the beneficiaries are refined to a particular age group. On housing, since 2010 old‐age support for house building in the local area has doubled, while younger adults continue to back decent pensions and healthcare for the old. If nothing else, this reminds us that we live not as individuals or representatives of generations, but as parts of families. There are also many areas of policy that are far from zero‐sum, not least when the issue is not about tax and spend. For example, action to address the risks young people face in the labour market or in their pension regime needn’t have significant implications for older voters. Wider constraints, such as Labour’s loss of Scottish seats, mean we can’t necessarily rely on a government with a big majority in the years ahead. An alternative route for escaping generational locks might involve demand‐side pressures from voters encouraging a more creative politics. First, while we again have two‐party politics of a form not seen since the 1970s, a return to the longer‐term trend of political fragmentation is possible. Such a shift would add more volatility and possibly enable cross‐party and generational coalition building. Demand‐side pressure for change could also manifest itself if two‐party politics continues, by building to such an extent on specific issues that parties are forced to innovate, without owning the solutions themselves. Devices like the Turner Pensions Commission might be more frequently turned to in future. Conclusion British politics may enter the post‐Brexit era stuck in a bad generational equilibrium, with different generational blocs gripping our two main parties. That would pose impediments to delivering the changes Britain badly needs. However, now more than ever, future trajectories are uncertain. These challenges are not going away, but politics is more unstable than it seemed even a few years ago. Sometimes it feels as though our parties are just hoping something will turn up to break the deadlock. But providing a proactive response to these challenges—with honesty about the give‐and‐take required—may be how a post‐crisis, post‐Brexit political offer with a broader appeal emerges. That will entail good leadership as well as good luck. That does seem a lot to ask, but then again big change always does. Chapter extract from Britain Beyond Brexit, edited by Gavin Kelly and Nick Pearce, published on April 26th by John Wiley and Sons Ltd as part of the Political Quarterly Monograph Series. Available to pre-order. This chapter first published in The Political Quarterly.
Generational politics is nothing new, but the extent of the profound generational cleavage that has emerged in British electoral politics is novel. The Brexit vote and the 2017 general election put generational politics centre‐stage, eclipsing in some ways the traditionally dominant role of class. Our two main parties now rely on age‐based coalitions of support—on the votes of the young in the case of Labour and the old in the case of the Conservatives. Both are severely constrained in their ability to spread their support to other age groups and, partly as a result, to form a government with a significant majority. This matters for understanding the cut and thrust of British politics today, but its importance only grows when we look ahead. Both sides may be tempted to view this as an equilibrium they can live with, as Labour believes it has the voters of the future and the Conservatives rely on the age groups most likely to actually vote. But the risk is that this ‘generational lock’ on our politics blocks a much‐needed progressive governing shift for post‐Brexit Britain—a shift to address two crucial, but generationally charged, economic challenges. First, the need to support young people’s living standards, because the expectation of each generation doing significantly better than their predecessors is not being met for younger cohorts today. And second, delivering and, crucially, paying for the health and care that a growing older population will need as the large baby boomer generation retires. Such a governing agenda will involve trade‐offs that a generationally polarised politics hinders at best, and blocks at worst. These generational political divides and economic challenges are not simplistically causally linked—there is more going on than angry young voters choosing the party that opposes what they see as a broken economic system. Culture matters as much as economics in the age‐based voting patterns we see today, meaning the age of places matters too, as Will Jennings and Gerry Stoker’s discussion of geographical polarisation in this issue sets out. But whatever their related but separate causes, generational rifts in our politics and our economy currently sit centre‐stage. This paper first examines their contours, before turning to what they might mean for the shape of Britain’s post‐Brexit political economy. Political divides The difference in political preferences between young and old is a defining feature of today’s politics, shaping coalitions of support for our main political parties to an unprecedented extent. Crucially, this age divide is neither the sudden event many interpreted it as in the aftermath of the 2017 general election, nor something that is likely to fade soon. Initially, Labour’s success in exceeding (low) expectations in 2017 was credited to a sea‐change in engagement among twenty‐somethings. The assumption was that activity by young activists on social media and at rallies had produced something broader and more important: they and their peers voting. The collapse of Theresa May’s majority was explained by a so‐called ‘youthquake’ of surging turnout among the youngest electors benefitting Labour. Labour partisans interpreted this youthquake as a vindication of a strategy of targetting ‘unlikely’ voters, while some Conservatives responded with existential angst about a landmark change in turnout patterns. While some early evidence pointed in this direction, this youth turnout‐focussed interpretation didn’t age well. Exit poll‐based estimates demonstrated not a sea change in turnout, but a general continuation of the post‐1992 pattern of higher voting likelihood among older groups. In this respect, far from 2017 marking a watershed in turnout by age differences, it actually looked remarkably similar to 2015. The exception was a small relative turnout increase among thirty‐somethings, a more established group of voters than the younger cohorts that drew the initial attention. Insofar as turnout rates shape political parties’ approaches, they continue to encourage prioritisation of older voters. So, if there was no youthquake, should the talk of generational political divides be put to bed? Far from it—the age‐related shifts underway are staggering. However, they are not about turnout but about party choice. And far from being just about the 2017 election, they have been building throughout the twenty‐first century. The scale of this shift is brought out by a comparison of the 2017 election with the last time Labour and the Conservatives both commanded around a 40 per cent vote share without either winning a landslide victory—October 1974. Back then, the likelihood of voters aged between thirty and seventy supporting Labour was very similar, with only a slightly stronger age gradient in Conservative support. But by 2017, age had become a key driver of preferences. A thirty‐year‐old was almost twice as likely to vote Labour as a seventy‐year‐old, with an opposing shift in Conservative support: a seventy‐year‐old was 2.2 times more likely to vote for the party than a thirty‐year‐old in 2017, compared to just 1.4 times as likely in October 1974. These stark age divisions in partisan preferences were not new in 2017, but rather have been growing from the start of this century, so predating the focus on older voters in the electoral strategy of George Osborne and David Cameron. This suggests that these divides are about wider differences in social, political, and (to some degree) policy attitudes of age groups—meaning they have happened to, as much as being created by, political parties. Age divides were also visible in both the Scottish and Brexit referendums, with older voters proving decisive in the No and Yes votes respectively. In the case of the Brexit vote, the stark age divide in preferences for the single biggest political shift in half a century is shaping the politics of what form of Brexit is delivered, but also risks exacerbating generational political divides long afterwards, a subject we return to below. The emergence of age‐based divisions has eroded, and partially replaced, the division that dominated twentieth century British politics: class. For consistency, we can again compare the divide in voting preferences in October 1974 and 2017. The change over the past four decades is, if anything, starker, but in the opposite direction, with huge divides in party preference by class in 1974 but only marginal gaps in 2017. The decline in class‐based divides in partisan preferences does not mean that class does not retain a major role in politics—just that it does not play the same or as dominant a role as it once did. Its ongoing role is visible, for example, in the fact that turnout declines since the 1990s have been driven by the working class. This in turn interacts with age, with lower turnout particularly marked among younger parts of lower socio‐economic groups. Economic challenges Big divides in party preferences are far from new and may not be overly concerning. But in some circumstances, they can hinder desirable governing agendas—for example when a package of trade‐offs across the very groups supporting different parties is required. Therefore, the combination of these partisan divides with Britain’s generational economic challenges is far from straightforward. It is to the nature of these economic challenges we now turn. Younger generations today have access to more information, entertainment, travel and educational opportunities than ever, yet pessimism about their prospects is widespread. Behind this is the fact that the significant increase in living standards from each generation to the next that we came to expect in the twentieth century has slowed or actively gone into reverse, owing to a number of related but distinct trends. We touch on three in this paper: weak asset accumulation, a slowdown in earnings progress, and a too‐often ignored pattern of risk transfer from firms and the state onto individuals. The single biggest driver of public concern for the prospects of younger generations today is the marked slowdown in home ownership, with millennials (born 1981 to 2000) half as likely to own their home at thirty as the baby boomers (born 1946 to 1965) were. Along with a major decline in access to social housing, this means that at the age of thirty, millennials are four times more likely to be renting privately than baby boomers were. Bolstering the idea that young people are experiencing capitalism without much capital, they are also less likely to have access to generous defined benefit pension schemes that form a substantial proportion of wealth in older generations. While an increasing number of young adults are saving something into a pension (firms are now required automatically to enrol employees earning above a relatively low threshold into a pension unless they explicitly opt out), the decline of defined benefit schemes is now all but complete outside the public sector. Private sector membership around age thirty‐five more than halved for those born in the early 1980s compared to those born around 1970. While wealth accumulation challenges have been building for decades, more recent shifts have deepened generational concerns, not least the fallout from the financial crisis. Smaller than expected rises in unemployment meant that young adults have not had to deal with worklessness on the scale that previous generations or their counterparts in southern Europe faced. But unemployment increases were more skewed towards younger people than in the recessions of the 1980s and 1990s, and young workers were hardest hit by the earnings squeeze that has characterised the decade since. In the immediate aftermath of the crisis, pay fell by 11 per cent for those in their twenties compared to just 2 per cent for employees in their sixties. The subsequent pay recovery has been weakest for today’s thirty‐somethings. Weak earnings have also undermined common myths that millennials are spending a fortune on avocado toast or city breaks: while young adults were spending the same as fifty‐five to sixty‐four‐year‐olds back in 2000, they are now spending 15 per cent less. Yes, they have more access to low marginal cost technology than previous generations had at their age, but most would be happy to swap that for a house and a pay rise. The pay experience of the young is one half of a profound twenty‐first century shift, with pensioner living standards overtaking those of the working‐age population. The introduction of more generous means‐tested benefits in the mid‐2000s and, more recently, higher employment and private savings levels, mean pensioner incomes have performed strongly and pensioner poverty has fallen by a third. These welcome improvements require us to change how we think about need today. While many (particularly older, female) pensioners remain poor, working‐age and working poverty have grown just as pensioner poverty has fallen. The nature, not just the pay, of the work that younger generations are doing raises wider questions of where risk lies in our society. Market forces and policy decisions have together left younger adults bearing significant risks that their predecessors were less exposed to. Young people are disproportionately likely to work on a zero‐hours contract or find themselves in lower‐qualified self‐employment. When it comes to housing, the number of children being brought up in the insecure private rented sector has trebled in the past fifteen years. And the decline of defined benefit pensions means individuals increasingly shoulder the risk of varying investment returns while saving, as well as the uncertainty around how long they may live. The first of these is suboptimal, while the second is indefensible. Importantly, these insecurities may undermine the appetite of young people to take on more desirable discretionary risks, exemplified by millennials having been 20–25 per cent less likely to voluntarily move jobs in their twenties than was the previous generation. This has implications for their pay progression and also for the economy as a whole, as the quality of matching of individuals to jobs is reduced. It is not just challenges facing young adults that should be central to a governing agenda for post‐Brexit Britain. Another long‐looming challenge with big generational implications is now coming home to roost—the cost of maintaining our welfare state and, in particular, providing the health and care that older generations rightly expect to receive. The retirement of the large baby boomer generation means growth in the older population, even before factoring in increased life expectancy. Combined with other pressures on health costs, this means spending on health, care and social security would need to rise by £36 billion by 2030 and by £83 billion by 2040 simply to maintain existing service levels. While these funding pressures are in the future, the implications of a system under strain are visible today. Healthcare is the most pressing area of worry for British adults: 42 per cent place it in their top three concerns, significantly above international norms. Increasingly underfunded social care provision in England means the number of older people who do not get the care they need has doubled since 2010. The status quo proves forcibly that policy failures can let down older generations too. However, addressing cost pressures carries generational challenges: the usual approaches of higher borrowing or taxes on working age income would bear down on the same younger generations at the sharp end of recent living standards pressures. So, today’s challenge is to give older generations the health and care they need, deserve and expect in a generationally fair way. That is easier said than done technically, and significantly harder politically. A bad equilibrium Ways of addressing these two economic challenges should be central (although far from exclusive) components of the governing agenda into the 2020s. But we can’t be certain that they will be, or that the right answers will be found. The political divide we started with could impose what we term ‘generational locks’ on both parties’ attempts to rise to these challenges. One well‐established lock is higher turnout at older ages, discouraging parties from focussing on younger adults’ needs. But in future, generational locks may operate more broadly, with parties highly reliant on one age group for support finding it hard to ask that group to engage in necessary trade‐offs—after all, the point of winning is that you win. So, the best strategy for voters at the other end of the age spectrum is to wait for their team to return to power. Generational locks can also operate in more complex ways. The inability or unwillingness of a party to address a generational issue can engender a lack of creativity or radicalism in their opponents, even when addressing that issue is core to their voters’ needs. And any attempt by parties to ask their own voters to make sacrifices can be easily lampooned by other parties as an abandonment of their base—an obstacle to attempts at lock‐breaking. It’s easy to see such generational locks operating in practice. Youth home ownership started falling from 1989, but continuing ownership increases for older families and their higher turnout at elections meant that it wasn’t until the financial crisis two decades later that housing moved centre‐stage. This is part of a wider trend of older wealth insiders benefitting from policy shifts when they happen, but also benefitting from the status quo. For example, there has been no growth in wealth taxation since the 1980s despite huge wealth increases over that period. Perhaps unsurprisingly, the Conservative party has chosen not to address this challenge and even actively to cut some wealth taxes, including inheritance tax. With no engagement from the Conservatives on the tricky issue of taxing assets, Labour has shied away from thinking creatively about significant reforms to wealth taxation. More recently, two clear examples of generational locks leading to bad outcomes stand out. First is the burden of welfare cuts since 2010. Reliant on older generations’ votes, the Conservatives majored on the protection or enhancement of pensioner benefits, meaning the focus of benefit cuts is on the thirty‐somethings who were worst affected by the financial crisis in their twenties. That is not to say that young people were particularly opposed to welfare cuts, even when bearing the brunt of their impact, but that the Conservative party’s reliance on older voters undermined the promise that ‘we are all in this together’ from a generational perspective. The second example is social care. All parties accept that the status quo is awful, and yet both have played a role in ensuring that no change takes place. George Osborne labelled Labour’s 2010 proposals for collective insurance drawing on the wealth in older people’s estates a ‘death tax’. Similar criticisms were then thrown in the other direction by Labour following the 2017 Conservative manifesto proposal that better‐off individuals contribute more towards their care costs from their assets. This was a case of the Conservatives asking an age group it relies on for support to engage in generational trade‐offs (admittedly, with flaws), leaving the party open to criticism from an opposition able to ‘hit them where it hurts’. In both cases politicians were (rightly) not prepared to ask younger voters to pay to resolve the situation. So, the social care crisis has dragged on. Failure in future to address these generational challenges—all the more likely if generational locks are tightened by an ongoing politics of blame or credit for the Brexit decision—would deliver similarly unattractive results. For example, the health funding challenge may echo the social care deadlock. However, widespread support for the NHS could mean that rather than nothing happening we settle for some, but insufficient, additional funding paid for in generationally unfair ways (such as national insurance on the working‐age population). The government’s announcement in June 2018 of £20 billion extra for the NHS, with no detail on the source of funds, raises this possibility. The result would be older generations let down on the quality of their healthcare, and young generations’ living standards squeezed again. On the needs of younger generations, their support for Labour been matched by a focus on some issues, such as tuition fees, but caution remains in other areas. On housing, the party went into the 2017 election with a more conservative council tax policy than in 2015, while Sadiq Khan explicitly ruled out action on green belt constraints during his London mayoral election campaign. Feeling little threat to their youth support from the Conservatives, Labour may feel worryingly comfortable in this position. Finally, it’s worth considering who will be hit hardest if generational economic challenges continue to be sidestepped. The least well‐off older people suffer most in our broken social care system, and those in younger generations without parental assets face the bleakest housing prospects. The irony might be that a partial shift in political divides from class to age puts locks on policy that mean that class‐based challenges are deepened, as well as generational ones enduring. Better outcomes While this bad equilibrium is clearly possible, it is far from certain. Luck, supply‐side responses in the form of more ambitious party strategies, or demand‐side pressure for change, could all precipitate better outcomes. Luck (or an unprecedentedly successful economic strategy) could trigger the return of meaningful productivity growth. This would directly support income progress for younger adults, help to maintain the existing welfare state without tax rises, and ease the political economy of generational trade‐offs by reducing the zero‐sum nature of choices. It is also possible that age‐based cultural cleavages will ease over time, opening up political choices. This could happen structurally as current younger cohorts age or, more optimistically, it could be because individual issues diminish in salience. On the latter, see Rob Ford and Maria Sobolewska’s discussion elsewhere in this issue of a range of such scenarios on migration. But such shifts would not be a panacea, and there may be pressures in the other direction. For example, productivity growth, while crucial in supporting young adults’ living standards, is unlikely to address a lack of asset accumulation. And while Brexit may reduce the political salience of divides on migration, it has to‐date reduced earnings growth and may entail significant new pressures on resources, exemplified, for example, by recent public commitments to a UK‐only satellite programme to replace the Galileo project. If luck does not solve these challenges then a supply‐side response from parties might, with political strategies beyond current superficial attempts such as the Conservatives’ offer of a millennial rail card and Labour’s promise to keep free pensioner bus passes. This would involve breaking out of current age coalitions to form a majority that allows the internalisation of trade‐offs in the combination of a generationally fair health and care funding solution and a wider package of reforms to make Britain work for the young. That is easier said than done. Labour may believe it has the best chance of such a breakthrough: after all, if this Parliament lasts, it will be running against a twelve‐year incumbent. However, much more sensitivity on issues of values and culture that appear to have reduced Labour’s support among older voters will likely be required. For the Conservatives, a sensible focus would be on those in their thirties and forties, rather than students who are unlikely to provide high volumes of support. Such a Conservative breakthrough hinges on youthful Labour support proving to be a life‐stage—rather than cohort—effect, with more optimistic scenarios for home ownership potentially underpinning middle‐age switching of party allegiance. Importantly, to achieve such a breakthrough, either party would need to establish a post‐Brexit political narrative that avoids all future outcomes and choices being refracted through the age cleavage that defined the Brexit decision itself. The parties could also tap into strong wells of generational harmony and support—we do not see the country as divided between generations, even if our politics is. There is already evidence of generational coalitions building for change, even where the beneficiaries are refined to a particular age group. On housing, since 2010 old‐age support for house building in the local area has doubled, while younger adults continue to back decent pensions and healthcare for the old. If nothing else, this reminds us that we live not as individuals or representatives of generations, but as parts of families. There are also many areas of policy that are far from zero‐sum, not least when the issue is not about tax and spend. For example, action to address the risks young people face in the labour market or in their pension regime needn’t have significant implications for older voters. Wider constraints, such as Labour’s loss of Scottish seats, mean we can’t necessarily rely on a government with a big majority in the years ahead. An alternative route for escaping generational locks might involve demand‐side pressures from voters encouraging a more creative politics. First, while we again have two‐party politics of a form not seen since the 1970s, a return to the longer‐term trend of political fragmentation is possible. Such a shift would add more volatility and possibly enable cross‐party and generational coalition building. Demand‐side pressure for change could also manifest itself if two‐party politics continues, by building to such an extent on specific issues that parties are forced to innovate, without owning the solutions themselves. Devices like the Turner Pensions Commission might be more frequently turned to in future. Conclusion British politics may enter the post‐Brexit era stuck in a bad generational equilibrium, with different generational blocs gripping our two main parties. That would pose impediments to delivering the changes Britain badly needs. However, now more than ever, future trajectories are uncertain. These challenges are not going away, but politics is more unstable than it seemed even a few years ago. Sometimes it feels as though our parties are just hoping something will turn up to break the deadlock. But providing a proactive response to these challenges—with honesty about the give‐and‐take required—may be how a post‐crisis, post‐Brexit political offer with a broader appeal emerges. That will entail good leadership as well as good luck. That does seem a lot to ask, but then again big change always does. Chapter extract from Britain Beyond Brexit, edited by Gavin Kelly and Nick Pearce, published on April 26th by John Wiley and Sons Ltd as part of the Political Quarterly Monograph Series. Available to pre-order. This chapter first published in The Political Quarterly.
Generational politics is nothing new, but the extent of the profound generational cleavage that has emerged in British electoral politics is novel. The Brexit vote and the 2017 general election put generational politics centre‐stage, eclipsing in some ways the traditionally dominant role of class. Our two main parties now rely on age‐based coalitions of support—on the votes of the young in the case of Labour and the old in the case of the Conservatives. Both are severely constrained in their ability to spread their support to other age groups and, partly as a result, to form a government with a significant majority. This matters for understanding the cut and thrust of British politics today, but its importance only grows when we look ahead. Both sides may be tempted to view this as an equilibrium they can live with, as Labour believes it has the voters of the future and the Conservatives rely on the age groups most likely to actually vote. But the risk is that this ‘generational lock’ on our politics blocks a much‐needed progressive governing shift for post‐Brexit Britain—a shift to address two crucial, but generationally charged, economic challenges. First, the need to support young people’s living standards, because the expectation of each generation doing significantly better than their predecessors is not being met for younger cohorts today. And second, delivering and, crucially, paying for the health and care that a growing older population will need as the large baby boomer generation retires. Such a governing agenda will involve trade‐offs that a generationally polarised politics hinders at best, and blocks at worst. These generational political divides and economic challenges are not simplistically causally linked—there is more going on than angry young voters choosing the party that opposes what they see as a broken economic system. Culture matters as much as economics in the age‐based voting patterns we see today, meaning the age of places matters too, as Will Jennings and Gerry Stoker’s discussion of geographical polarisation in this issue sets out. But whatever their related but separate causes, generational rifts in our politics and our economy currently sit centre‐stage. This paper first examines their contours, before turning to what they might mean for the shape of Britain’s post‐Brexit political economy. Political divides The difference in political preferences between young and old is a defining feature of today’s politics, shaping coalitions of support for our main political parties to an unprecedented extent. Crucially, this age divide is neither the sudden event many interpreted it as in the aftermath of the 2017 general election, nor something that is likely to fade soon. Initially, Labour’s success in exceeding (low) expectations in 2017 was credited to a sea‐change in engagement among twenty‐somethings. The assumption was that activity by young activists on social media and at rallies had produced something broader and more important: they and their peers voting. The collapse of Theresa May’s majority was explained by a so‐called ‘youthquake’ of surging turnout among the youngest electors benefitting Labour. Labour partisans interpreted this youthquake as a vindication of a strategy of targetting ‘unlikely’ voters, while some Conservatives responded with existential angst about a landmark change in turnout patterns. While some early evidence pointed in this direction, this youth turnout‐focussed interpretation didn’t age well. Exit poll‐based estimates demonstrated not a sea change in turnout, but a general continuation of the post‐1992 pattern of higher voting likelihood among older groups. In this respect, far from 2017 marking a watershed in turnout by age differences, it actually looked remarkably similar to 2015. The exception was a small relative turnout increase among thirty‐somethings, a more established group of voters than the younger cohorts that drew the initial attention. Insofar as turnout rates shape political parties’ approaches, they continue to encourage prioritisation of older voters. So, if there was no youthquake, should the talk of generational political divides be put to bed? Far from it—the age‐related shifts underway are staggering. However, they are not about turnout but about party choice. And far from being just about the 2017 election, they have been building throughout the twenty‐first century. The scale of this shift is brought out by a comparison of the 2017 election with the last time Labour and the Conservatives both commanded around a 40 per cent vote share without either winning a landslide victory—October 1974. Back then, the likelihood of voters aged between thirty and seventy supporting Labour was very similar, with only a slightly stronger age gradient in Conservative support. But by 2017, age had become a key driver of preferences. A thirty‐year‐old was almost twice as likely to vote Labour as a seventy‐year‐old, with an opposing shift in Conservative support: a seventy‐year‐old was 2.2 times more likely to vote for the party than a thirty‐year‐old in 2017, compared to just 1.4 times as likely in October 1974. These stark age divisions in partisan preferences were not new in 2017, but rather have been growing from the start of this century, so predating the focus on older voters in the electoral strategy of George Osborne and David Cameron. This suggests that these divides are about wider differences in social, political, and (to some degree) policy attitudes of age groups—meaning they have happened to, as much as being created by, political parties. Age divides were also visible in both the Scottish and Brexit referendums, with older voters proving decisive in the No and Yes votes respectively. In the case of the Brexit vote, the stark age divide in preferences for the single biggest political shift in half a century is shaping the politics of what form of Brexit is delivered, but also risks exacerbating generational political divides long afterwards, a subject we return to below. The emergence of age‐based divisions has eroded, and partially replaced, the division that dominated twentieth century British politics: class. For consistency, we can again compare the divide in voting preferences in October 1974 and 2017. The change over the past four decades is, if anything, starker, but in the opposite direction, with huge divides in party preference by class in 1974 but only marginal gaps in 2017. The decline in class‐based divides in partisan preferences does not mean that class does not retain a major role in politics—just that it does not play the same or as dominant a role as it once did. Its ongoing role is visible, for example, in the fact that turnout declines since the 1990s have been driven by the working class. This in turn interacts with age, with lower turnout particularly marked among younger parts of lower socio‐economic groups. Economic challenges Big divides in party preferences are far from new and may not be overly concerning. But in some circumstances, they can hinder desirable governing agendas—for example when a package of trade‐offs across the very groups supporting different parties is required. Therefore, the combination of these partisan divides with Britain’s generational economic challenges is far from straightforward. It is to the nature of these economic challenges we now turn. Younger generations today have access to more information, entertainment, travel and educational opportunities than ever, yet pessimism about their prospects is widespread. Behind this is the fact that the significant increase in living standards from each generation to the next that we came to expect in the twentieth century has slowed or actively gone into reverse, owing to a number of related but distinct trends. We touch on three in this paper: weak asset accumulation, a slowdown in earnings progress, and a too‐often ignored pattern of risk transfer from firms and the state onto individuals. The single biggest driver of public concern for the prospects of younger generations today is the marked slowdown in home ownership, with millennials (born 1981 to 2000) half as likely to own their home at thirty as the baby boomers (born 1946 to 1965) were. Along with a major decline in access to social housing, this means that at the age of thirty, millennials are four times more likely to be renting privately than baby boomers were. Bolstering the idea that young people are experiencing capitalism without much capital, they are also less likely to have access to generous defined benefit pension schemes that form a substantial proportion of wealth in older generations. While an increasing number of young adults are saving something into a pension (firms are now required automatically to enrol employees earning above a relatively low threshold into a pension unless they explicitly opt out), the decline of defined benefit schemes is now all but complete outside the public sector. Private sector membership around age thirty‐five more than halved for those born in the early 1980s compared to those born around 1970. While wealth accumulation challenges have been building for decades, more recent shifts have deepened generational concerns, not least the fallout from the financial crisis. Smaller than expected rises in unemployment meant that young adults have not had to deal with worklessness on the scale that previous generations or their counterparts in southern Europe faced. But unemployment increases were more skewed towards younger people than in the recessions of the 1980s and 1990s, and young workers were hardest hit by the earnings squeeze that has characterised the decade since. In the immediate aftermath of the crisis, pay fell by 11 per cent for those in their twenties compared to just 2 per cent for employees in their sixties. The subsequent pay recovery has been weakest for today’s thirty‐somethings. Weak earnings have also undermined common myths that millennials are spending a fortune on avocado toast or city breaks: while young adults were spending the same as fifty‐five to sixty‐four‐year‐olds back in 2000, they are now spending 15 per cent less. Yes, they have more access to low marginal cost technology than previous generations had at their age, but most would be happy to swap that for a house and a pay rise. The pay experience of the young is one half of a profound twenty‐first century shift, with pensioner living standards overtaking those of the working‐age population. The introduction of more generous means‐tested benefits in the mid‐2000s and, more recently, higher employment and private savings levels, mean pensioner incomes have performed strongly and pensioner poverty has fallen by a third. These welcome improvements require us to change how we think about need today. While many (particularly older, female) pensioners remain poor, working‐age and working poverty have grown just as pensioner poverty has fallen. The nature, not just the pay, of the work that younger generations are doing raises wider questions of where risk lies in our society. Market forces and policy decisions have together left younger adults bearing significant risks that their predecessors were less exposed to. Young people are disproportionately likely to work on a zero‐hours contract or find themselves in lower‐qualified self‐employment. When it comes to housing, the number of children being brought up in the insecure private rented sector has trebled in the past fifteen years. And the decline of defined benefit pensions means individuals increasingly shoulder the risk of varying investment returns while saving, as well as the uncertainty around how long they may live. The first of these is suboptimal, while the second is indefensible. Importantly, these insecurities may undermine the appetite of young people to take on more desirable discretionary risks, exemplified by millennials having been 20–25 per cent less likely to voluntarily move jobs in their twenties than was the previous generation. This has implications for their pay progression and also for the economy as a whole, as the quality of matching of individuals to jobs is reduced. It is not just challenges facing young adults that should be central to a governing agenda for post‐Brexit Britain. Another long‐looming challenge with big generational implications is now coming home to roost—the cost of maintaining our welfare state and, in particular, providing the health and care that older generations rightly expect to receive. The retirement of the large baby boomer generation means growth in the older population, even before factoring in increased life expectancy. Combined with other pressures on health costs, this means spending on health, care and social security would need to rise by £36 billion by 2030 and by £83 billion by 2040 simply to maintain existing service levels. While these funding pressures are in the future, the implications of a system under strain are visible today. Healthcare is the most pressing area of worry for British adults: 42 per cent place it in their top three concerns, significantly above international norms. Increasingly underfunded social care provision in England means the number of older people who do not get the care they need has doubled since 2010. The status quo proves forcibly that policy failures can let down older generations too. However, addressing cost pressures carries generational challenges: the usual approaches of higher borrowing or taxes on working age income would bear down on the same younger generations at the sharp end of recent living standards pressures. So, today’s challenge is to give older generations the health and care they need, deserve and expect in a generationally fair way. That is easier said than done technically, and significantly harder politically. A bad equilibrium Ways of addressing these two economic challenges should be central (although far from exclusive) components of the governing agenda into the 2020s. But we can’t be certain that they will be, or that the right answers will be found. The political divide we started with could impose what we term ‘generational locks’ on both parties’ attempts to rise to these challenges. One well‐established lock is higher turnout at older ages, discouraging parties from focussing on younger adults’ needs. But in future, generational locks may operate more broadly, with parties highly reliant on one age group for support finding it hard to ask that group to engage in necessary trade‐offs—after all, the point of winning is that you win. So, the best strategy for voters at the other end of the age spectrum is to wait for their team to return to power. Generational locks can also operate in more complex ways. The inability or unwillingness of a party to address a generational issue can engender a lack of creativity or radicalism in their opponents, even when addressing that issue is core to their voters’ needs. And any attempt by parties to ask their own voters to make sacrifices can be easily lampooned by other parties as an abandonment of their base—an obstacle to attempts at lock‐breaking. It’s easy to see such generational locks operating in practice. Youth home ownership started falling from 1989, but continuing ownership increases for older families and their higher turnout at elections meant that it wasn’t until the financial crisis two decades later that housing moved centre‐stage. This is part of a wider trend of older wealth insiders benefitting from policy shifts when they happen, but also benefitting from the status quo. For example, there has been no growth in wealth taxation since the 1980s despite huge wealth increases over that period. Perhaps unsurprisingly, the Conservative party has chosen not to address this challenge and even actively to cut some wealth taxes, including inheritance tax. With no engagement from the Conservatives on the tricky issue of taxing assets, Labour has shied away from thinking creatively about significant reforms to wealth taxation. More recently, two clear examples of generational locks leading to bad outcomes stand out. First is the burden of welfare cuts since 2010. Reliant on older generations’ votes, the Conservatives majored on the protection or enhancement of pensioner benefits, meaning the focus of benefit cuts is on the thirty‐somethings who were worst affected by the financial crisis in their twenties. That is not to say that young people were particularly opposed to welfare cuts, even when bearing the brunt of their impact, but that the Conservative party’s reliance on older voters undermined the promise that ‘we are all in this together’ from a generational perspective. The second example is social care. All parties accept that the status quo is awful, and yet both have played a role in ensuring that no change takes place. George Osborne labelled Labour’s 2010 proposals for collective insurance drawing on the wealth in older people’s estates a ‘death tax’. Similar criticisms were then thrown in the other direction by Labour following the 2017 Conservative manifesto proposal that better‐off individuals contribute more towards their care costs from their assets. This was a case of the Conservatives asking an age group it relies on for support to engage in generational trade‐offs (admittedly, with flaws), leaving the party open to criticism from an opposition able to ‘hit them where it hurts’. In both cases politicians were (rightly) not prepared to ask younger voters to pay to resolve the situation. So, the social care crisis has dragged on. Failure in future to address these generational challenges—all the more likely if generational locks are tightened by an ongoing politics of blame or credit for the Brexit decision—would deliver similarly unattractive results. For example, the health funding challenge may echo the social care deadlock. However, widespread support for the NHS could mean that rather than nothing happening we settle for some, but insufficient, additional funding paid for in generationally unfair ways (such as national insurance on the working‐age population). The government’s announcement in June 2018 of £20 billion extra for the NHS, with no detail on the source of funds, raises this possibility. The result would be older generations let down on the quality of their healthcare, and young generations’ living standards squeezed again. On the needs of younger generations, their support for Labour been matched by a focus on some issues, such as tuition fees, but caution remains in other areas. On housing, the party went into the 2017 election with a more conservative council tax policy than in 2015, while Sadiq Khan explicitly ruled out action on green belt constraints during his London mayoral election campaign. Feeling little threat to their youth support from the Conservatives, Labour may feel worryingly comfortable in this position. Finally, it’s worth considering who will be hit hardest if generational economic challenges continue to be sidestepped. The least well‐off older people suffer most in our broken social care system, and those in younger generations without parental assets face the bleakest housing prospects. The irony might be that a partial shift in political divides from class to age puts locks on policy that mean that class‐based challenges are deepened, as well as generational ones enduring. Better outcomes While this bad equilibrium is clearly possible, it is far from certain. Luck, supply‐side responses in the form of more ambitious party strategies, or demand‐side pressure for change, could all precipitate better outcomes. Luck (or an unprecedentedly successful economic strategy) could trigger the return of meaningful productivity growth. This would directly support income progress for younger adults, help to maintain the existing welfare state without tax rises, and ease the political economy of generational trade‐offs by reducing the zero‐sum nature of choices. It is also possible that age‐based cultural cleavages will ease over time, opening up political choices. This could happen structurally as current younger cohorts age or, more optimistically, it could be because individual issues diminish in salience. On the latter, see Rob Ford and Maria Sobolewska’s discussion elsewhere in this issue of a range of such scenarios on migration. But such shifts would not be a panacea, and there may be pressures in the other direction. For example, productivity growth, while crucial in supporting young adults’ living standards, is unlikely to address a lack of asset accumulation. And while Brexit may reduce the political salience of divides on migration, it has to‐date reduced earnings growth and may entail significant new pressures on resources, exemplified, for example, by recent public commitments to a UK‐only satellite programme to replace the Galileo project. If luck does not solve these challenges then a supply‐side response from parties might, with political strategies beyond current superficial attempts such as the Conservatives’ offer of a millennial rail card and Labour’s promise to keep free pensioner bus passes. This would involve breaking out of current age coalitions to form a majority that allows the internalisation of trade‐offs in the combination of a generationally fair health and care funding solution and a wider package of reforms to make Britain work for the young. That is easier said than done. Labour may believe it has the best chance of such a breakthrough: after all, if this Parliament lasts, it will be running against a twelve‐year incumbent. However, much more sensitivity on issues of values and culture that appear to have reduced Labour’s support among older voters will likely be required. For the Conservatives, a sensible focus would be on those in their thirties and forties, rather than students who are unlikely to provide high volumes of support. Such a Conservative breakthrough hinges on youthful Labour support proving to be a life‐stage—rather than cohort—effect, with more optimistic scenarios for home ownership potentially underpinning middle‐age switching of party allegiance. Importantly, to achieve such a breakthrough, either party would need to establish a post‐Brexit political narrative that avoids all future outcomes and choices being refracted through the age cleavage that defined the Brexit decision itself. The parties could also tap into strong wells of generational harmony and support—we do not see the country as divided between generations, even if our politics is. There is already evidence of generational coalitions building for change, even where the beneficiaries are refined to a particular age group. On housing, since 2010 old‐age support for house building in the local area has doubled, while younger adults continue to back decent pensions and healthcare for the old. If nothing else, this reminds us that we live not as individuals or representatives of generations, but as parts of families. There are also many areas of policy that are far from zero‐sum, not least when the issue is not about tax and spend. For example, action to address the risks young people face in the labour market or in their pension regime needn’t have significant implications for older voters. Wider constraints, such as Labour’s loss of Scottish seats, mean we can’t necessarily rely on a government with a big majority in the years ahead. An alternative route for escaping generational locks might involve demand‐side pressures from voters encouraging a more creative politics. First, while we again have two‐party politics of a form not seen since the 1970s, a return to the longer‐term trend of political fragmentation is possible. Such a shift would add more volatility and possibly enable cross‐party and generational coalition building. Demand‐side pressure for change could also manifest itself if two‐party politics continues, by building to such an extent on specific issues that parties are forced to innovate, without owning the solutions themselves. Devices like the Turner Pensions Commission might be more frequently turned to in future. Conclusion British politics may enter the post‐Brexit era stuck in a bad generational equilibrium, with different generational blocs gripping our two main parties. That would pose impediments to delivering the changes Britain badly needs. However, now more than ever, future trajectories are uncertain. These challenges are not going away, but politics is more unstable than it seemed even a few years ago. Sometimes it feels as though our parties are just hoping something will turn up to break the deadlock. But providing a proactive response to these challenges—with honesty about the give‐and‐take required—may be how a post‐crisis, post‐Brexit political offer with a broader appeal emerges. That will entail good leadership as well as good luck. That does seem a lot to ask, but then again big change always does. Chapter extract from Britain Beyond Brexit, edited by Gavin Kelly and Nick Pearce, published on April 26th by John Wiley and Sons Ltd as part of the Political Quarterly Monograph Series. Available to pre-order. This chapter first published in The Political Quarterly.
Economic challenges Big divides in party preferences are far from new and may not be overly concerning. But in some circumstances, they can hinder desirable governing agendas—for example when a package of trade‐offs across the very groups supporting different parties is required. Therefore, the combination of these partisan divides with Britain’s generational economic challenges is far from straightforward. It is to the nature of these economic challenges we now turn. Younger generations today have access to more information, entertainment, travel and educational opportunities than ever, yet pessimism about their prospects is widespread. Behind this is the fact that the significant increase in living standards from each generation to the next that we came to expect in the twentieth century has slowed or actively gone into reverse, owing to a number of related but distinct trends. We touch on three in this paper: weak asset accumulation, a slowdown in earnings progress, and a too‐often ignored pattern of risk transfer from firms and the state onto individuals. The single biggest driver of public concern for the prospects of younger generations today is the marked slowdown in home ownership, with millennials (born 1981 to 2000) half as likely to own their home at thirty as the baby boomers (born 1946 to 1965) were. Along with a major decline in access to social housing, this means that at the age of thirty, millennials are four times more likely to be renting privately than baby boomers were. Bolstering the idea that young people are experiencing capitalism without much capital, they are also less likely to have access to generous defined benefit pension schemes that form a substantial proportion of wealth in older generations. While an increasing number of young adults are saving something into a pension (firms are now required automatically to enrol employees earning above a relatively low threshold into a pension unless they explicitly opt out), the decline of defined benefit schemes is now all but complete outside the public sector. Private sector membership around age thirty‐five more than halved for those born in the early 1980s compared to those born around 1970. While wealth accumulation challenges have been building for decades, more recent shifts have deepened generational concerns, not least the fallout from the financial crisis. Smaller than expected rises in unemployment meant that young adults have not had to deal with worklessness on the scale that previous generations or their counterparts in southern Europe faced. But unemployment increases were more skewed towards younger people than in the recessions of the 1980s and 1990s, and young workers were hardest hit by the earnings squeeze that has characterised the decade since. In the immediate aftermath of the crisis, pay fell by 11 per cent for those in their twenties compared to just 2 per cent for employees in their sixties. The subsequent pay recovery has been weakest for today’s thirty‐somethings. Weak earnings have also undermined common myths that millennials are spending a fortune on avocado toast or city breaks: while young adults were spending the same as fifty‐five to sixty‐four‐year‐olds back in 2000, they are now spending 15 per cent less. Yes, they have more access to low marginal cost technology than previous generations had at their age, but most would be happy to swap that for a house and a pay rise. The pay experience of the young is one half of a profound twenty‐first century shift, with pensioner living standards overtaking those of the working‐age population. The introduction of more generous means‐tested benefits in the mid‐2000s and, more recently, higher employment and private savings levels, mean pensioner incomes have performed strongly and pensioner poverty has fallen by a third. These welcome improvements require us to change how we think about need today. While many (particularly older, female) pensioners remain poor, working‐age and working poverty have grown just as pensioner poverty has fallen. The nature, not just the pay, of the work that younger generations are doing raises wider questions of where risk lies in our society. Market forces and policy decisions have together left younger adults bearing significant risks that their predecessors were less exposed to. Young people are disproportionately likely to work on a zero‐hours contract or find themselves in lower‐qualified self‐employment. When it comes to housing, the number of children being brought up in the insecure private rented sector has trebled in the past fifteen years. And the decline of defined benefit pensions means individuals increasingly shoulder the risk of varying investment returns while saving, as well as the uncertainty around how long they may live. The first of these is suboptimal, while the second is indefensible. Importantly, these insecurities may undermine the appetite of young people to take on more desirable discretionary risks, exemplified by millennials having been 20–25 per cent less likely to voluntarily move jobs in their twenties than was the previous generation. This has implications for their pay progression and also for the economy as a whole, as the quality of matching of individuals to jobs is reduced. It is not just challenges facing young adults that should be central to a governing agenda for post‐Brexit Britain. Another long‐looming challenge with big generational implications is now coming home to roost—the cost of maintaining our welfare state and, in particular, providing the health and care that older generations rightly expect to receive. The retirement of the large baby boomer generation means growth in the older population, even before factoring in increased life expectancy. Combined with other pressures on health costs, this means spending on health, care and social security would need to rise by £36 billion by 2030 and by £83 billion by 2040 simply to maintain existing service levels. While these funding pressures are in the future, the implications of a system under strain are visible today. Healthcare is the most pressing area of worry for British adults: 42 per cent place it in their top three concerns, significantly above international norms. Increasingly underfunded social care provision in England means the number of older people who do not get the care they need has doubled since 2010. The status quo proves forcibly that policy failures can let down older generations too. However, addressing cost pressures carries generational challenges: the usual approaches of higher borrowing or taxes on working age income would bear down on the same younger generations at the sharp end of recent living standards pressures. So, today’s challenge is to give older generations the health and care they need, deserve and expect in a generationally fair way. That is easier said than done technically, and significantly harder politically. A bad equilibrium Ways of addressing these two economic challenges should be central (although far from exclusive) components of the governing agenda into the 2020s. But we can’t be certain that they will be, or that the right answers will be found. The political divide we started with could impose what we term ‘generational locks’ on both parties’ attempts to rise to these challenges. One well‐established lock is higher turnout at older ages, discouraging parties from focussing on younger adults’ needs. But in future, generational locks may operate more broadly, with parties highly reliant on one age group for support finding it hard to ask that group to engage in necessary trade‐offs—after all, the point of winning is that you win. So, the best strategy for voters at the other end of the age spectrum is to wait for their team to return to power. Generational locks can also operate in more complex ways. The inability or unwillingness of a party to address a generational issue can engender a lack of creativity or radicalism in their opponents, even when addressing that issue is core to their voters’ needs. And any attempt by parties to ask their own voters to make sacrifices can be easily lampooned by other parties as an abandonment of their base—an obstacle to attempts at lock‐breaking. It’s easy to see such generational locks operating in practice. Youth home ownership started falling from 1989, but continuing ownership increases for older families and their higher turnout at elections meant that it wasn’t until the financial crisis two decades later that housing moved centre‐stage. This is part of a wider trend of older wealth insiders benefitting from policy shifts when they happen, but also benefitting from the status quo. For example, there has been no growth in wealth taxation since the 1980s despite huge wealth increases over that period. Perhaps unsurprisingly, the Conservative party has chosen not to address this challenge and even actively to cut some wealth taxes, including inheritance tax. With no engagement from the Conservatives on the tricky issue of taxing assets, Labour has shied away from thinking creatively about significant reforms to wealth taxation. More recently, two clear examples of generational locks leading to bad outcomes stand out. First is the burden of welfare cuts since 2010. Reliant on older generations’ votes, the Conservatives majored on the protection or enhancement of pensioner benefits, meaning the focus of benefit cuts is on the thirty‐somethings who were worst affected by the financial crisis in their twenties. That is not to say that young people were particularly opposed to welfare cuts, even when bearing the brunt of their impact, but that the Conservative party’s reliance on older voters undermined the promise that ‘we are all in this together’ from a generational perspective. The second example is social care. All parties accept that the status quo is awful, and yet both have played a role in ensuring that no change takes place. George Osborne labelled Labour’s 2010 proposals for collective insurance drawing on the wealth in older people’s estates a ‘death tax’. Similar criticisms were then thrown in the other direction by Labour following the 2017 Conservative manifesto proposal that better‐off individuals contribute more towards their care costs from their assets. This was a case of the Conservatives asking an age group it relies on for support to engage in generational trade‐offs (admittedly, with flaws), leaving the party open to criticism from an opposition able to ‘hit them where it hurts’. In both cases politicians were (rightly) not prepared to ask younger voters to pay to resolve the situation. So, the social care crisis has dragged on. Failure in future to address these generational challenges—all the more likely if generational locks are tightened by an ongoing politics of blame or credit for the Brexit decision—would deliver similarly unattractive results. For example, the health funding challenge may echo the social care deadlock. However, widespread support for the NHS could mean that rather than nothing happening we settle for some, but insufficient, additional funding paid for in generationally unfair ways (such as national insurance on the working‐age population). The government’s announcement in June 2018 of £20 billion extra for the NHS, with no detail on the source of funds, raises this possibility. The result would be older generations let down on the quality of their healthcare, and young generations’ living standards squeezed again. On the needs of younger generations, their support for Labour been matched by a focus on some issues, such as tuition fees, but caution remains in other areas. On housing, the party went into the 2017 election with a more conservative council tax policy than in 2015, while Sadiq Khan explicitly ruled out action on green belt constraints during his London mayoral election campaign. Feeling little threat to their youth support from the Conservatives, Labour may feel worryingly comfortable in this position. Finally, it’s worth considering who will be hit hardest if generational economic challenges continue to be sidestepped. The least well‐off older people suffer most in our broken social care system, and those in younger generations without parental assets face the bleakest housing prospects. The irony might be that a partial shift in political divides from class to age puts locks on policy that mean that class‐based challenges are deepened, as well as generational ones enduring. Better outcomes While this bad equilibrium is clearly possible, it is far from certain. Luck, supply‐side responses in the form of more ambitious party strategies, or demand‐side pressure for change, could all precipitate better outcomes. Luck (or an unprecedentedly successful economic strategy) could trigger the return of meaningful productivity growth. This would directly support income progress for younger adults, help to maintain the existing welfare state without tax rises, and ease the political economy of generational trade‐offs by reducing the zero‐sum nature of choices. It is also possible that age‐based cultural cleavages will ease over time, opening up political choices. This could happen structurally as current younger cohorts age or, more optimistically, it could be because individual issues diminish in salience. On the latter, see Rob Ford and Maria Sobolewska’s discussion elsewhere in this issue of a range of such scenarios on migration. But such shifts would not be a panacea, and there may be pressures in the other direction. For example, productivity growth, while crucial in supporting young adults’ living standards, is unlikely to address a lack of asset accumulation. And while Brexit may reduce the political salience of divides on migration, it has to‐date reduced earnings growth and may entail significant new pressures on resources, exemplified, for example, by recent public commitments to a UK‐only satellite programme to replace the Galileo project. If luck does not solve these challenges then a supply‐side response from parties might, with political strategies beyond current superficial attempts such as the Conservatives’ offer of a millennial rail card and Labour’s promise to keep free pensioner bus passes. This would involve breaking out of current age coalitions to form a majority that allows the internalisation of trade‐offs in the combination of a generationally fair health and care funding solution and a wider package of reforms to make Britain work for the young. That is easier said than done. Labour may believe it has the best chance of such a breakthrough: after all, if this Parliament lasts, it will be running against a twelve‐year incumbent. However, much more sensitivity on issues of values and culture that appear to have reduced Labour’s support among older voters will likely be required. For the Conservatives, a sensible focus would be on those in their thirties and forties, rather than students who are unlikely to provide high volumes of support. Such a Conservative breakthrough hinges on youthful Labour support proving to be a life‐stage—rather than cohort—effect, with more optimistic scenarios for home ownership potentially underpinning middle‐age switching of party allegiance. Importantly, to achieve such a breakthrough, either party would need to establish a post‐Brexit political narrative that avoids all future outcomes and choices being refracted through the age cleavage that defined the Brexit decision itself. The parties could also tap into strong wells of generational harmony and support—we do not see the country as divided between generations, even if our politics is. There is already evidence of generational coalitions building for change, even where the beneficiaries are refined to a particular age group. On housing, since 2010 old‐age support for house building in the local area has doubled, while younger adults continue to back decent pensions and healthcare for the old. If nothing else, this reminds us that we live not as individuals or representatives of generations, but as parts of families. There are also many areas of policy that are far from zero‐sum, not least when the issue is not about tax and spend. For example, action to address the risks young people face in the labour market or in their pension regime needn’t have significant implications for older voters. Wider constraints, such as Labour’s loss of Scottish seats, mean we can’t necessarily rely on a government with a big majority in the years ahead. An alternative route for escaping generational locks might involve demand‐side pressures from voters encouraging a more creative politics. First, while we again have two‐party politics of a form not seen since the 1970s, a return to the longer‐term trend of political fragmentation is possible. Such a shift would add more volatility and possibly enable cross‐party and generational coalition building. Demand‐side pressure for change could also manifest itself if two‐party politics continues, by building to such an extent on specific issues that parties are forced to innovate, without owning the solutions themselves. Devices like the Turner Pensions Commission might be more frequently turned to in future. Conclusion British politics may enter the post‐Brexit era stuck in a bad generational equilibrium, with different generational blocs gripping our two main parties. That would pose impediments to delivering the changes Britain badly needs. However, now more than ever, future trajectories are uncertain. These challenges are not going away, but politics is more unstable than it seemed even a few years ago. Sometimes it feels as though our parties are just hoping something will turn up to break the deadlock. But providing a proactive response to these challenges—with honesty about the give‐and‐take required—may be how a post‐crisis, post‐Brexit political offer with a broader appeal emerges. That will entail good leadership as well as good luck. That does seem a lot to ask, but then again big change always does. Chapter extract from Britain Beyond Brexit, edited by Gavin Kelly and Nick Pearce, published on April 26th by John Wiley and Sons Ltd as part of the Political Quarterly Monograph Series. Available to pre-order. This chapter first published in The Political Quarterly.
Economic challenges Big divides in party preferences are far from new and may not be overly concerning. But in some circumstances, they can hinder desirable governing agendas—for example when a package of trade‐offs across the very groups supporting different parties is required. Therefore, the combination of these partisan divides with Britain’s generational economic challenges is far from straightforward. It is to the nature of these economic challenges we now turn. Younger generations today have access to more information, entertainment, travel and educational opportunities than ever, yet pessimism about their prospects is widespread. Behind this is the fact that the significant increase in living standards from each generation to the next that we came to expect in the twentieth century has slowed or actively gone into reverse, owing to a number of related but distinct trends. We touch on three in this paper: weak asset accumulation, a slowdown in earnings progress, and a too‐often ignored pattern of risk transfer from firms and the state onto individuals. The single biggest driver of public concern for the prospects of younger generations today is the marked slowdown in home ownership, with millennials (born 1981 to 2000) half as likely to own their home at thirty as the baby boomers (born 1946 to 1965) were. Along with a major decline in access to social housing, this means that at the age of thirty, millennials are four times more likely to be renting privately than baby boomers were. Bolstering the idea that young people are experiencing capitalism without much capital, they are also less likely to have access to generous defined benefit pension schemes that form a substantial proportion of wealth in older generations. While an increasing number of young adults are saving something into a pension (firms are now required automatically to enrol employees earning above a relatively low threshold into a pension unless they explicitly opt out), the decline of defined benefit schemes is now all but complete outside the public sector. Private sector membership around age thirty‐five more than halved for those born in the early 1980s compared to those born around 1970. While wealth accumulation challenges have been building for decades, more recent shifts have deepened generational concerns, not least the fallout from the financial crisis. Smaller than expected rises in unemployment meant that young adults have not had to deal with worklessness on the scale that previous generations or their counterparts in southern Europe faced. But unemployment increases were more skewed towards younger people than in the recessions of the 1980s and 1990s, and young workers were hardest hit by the earnings squeeze that has characterised the decade since. In the immediate aftermath of the crisis, pay fell by 11 per cent for those in their twenties compared to just 2 per cent for employees in their sixties. The subsequent pay recovery has been weakest for today’s thirty‐somethings. Weak earnings have also undermined common myths that millennials are spending a fortune on avocado toast or city breaks: while young adults were spending the same as fifty‐five to sixty‐four‐year‐olds back in 2000, they are now spending 15 per cent less. Yes, they have more access to low marginal cost technology than previous generations had at their age, but most would be happy to swap that for a house and a pay rise. The pay experience of the young is one half of a profound twenty‐first century shift, with pensioner living standards overtaking those of the working‐age population. The introduction of more generous means‐tested benefits in the mid‐2000s and, more recently, higher employment and private savings levels, mean pensioner incomes have performed strongly and pensioner poverty has fallen by a third. These welcome improvements require us to change how we think about need today. While many (particularly older, female) pensioners remain poor, working‐age and working poverty have grown just as pensioner poverty has fallen. The nature, not just the pay, of the work that younger generations are doing raises wider questions of where risk lies in our society. Market forces and policy decisions have together left younger adults bearing significant risks that their predecessors were less exposed to. Young people are disproportionately likely to work on a zero‐hours contract or find themselves in lower‐qualified self‐employment. When it comes to housing, the number of children being brought up in the insecure private rented sector has trebled in the past fifteen years. And the decline of defined benefit pensions means individuals increasingly shoulder the risk of varying investment returns while saving, as well as the uncertainty around how long they may live. The first of these is suboptimal, while the second is indefensible. Importantly, these insecurities may undermine the appetite of young people to take on more desirable discretionary risks, exemplified by millennials having been 20–25 per cent less likely to voluntarily move jobs in their twenties than was the previous generation. This has implications for their pay progression and also for the economy as a whole, as the quality of matching of individuals to jobs is reduced. It is not just challenges facing young adults that should be central to a governing agenda for post‐Brexit Britain. Another long‐looming challenge with big generational implications is now coming home to roost—the cost of maintaining our welfare state and, in particular, providing the health and care that older generations rightly expect to receive. The retirement of the large baby boomer generation means growth in the older population, even before factoring in increased life expectancy. Combined with other pressures on health costs, this means spending on health, care and social security would need to rise by £36 billion by 2030 and by £83 billion by 2040 simply to maintain existing service levels. While these funding pressures are in the future, the implications of a system under strain are visible today. Healthcare is the most pressing area of worry for British adults: 42 per cent place it in their top three concerns, significantly above international norms. Increasingly underfunded social care provision in England means the number of older people who do not get the care they need has doubled since 2010. The status quo proves forcibly that policy failures can let down older generations too. However, addressing cost pressures carries generational challenges: the usual approaches of higher borrowing or taxes on working age income would bear down on the same younger generations at the sharp end of recent living standards pressures. So, today’s challenge is to give older generations the health and care they need, deserve and expect in a generationally fair way. That is easier said than done technically, and significantly harder politically. A bad equilibrium Ways of addressing these two economic challenges should be central (although far from exclusive) components of the governing agenda into the 2020s. But we can’t be certain that they will be, or that the right answers will be found. The political divide we started with could impose what we term ‘generational locks’ on both parties’ attempts to rise to these challenges. One well‐established lock is higher turnout at older ages, discouraging parties from focussing on younger adults’ needs. But in future, generational locks may operate more broadly, with parties highly reliant on one age group for support finding it hard to ask that group to engage in necessary trade‐offs—after all, the point of winning is that you win. So, the best strategy for voters at the other end of the age spectrum is to wait for their team to return to power. Generational locks can also operate in more complex ways. The inability or unwillingness of a party to address a generational issue can engender a lack of creativity or radicalism in their opponents, even when addressing that issue is core to their voters’ needs. And any attempt by parties to ask their own voters to make sacrifices can be easily lampooned by other parties as an abandonment of their base—an obstacle to attempts at lock‐breaking. It’s easy to see such generational locks operating in practice. Youth home ownership started falling from 1989, but continuing ownership increases for older families and their higher turnout at elections meant that it wasn’t until the financial crisis two decades later that housing moved centre‐stage. This is part of a wider trend of older wealth insiders benefitting from policy shifts when they happen, but also benefitting from the status quo. For example, there has been no growth in wealth taxation since the 1980s despite huge wealth increases over that period. Perhaps unsurprisingly, the Conservative party has chosen not to address this challenge and even actively to cut some wealth taxes, including inheritance tax. With no engagement from the Conservatives on the tricky issue of taxing assets, Labour has shied away from thinking creatively about significant reforms to wealth taxation. More recently, two clear examples of generational locks leading to bad outcomes stand out. First is the burden of welfare cuts since 2010. Reliant on older generations’ votes, the Conservatives majored on the protection or enhancement of pensioner benefits, meaning the focus of benefit cuts is on the thirty‐somethings who were worst affected by the financial crisis in their twenties. That is not to say that young people were particularly opposed to welfare cuts, even when bearing the brunt of their impact, but that the Conservative party’s reliance on older voters undermined the promise that ‘we are all in this together’ from a generational perspective. The second example is social care. All parties accept that the status quo is awful, and yet both have played a role in ensuring that no change takes place. George Osborne labelled Labour’s 2010 proposals for collective insurance drawing on the wealth in older people’s estates a ‘death tax’. Similar criticisms were then thrown in the other direction by Labour following the 2017 Conservative manifesto proposal that better‐off individuals contribute more towards their care costs from their assets. This was a case of the Conservatives asking an age group it relies on for support to engage in generational trade‐offs (admittedly, with flaws), leaving the party open to criticism from an opposition able to ‘hit them where it hurts’. In both cases politicians were (rightly) not prepared to ask younger voters to pay to resolve the situation. So, the social care crisis has dragged on. Failure in future to address these generational challenges—all the more likely if generational locks are tightened by an ongoing politics of blame or credit for the Brexit decision—would deliver similarly unattractive results. For example, the health funding challenge may echo the social care deadlock. However, widespread support for the NHS could mean that rather than nothing happening we settle for some, but insufficient, additional funding paid for in generationally unfair ways (such as national insurance on the working‐age population). The government’s announcement in June 2018 of £20 billion extra for the NHS, with no detail on the source of funds, raises this possibility. The result would be older generations let down on the quality of their healthcare, and young generations’ living standards squeezed again. On the needs of younger generations, their support for Labour been matched by a focus on some issues, such as tuition fees, but caution remains in other areas. On housing, the party went into the 2017 election with a more conservative council tax policy than in 2015, while Sadiq Khan explicitly ruled out action on green belt constraints during his London mayoral election campaign. Feeling little threat to their youth support from the Conservatives, Labour may feel worryingly comfortable in this position. Finally, it’s worth considering who will be hit hardest if generational economic challenges continue to be sidestepped. The least well‐off older people suffer most in our broken social care system, and those in younger generations without parental assets face the bleakest housing prospects. The irony might be that a partial shift in political divides from class to age puts locks on policy that mean that class‐based challenges are deepened, as well as generational ones enduring. Better outcomes While this bad equilibrium is clearly possible, it is far from certain. Luck, supply‐side responses in the form of more ambitious party strategies, or demand‐side pressure for change, could all precipitate better outcomes. Luck (or an unprecedentedly successful economic strategy) could trigger the return of meaningful productivity growth. This would directly support income progress for younger adults, help to maintain the existing welfare state without tax rises, and ease the political economy of generational trade‐offs by reducing the zero‐sum nature of choices. It is also possible that age‐based cultural cleavages will ease over time, opening up political choices. This could happen structurally as current younger cohorts age or, more optimistically, it could be because individual issues diminish in salience. On the latter, see Rob Ford and Maria Sobolewska’s discussion elsewhere in this issue of a range of such scenarios on migration. But such shifts would not be a panacea, and there may be pressures in the other direction. For example, productivity growth, while crucial in supporting young adults’ living standards, is unlikely to address a lack of asset accumulation. And while Brexit may reduce the political salience of divides on migration, it has to‐date reduced earnings growth and may entail significant new pressures on resources, exemplified, for example, by recent public commitments to a UK‐only satellite programme to replace the Galileo project. If luck does not solve these challenges then a supply‐side response from parties might, with political strategies beyond current superficial attempts such as the Conservatives’ offer of a millennial rail card and Labour’s promise to keep free pensioner bus passes. This would involve breaking out of current age coalitions to form a majority that allows the internalisation of trade‐offs in the combination of a generationally fair health and care funding solution and a wider package of reforms to make Britain work for the young. That is easier said than done. Labour may believe it has the best chance of such a breakthrough: after all, if this Parliament lasts, it will be running against a twelve‐year incumbent. However, much more sensitivity on issues of values and culture that appear to have reduced Labour’s support among older voters will likely be required. For the Conservatives, a sensible focus would be on those in their thirties and forties, rather than students who are unlikely to provide high volumes of support. Such a Conservative breakthrough hinges on youthful Labour support proving to be a life‐stage—rather than cohort—effect, with more optimistic scenarios for home ownership potentially underpinning middle‐age switching of party allegiance. Importantly, to achieve such a breakthrough, either party would need to establish a post‐Brexit political narrative that avoids all future outcomes and choices being refracted through the age cleavage that defined the Brexit decision itself. The parties could also tap into strong wells of generational harmony and support—we do not see the country as divided between generations, even if our politics is. There is already evidence of generational coalitions building for change, even where the beneficiaries are refined to a particular age group. On housing, since 2010 old‐age support for house building in the local area has doubled, while younger adults continue to back decent pensions and healthcare for the old. If nothing else, this reminds us that we live not as individuals or representatives of generations, but as parts of families. There are also many areas of policy that are far from zero‐sum, not least when the issue is not about tax and spend. For example, action to address the risks young people face in the labour market or in their pension regime needn’t have significant implications for older voters. Wider constraints, such as Labour’s loss of Scottish seats, mean we can’t necessarily rely on a government with a big majority in the years ahead. An alternative route for escaping generational locks might involve demand‐side pressures from voters encouraging a more creative politics. First, while we again have two‐party politics of a form not seen since the 1970s, a return to the longer‐term trend of political fragmentation is possible. Such a shift would add more volatility and possibly enable cross‐party and generational coalition building. Demand‐side pressure for change could also manifest itself if two‐party politics continues, by building to such an extent on specific issues that parties are forced to innovate, without owning the solutions themselves. Devices like the Turner Pensions Commission might be more frequently turned to in future. Conclusion British politics may enter the post‐Brexit era stuck in a bad generational equilibrium, with different generational blocs gripping our two main parties. That would pose impediments to delivering the changes Britain badly needs. However, now more than ever, future trajectories are uncertain. These challenges are not going away, but politics is more unstable than it seemed even a few years ago. Sometimes it feels as though our parties are just hoping something will turn up to break the deadlock. But providing a proactive response to these challenges—with honesty about the give‐and‐take required—may be how a post‐crisis, post‐Brexit political offer with a broader appeal emerges. That will entail good leadership as well as good luck. That does seem a lot to ask, but then again big change always does. Chapter extract from Britain Beyond Brexit, edited by Gavin Kelly and Nick Pearce, published on April 26th by John Wiley and Sons Ltd as part of the Political Quarterly Monograph Series. Available to pre-order. This chapter first published in The Political Quarterly.
Bolstering the idea that young people are experiencing capitalism without much capital, they are also less likely to have access to generous defined benefit pension schemes that form a substantial proportion of wealth in older generations. While an increasing number of young adults are saving something into a pension (firms are now required automatically to enrol employees earning above a relatively low threshold into a pension unless they explicitly opt out), the decline of defined benefit schemes is now all but complete outside the public sector. Private sector membership around age thirty‐five more than halved for those born in the early 1980s compared to those born around 1970. While wealth accumulation challenges have been building for decades, more recent shifts have deepened generational concerns, not least the fallout from the financial crisis. Smaller than expected rises in unemployment meant that young adults have not had to deal with worklessness on the scale that previous generations or their counterparts in southern Europe faced. But unemployment increases were more skewed towards younger people than in the recessions of the 1980s and 1990s, and young workers were hardest hit by the earnings squeeze that has characterised the decade since. In the immediate aftermath of the crisis, pay fell by 11 per cent for those in their twenties compared to just 2 per cent for employees in their sixties. The subsequent pay recovery has been weakest for today’s thirty‐somethings. Weak earnings have also undermined common myths that millennials are spending a fortune on avocado toast or city breaks: while young adults were spending the same as fifty‐five to sixty‐four‐year‐olds back in 2000, they are now spending 15 per cent less. Yes, they have more access to low marginal cost technology than previous generations had at their age, but most would be happy to swap that for a house and a pay rise. The pay experience of the young is one half of a profound twenty‐first century shift, with pensioner living standards overtaking those of the working‐age population. The introduction of more generous means‐tested benefits in the mid‐2000s and, more recently, higher employment and private savings levels, mean pensioner incomes have performed strongly and pensioner poverty has fallen by a third. These welcome improvements require us to change how we think about need today. While many (particularly older, female) pensioners remain poor, working‐age and working poverty have grown just as pensioner poverty has fallen. The nature, not just the pay, of the work that younger generations are doing raises wider questions of where risk lies in our society. Market forces and policy decisions have together left younger adults bearing significant risks that their predecessors were less exposed to. Young people are disproportionately likely to work on a zero‐hours contract or find themselves in lower‐qualified self‐employment. When it comes to housing, the number of children being brought up in the insecure private rented sector has trebled in the past fifteen years. And the decline of defined benefit pensions means individuals increasingly shoulder the risk of varying investment returns while saving, as well as the uncertainty around how long they may live. The first of these is suboptimal, while the second is indefensible. Importantly, these insecurities may undermine the appetite of young people to take on more desirable discretionary risks, exemplified by millennials having been 20–25 per cent less likely to voluntarily move jobs in their twenties than was the previous generation. This has implications for their pay progression and also for the economy as a whole, as the quality of matching of individuals to jobs is reduced. It is not just challenges facing young adults that should be central to a governing agenda for post‐Brexit Britain. Another long‐looming challenge with big generational implications is now coming home to roost—the cost of maintaining our welfare state and, in particular, providing the health and care that older generations rightly expect to receive. The retirement of the large baby boomer generation means growth in the older population, even before factoring in increased life expectancy. Combined with other pressures on health costs, this means spending on health, care and social security would need to rise by £36 billion by 2030 and by £83 billion by 2040 simply to maintain existing service levels. While these funding pressures are in the future, the implications of a system under strain are visible today. Healthcare is the most pressing area of worry for British adults: 42 per cent place it in their top three concerns, significantly above international norms. Increasingly underfunded social care provision in England means the number of older people who do not get the care they need has doubled since 2010. The status quo proves forcibly that policy failures can let down older generations too. However, addressing cost pressures carries generational challenges: the usual approaches of higher borrowing or taxes on working age income would bear down on the same younger generations at the sharp end of recent living standards pressures. So, today’s challenge is to give older generations the health and care they need, deserve and expect in a generationally fair way. That is easier said than done technically, and significantly harder politically. A bad equilibrium Ways of addressing these two economic challenges should be central (although far from exclusive) components of the governing agenda into the 2020s. But we can’t be certain that they will be, or that the right answers will be found. The political divide we started with could impose what we term ‘generational locks’ on both parties’ attempts to rise to these challenges. One well‐established lock is higher turnout at older ages, discouraging parties from focussing on younger adults’ needs. But in future, generational locks may operate more broadly, with parties highly reliant on one age group for support finding it hard to ask that group to engage in necessary trade‐offs—after all, the point of winning is that you win. So, the best strategy for voters at the other end of the age spectrum is to wait for their team to return to power. Generational locks can also operate in more complex ways. The inability or unwillingness of a party to address a generational issue can engender a lack of creativity or radicalism in their opponents, even when addressing that issue is core to their voters’ needs. And any attempt by parties to ask their own voters to make sacrifices can be easily lampooned by other parties as an abandonment of their base—an obstacle to attempts at lock‐breaking. It’s easy to see such generational locks operating in practice. Youth home ownership started falling from 1989, but continuing ownership increases for older families and their higher turnout at elections meant that it wasn’t until the financial crisis two decades later that housing moved centre‐stage. This is part of a wider trend of older wealth insiders benefitting from policy shifts when they happen, but also benefitting from the status quo. For example, there has been no growth in wealth taxation since the 1980s despite huge wealth increases over that period. Perhaps unsurprisingly, the Conservative party has chosen not to address this challenge and even actively to cut some wealth taxes, including inheritance tax. With no engagement from the Conservatives on the tricky issue of taxing assets, Labour has shied away from thinking creatively about significant reforms to wealth taxation. More recently, two clear examples of generational locks leading to bad outcomes stand out. First is the burden of welfare cuts since 2010. Reliant on older generations’ votes, the Conservatives majored on the protection or enhancement of pensioner benefits, meaning the focus of benefit cuts is on the thirty‐somethings who were worst affected by the financial crisis in their twenties. That is not to say that young people were particularly opposed to welfare cuts, even when bearing the brunt of their impact, but that the Conservative party’s reliance on older voters undermined the promise that ‘we are all in this together’ from a generational perspective. The second example is social care. All parties accept that the status quo is awful, and yet both have played a role in ensuring that no change takes place. George Osborne labelled Labour’s 2010 proposals for collective insurance drawing on the wealth in older people’s estates a ‘death tax’. Similar criticisms were then thrown in the other direction by Labour following the 2017 Conservative manifesto proposal that better‐off individuals contribute more towards their care costs from their assets. This was a case of the Conservatives asking an age group it relies on for support to engage in generational trade‐offs (admittedly, with flaws), leaving the party open to criticism from an opposition able to ‘hit them where it hurts’. In both cases politicians were (rightly) not prepared to ask younger voters to pay to resolve the situation. So, the social care crisis has dragged on. Failure in future to address these generational challenges—all the more likely if generational locks are tightened by an ongoing politics of blame or credit for the Brexit decision—would deliver similarly unattractive results. For example, the health funding challenge may echo the social care deadlock. However, widespread support for the NHS could mean that rather than nothing happening we settle for some, but insufficient, additional funding paid for in generationally unfair ways (such as national insurance on the working‐age population). The government’s announcement in June 2018 of £20 billion extra for the NHS, with no detail on the source of funds, raises this possibility. The result would be older generations let down on the quality of their healthcare, and young generations’ living standards squeezed again. On the needs of younger generations, their support for Labour been matched by a focus on some issues, such as tuition fees, but caution remains in other areas. On housing, the party went into the 2017 election with a more conservative council tax policy than in 2015, while Sadiq Khan explicitly ruled out action on green belt constraints during his London mayoral election campaign. Feeling little threat to their youth support from the Conservatives, Labour may feel worryingly comfortable in this position. Finally, it’s worth considering who will be hit hardest if generational economic challenges continue to be sidestepped. The least well‐off older people suffer most in our broken social care system, and those in younger generations without parental assets face the bleakest housing prospects. The irony might be that a partial shift in political divides from class to age puts locks on policy that mean that class‐based challenges are deepened, as well as generational ones enduring. Better outcomes While this bad equilibrium is clearly possible, it is far from certain. Luck, supply‐side responses in the form of more ambitious party strategies, or demand‐side pressure for change, could all precipitate better outcomes. Luck (or an unprecedentedly successful economic strategy) could trigger the return of meaningful productivity growth. This would directly support income progress for younger adults, help to maintain the existing welfare state without tax rises, and ease the political economy of generational trade‐offs by reducing the zero‐sum nature of choices. It is also possible that age‐based cultural cleavages will ease over time, opening up political choices. This could happen structurally as current younger cohorts age or, more optimistically, it could be because individual issues diminish in salience. On the latter, see Rob Ford and Maria Sobolewska’s discussion elsewhere in this issue of a range of such scenarios on migration. But such shifts would not be a panacea, and there may be pressures in the other direction. For example, productivity growth, while crucial in supporting young adults’ living standards, is unlikely to address a lack of asset accumulation. And while Brexit may reduce the political salience of divides on migration, it has to‐date reduced earnings growth and may entail significant new pressures on resources, exemplified, for example, by recent public commitments to a UK‐only satellite programme to replace the Galileo project. If luck does not solve these challenges then a supply‐side response from parties might, with political strategies beyond current superficial attempts such as the Conservatives’ offer of a millennial rail card and Labour’s promise to keep free pensioner bus passes. This would involve breaking out of current age coalitions to form a majority that allows the internalisation of trade‐offs in the combination of a generationally fair health and care funding solution and a wider package of reforms to make Britain work for the young. That is easier said than done. Labour may believe it has the best chance of such a breakthrough: after all, if this Parliament lasts, it will be running against a twelve‐year incumbent. However, much more sensitivity on issues of values and culture that appear to have reduced Labour’s support among older voters will likely be required. For the Conservatives, a sensible focus would be on those in their thirties and forties, rather than students who are unlikely to provide high volumes of support. Such a Conservative breakthrough hinges on youthful Labour support proving to be a life‐stage—rather than cohort—effect, with more optimistic scenarios for home ownership potentially underpinning middle‐age switching of party allegiance. Importantly, to achieve such a breakthrough, either party would need to establish a post‐Brexit political narrative that avoids all future outcomes and choices being refracted through the age cleavage that defined the Brexit decision itself. The parties could also tap into strong wells of generational harmony and support—we do not see the country as divided between generations, even if our politics is. There is already evidence of generational coalitions building for change, even where the beneficiaries are refined to a particular age group. On housing, since 2010 old‐age support for house building in the local area has doubled, while younger adults continue to back decent pensions and healthcare for the old. If nothing else, this reminds us that we live not as individuals or representatives of generations, but as parts of families. There are also many areas of policy that are far from zero‐sum, not least when the issue is not about tax and spend. For example, action to address the risks young people face in the labour market or in their pension regime needn’t have significant implications for older voters. Wider constraints, such as Labour’s loss of Scottish seats, mean we can’t necessarily rely on a government with a big majority in the years ahead. An alternative route for escaping generational locks might involve demand‐side pressures from voters encouraging a more creative politics. First, while we again have two‐party politics of a form not seen since the 1970s, a return to the longer‐term trend of political fragmentation is possible. Such a shift would add more volatility and possibly enable cross‐party and generational coalition building. Demand‐side pressure for change could also manifest itself if two‐party politics continues, by building to such an extent on specific issues that parties are forced to innovate, without owning the solutions themselves. Devices like the Turner Pensions Commission might be more frequently turned to in future. Conclusion British politics may enter the post‐Brexit era stuck in a bad generational equilibrium, with different generational blocs gripping our two main parties. That would pose impediments to delivering the changes Britain badly needs. However, now more than ever, future trajectories are uncertain. These challenges are not going away, but politics is more unstable than it seemed even a few years ago. Sometimes it feels as though our parties are just hoping something will turn up to break the deadlock. But providing a proactive response to these challenges—with honesty about the give‐and‐take required—may be how a post‐crisis, post‐Brexit political offer with a broader appeal emerges. That will entail good leadership as well as good luck. That does seem a lot to ask, but then again big change always does. Chapter extract from Britain Beyond Brexit, edited by Gavin Kelly and Nick Pearce, published on April 26th by John Wiley and Sons Ltd as part of the Political Quarterly Monograph Series. Available to pre-order. This chapter first published in The Political Quarterly.
Bolstering the idea that young people are experiencing capitalism without much capital, they are also less likely to have access to generous defined benefit pension schemes that form a substantial proportion of wealth in older generations. While an increasing number of young adults are saving something into a pension (firms are now required automatically to enrol employees earning above a relatively low threshold into a pension unless they explicitly opt out), the decline of defined benefit schemes is now all but complete outside the public sector. Private sector membership around age thirty‐five more than halved for those born in the early 1980s compared to those born around 1970. While wealth accumulation challenges have been building for decades, more recent shifts have deepened generational concerns, not least the fallout from the financial crisis. Smaller than expected rises in unemployment meant that young adults have not had to deal with worklessness on the scale that previous generations or their counterparts in southern Europe faced. But unemployment increases were more skewed towards younger people than in the recessions of the 1980s and 1990s, and young workers were hardest hit by the earnings squeeze that has characterised the decade since. In the immediate aftermath of the crisis, pay fell by 11 per cent for those in their twenties compared to just 2 per cent for employees in their sixties. The subsequent pay recovery has been weakest for today’s thirty‐somethings. Weak earnings have also undermined common myths that millennials are spending a fortune on avocado toast or city breaks: while young adults were spending the same as fifty‐five to sixty‐four‐year‐olds back in 2000, they are now spending 15 per cent less. Yes, they have more access to low marginal cost technology than previous generations had at their age, but most would be happy to swap that for a house and a pay rise. The pay experience of the young is one half of a profound twenty‐first century shift, with pensioner living standards overtaking those of the working‐age population. The introduction of more generous means‐tested benefits in the mid‐2000s and, more recently, higher employment and private savings levels, mean pensioner incomes have performed strongly and pensioner poverty has fallen by a third. These welcome improvements require us to change how we think about need today. While many (particularly older, female) pensioners remain poor, working‐age and working poverty have grown just as pensioner poverty has fallen. The nature, not just the pay, of the work that younger generations are doing raises wider questions of where risk lies in our society. Market forces and policy decisions have together left younger adults bearing significant risks that their predecessors were less exposed to. Young people are disproportionately likely to work on a zero‐hours contract or find themselves in lower‐qualified self‐employment. When it comes to housing, the number of children being brought up in the insecure private rented sector has trebled in the past fifteen years. And the decline of defined benefit pensions means individuals increasingly shoulder the risk of varying investment returns while saving, as well as the uncertainty around how long they may live. The first of these is suboptimal, while the second is indefensible. Importantly, these insecurities may undermine the appetite of young people to take on more desirable discretionary risks, exemplified by millennials having been 20–25 per cent less likely to voluntarily move jobs in their twenties than was the previous generation. This has implications for their pay progression and also for the economy as a whole, as the quality of matching of individuals to jobs is reduced. It is not just challenges facing young adults that should be central to a governing agenda for post‐Brexit Britain. Another long‐looming challenge with big generational implications is now coming home to roost—the cost of maintaining our welfare state and, in particular, providing the health and care that older generations rightly expect to receive. The retirement of the large baby boomer generation means growth in the older population, even before factoring in increased life expectancy. Combined with other pressures on health costs, this means spending on health, care and social security would need to rise by £36 billion by 2030 and by £83 billion by 2040 simply to maintain existing service levels. While these funding pressures are in the future, the implications of a system under strain are visible today. Healthcare is the most pressing area of worry for British adults: 42 per cent place it in their top three concerns, significantly above international norms. Increasingly underfunded social care provision in England means the number of older people who do not get the care they need has doubled since 2010. The status quo proves forcibly that policy failures can let down older generations too. However, addressing cost pressures carries generational challenges: the usual approaches of higher borrowing or taxes on working age income would bear down on the same younger generations at the sharp end of recent living standards pressures. So, today’s challenge is to give older generations the health and care they need, deserve and expect in a generationally fair way. That is easier said than done technically, and significantly harder politically. A bad equilibrium Ways of addressing these two economic challenges should be central (although far from exclusive) components of the governing agenda into the 2020s. But we can’t be certain that they will be, or that the right answers will be found. The political divide we started with could impose what we term ‘generational locks’ on both parties’ attempts to rise to these challenges. One well‐established lock is higher turnout at older ages, discouraging parties from focussing on younger adults’ needs. But in future, generational locks may operate more broadly, with parties highly reliant on one age group for support finding it hard to ask that group to engage in necessary trade‐offs—after all, the point of winning is that you win. So, the best strategy for voters at the other end of the age spectrum is to wait for their team to return to power. Generational locks can also operate in more complex ways. The inability or unwillingness of a party to address a generational issue can engender a lack of creativity or radicalism in their opponents, even when addressing that issue is core to their voters’ needs. And any attempt by parties to ask their own voters to make sacrifices can be easily lampooned by other parties as an abandonment of their base—an obstacle to attempts at lock‐breaking. It’s easy to see such generational locks operating in practice. Youth home ownership started falling from 1989, but continuing ownership increases for older families and their higher turnout at elections meant that it wasn’t until the financial crisis two decades later that housing moved centre‐stage. This is part of a wider trend of older wealth insiders benefitting from policy shifts when they happen, but also benefitting from the status quo. For example, there has been no growth in wealth taxation since the 1980s despite huge wealth increases over that period. Perhaps unsurprisingly, the Conservative party has chosen not to address this challenge and even actively to cut some wealth taxes, including inheritance tax. With no engagement from the Conservatives on the tricky issue of taxing assets, Labour has shied away from thinking creatively about significant reforms to wealth taxation. More recently, two clear examples of generational locks leading to bad outcomes stand out. First is the burden of welfare cuts since 2010. Reliant on older generations’ votes, the Conservatives majored on the protection or enhancement of pensioner benefits, meaning the focus of benefit cuts is on the thirty‐somethings who were worst affected by the financial crisis in their twenties. That is not to say that young people were particularly opposed to welfare cuts, even when bearing the brunt of their impact, but that the Conservative party’s reliance on older voters undermined the promise that ‘we are all in this together’ from a generational perspective. The second example is social care. All parties accept that the status quo is awful, and yet both have played a role in ensuring that no change takes place. George Osborne labelled Labour’s 2010 proposals for collective insurance drawing on the wealth in older people’s estates a ‘death tax’. Similar criticisms were then thrown in the other direction by Labour following the 2017 Conservative manifesto proposal that better‐off individuals contribute more towards their care costs from their assets. This was a case of the Conservatives asking an age group it relies on for support to engage in generational trade‐offs (admittedly, with flaws), leaving the party open to criticism from an opposition able to ‘hit them where it hurts’. In both cases politicians were (rightly) not prepared to ask younger voters to pay to resolve the situation. So, the social care crisis has dragged on. Failure in future to address these generational challenges—all the more likely if generational locks are tightened by an ongoing politics of blame or credit for the Brexit decision—would deliver similarly unattractive results. For example, the health funding challenge may echo the social care deadlock. However, widespread support for the NHS could mean that rather than nothing happening we settle for some, but insufficient, additional funding paid for in generationally unfair ways (such as national insurance on the working‐age population). The government’s announcement in June 2018 of £20 billion extra for the NHS, with no detail on the source of funds, raises this possibility. The result would be older generations let down on the quality of their healthcare, and young generations’ living standards squeezed again. On the needs of younger generations, their support for Labour been matched by a focus on some issues, such as tuition fees, but caution remains in other areas. On housing, the party went into the 2017 election with a more conservative council tax policy than in 2015, while Sadiq Khan explicitly ruled out action on green belt constraints during his London mayoral election campaign. Feeling little threat to their youth support from the Conservatives, Labour may feel worryingly comfortable in this position. Finally, it’s worth considering who will be hit hardest if generational economic challenges continue to be sidestepped. The least well‐off older people suffer most in our broken social care system, and those in younger generations without parental assets face the bleakest housing prospects. The irony might be that a partial shift in political divides from class to age puts locks on policy that mean that class‐based challenges are deepened, as well as generational ones enduring. Better outcomes While this bad equilibrium is clearly possible, it is far from certain. Luck, supply‐side responses in the form of more ambitious party strategies, or demand‐side pressure for change, could all precipitate better outcomes. Luck (or an unprecedentedly successful economic strategy) could trigger the return of meaningful productivity growth. This would directly support income progress for younger adults, help to maintain the existing welfare state without tax rises, and ease the political economy of generational trade‐offs by reducing the zero‐sum nature of choices. It is also possible that age‐based cultural cleavages will ease over time, opening up political choices. This could happen structurally as current younger cohorts age or, more optimistically, it could be because individual issues diminish in salience. On the latter, see Rob Ford and Maria Sobolewska’s discussion elsewhere in this issue of a range of such scenarios on migration. But such shifts would not be a panacea, and there may be pressures in the other direction. For example, productivity growth, while crucial in supporting young adults’ living standards, is unlikely to address a lack of asset accumulation. And while Brexit may reduce the political salience of divides on migration, it has to‐date reduced earnings growth and may entail significant new pressures on resources, exemplified, for example, by recent public commitments to a UK‐only satellite programme to replace the Galileo project. If luck does not solve these challenges then a supply‐side response from parties might, with political strategies beyond current superficial attempts such as the Conservatives’ offer of a millennial rail card and Labour’s promise to keep free pensioner bus passes. This would involve breaking out of current age coalitions to form a majority that allows the internalisation of trade‐offs in the combination of a generationally fair health and care funding solution and a wider package of reforms to make Britain work for the young. That is easier said than done. Labour may believe it has the best chance of such a breakthrough: after all, if this Parliament lasts, it will be running against a twelve‐year incumbent. However, much more sensitivity on issues of values and culture that appear to have reduced Labour’s support among older voters will likely be required. For the Conservatives, a sensible focus would be on those in their thirties and forties, rather than students who are unlikely to provide high volumes of support. Such a Conservative breakthrough hinges on youthful Labour support proving to be a life‐stage—rather than cohort—effect, with more optimistic scenarios for home ownership potentially underpinning middle‐age switching of party allegiance. Importantly, to achieve such a breakthrough, either party would need to establish a post‐Brexit political narrative that avoids all future outcomes and choices being refracted through the age cleavage that defined the Brexit decision itself. The parties could also tap into strong wells of generational harmony and support—we do not see the country as divided between generations, even if our politics is. There is already evidence of generational coalitions building for change, even where the beneficiaries are refined to a particular age group. On housing, since 2010 old‐age support for house building in the local area has doubled, while younger adults continue to back decent pensions and healthcare for the old. If nothing else, this reminds us that we live not as individuals or representatives of generations, but as parts of families. There are also many areas of policy that are far from zero‐sum, not least when the issue is not about tax and spend. For example, action to address the risks young people face in the labour market or in their pension regime needn’t have significant implications for older voters. Wider constraints, such as Labour’s loss of Scottish seats, mean we can’t necessarily rely on a government with a big majority in the years ahead. An alternative route for escaping generational locks might involve demand‐side pressures from voters encouraging a more creative politics. First, while we again have two‐party politics of a form not seen since the 1970s, a return to the longer‐term trend of political fragmentation is possible. Such a shift would add more volatility and possibly enable cross‐party and generational coalition building. Demand‐side pressure for change could also manifest itself if two‐party politics continues, by building to such an extent on specific issues that parties are forced to innovate, without owning the solutions themselves. Devices like the Turner Pensions Commission might be more frequently turned to in future. Conclusion British politics may enter the post‐Brexit era stuck in a bad generational equilibrium, with different generational blocs gripping our two main parties. That would pose impediments to delivering the changes Britain badly needs. However, now more than ever, future trajectories are uncertain. These challenges are not going away, but politics is more unstable than it seemed even a few years ago. Sometimes it feels as though our parties are just hoping something will turn up to break the deadlock. But providing a proactive response to these challenges—with honesty about the give‐and‐take required—may be how a post‐crisis, post‐Brexit political offer with a broader appeal emerges. That will entail good leadership as well as good luck. That does seem a lot to ask, but then again big change always does. Chapter extract from Britain Beyond Brexit, edited by Gavin Kelly and Nick Pearce, published on April 26th by John Wiley and Sons Ltd as part of the Political Quarterly Monograph Series. Available to pre-order. This chapter first published in The Political Quarterly.
Weak earnings have also undermined common myths that millennials are spending a fortune on avocado toast or city breaks: while young adults were spending the same as fifty‐five to sixty‐four‐year‐olds back in 2000, they are now spending 15 per cent less. Yes, they have more access to low marginal cost technology than previous generations had at their age, but most would be happy to swap that for a house and a pay rise. The pay experience of the young is one half of a profound twenty‐first century shift, with pensioner living standards overtaking those of the working‐age population. The introduction of more generous means‐tested benefits in the mid‐2000s and, more recently, higher employment and private savings levels, mean pensioner incomes have performed strongly and pensioner poverty has fallen by a third. These welcome improvements require us to change how we think about need today. While many (particularly older, female) pensioners remain poor, working‐age and working poverty have grown just as pensioner poverty has fallen. The nature, not just the pay, of the work that younger generations are doing raises wider questions of where risk lies in our society. Market forces and policy decisions have together left younger adults bearing significant risks that their predecessors were less exposed to. Young people are disproportionately likely to work on a zero‐hours contract or find themselves in lower‐qualified self‐employment. When it comes to housing, the number of children being brought up in the insecure private rented sector has trebled in the past fifteen years. And the decline of defined benefit pensions means individuals increasingly shoulder the risk of varying investment returns while saving, as well as the uncertainty around how long they may live. The first of these is suboptimal, while the second is indefensible. Importantly, these insecurities may undermine the appetite of young people to take on more desirable discretionary risks, exemplified by millennials having been 20–25 per cent less likely to voluntarily move jobs in their twenties than was the previous generation. This has implications for their pay progression and also for the economy as a whole, as the quality of matching of individuals to jobs is reduced. It is not just challenges facing young adults that should be central to a governing agenda for post‐Brexit Britain. Another long‐looming challenge with big generational implications is now coming home to roost—the cost of maintaining our welfare state and, in particular, providing the health and care that older generations rightly expect to receive. The retirement of the large baby boomer generation means growth in the older population, even before factoring in increased life expectancy. Combined with other pressures on health costs, this means spending on health, care and social security would need to rise by £36 billion by 2030 and by £83 billion by 2040 simply to maintain existing service levels. While these funding pressures are in the future, the implications of a system under strain are visible today. Healthcare is the most pressing area of worry for British adults: 42 per cent place it in their top three concerns, significantly above international norms. Increasingly underfunded social care provision in England means the number of older people who do not get the care they need has doubled since 2010. The status quo proves forcibly that policy failures can let down older generations too. However, addressing cost pressures carries generational challenges: the usual approaches of higher borrowing or taxes on working age income would bear down on the same younger generations at the sharp end of recent living standards pressures. So, today’s challenge is to give older generations the health and care they need, deserve and expect in a generationally fair way. That is easier said than done technically, and significantly harder politically. A bad equilibrium Ways of addressing these two economic challenges should be central (although far from exclusive) components of the governing agenda into the 2020s. But we can’t be certain that they will be, or that the right answers will be found. The political divide we started with could impose what we term ‘generational locks’ on both parties’ attempts to rise to these challenges. One well‐established lock is higher turnout at older ages, discouraging parties from focussing on younger adults’ needs. But in future, generational locks may operate more broadly, with parties highly reliant on one age group for support finding it hard to ask that group to engage in necessary trade‐offs—after all, the point of winning is that you win. So, the best strategy for voters at the other end of the age spectrum is to wait for their team to return to power. Generational locks can also operate in more complex ways. The inability or unwillingness of a party to address a generational issue can engender a lack of creativity or radicalism in their opponents, even when addressing that issue is core to their voters’ needs. And any attempt by parties to ask their own voters to make sacrifices can be easily lampooned by other parties as an abandonment of their base—an obstacle to attempts at lock‐breaking. It’s easy to see such generational locks operating in practice. Youth home ownership started falling from 1989, but continuing ownership increases for older families and their higher turnout at elections meant that it wasn’t until the financial crisis two decades later that housing moved centre‐stage. This is part of a wider trend of older wealth insiders benefitting from policy shifts when they happen, but also benefitting from the status quo. For example, there has been no growth in wealth taxation since the 1980s despite huge wealth increases over that period. Perhaps unsurprisingly, the Conservative party has chosen not to address this challenge and even actively to cut some wealth taxes, including inheritance tax. With no engagement from the Conservatives on the tricky issue of taxing assets, Labour has shied away from thinking creatively about significant reforms to wealth taxation. More recently, two clear examples of generational locks leading to bad outcomes stand out. First is the burden of welfare cuts since 2010. Reliant on older generations’ votes, the Conservatives majored on the protection or enhancement of pensioner benefits, meaning the focus of benefit cuts is on the thirty‐somethings who were worst affected by the financial crisis in their twenties. That is not to say that young people were particularly opposed to welfare cuts, even when bearing the brunt of their impact, but that the Conservative party’s reliance on older voters undermined the promise that ‘we are all in this together’ from a generational perspective. The second example is social care. All parties accept that the status quo is awful, and yet both have played a role in ensuring that no change takes place. George Osborne labelled Labour’s 2010 proposals for collective insurance drawing on the wealth in older people’s estates a ‘death tax’. Similar criticisms were then thrown in the other direction by Labour following the 2017 Conservative manifesto proposal that better‐off individuals contribute more towards their care costs from their assets. This was a case of the Conservatives asking an age group it relies on for support to engage in generational trade‐offs (admittedly, with flaws), leaving the party open to criticism from an opposition able to ‘hit them where it hurts’. In both cases politicians were (rightly) not prepared to ask younger voters to pay to resolve the situation. So, the social care crisis has dragged on. Failure in future to address these generational challenges—all the more likely if generational locks are tightened by an ongoing politics of blame or credit for the Brexit decision—would deliver similarly unattractive results. For example, the health funding challenge may echo the social care deadlock. However, widespread support for the NHS could mean that rather than nothing happening we settle for some, but insufficient, additional funding paid for in generationally unfair ways (such as national insurance on the working‐age population). The government’s announcement in June 2018 of £20 billion extra for the NHS, with no detail on the source of funds, raises this possibility. The result would be older generations let down on the quality of their healthcare, and young generations’ living standards squeezed again. On the needs of younger generations, their support for Labour been matched by a focus on some issues, such as tuition fees, but caution remains in other areas. On housing, the party went into the 2017 election with a more conservative council tax policy than in 2015, while Sadiq Khan explicitly ruled out action on green belt constraints during his London mayoral election campaign. Feeling little threat to their youth support from the Conservatives, Labour may feel worryingly comfortable in this position. Finally, it’s worth considering who will be hit hardest if generational economic challenges continue to be sidestepped. The least well‐off older people suffer most in our broken social care system, and those in younger generations without parental assets face the bleakest housing prospects. The irony might be that a partial shift in political divides from class to age puts locks on policy that mean that class‐based challenges are deepened, as well as generational ones enduring. Better outcomes While this bad equilibrium is clearly possible, it is far from certain. Luck, supply‐side responses in the form of more ambitious party strategies, or demand‐side pressure for change, could all precipitate better outcomes. Luck (or an unprecedentedly successful economic strategy) could trigger the return of meaningful productivity growth. This would directly support income progress for younger adults, help to maintain the existing welfare state without tax rises, and ease the political economy of generational trade‐offs by reducing the zero‐sum nature of choices. It is also possible that age‐based cultural cleavages will ease over time, opening up political choices. This could happen structurally as current younger cohorts age or, more optimistically, it could be because individual issues diminish in salience. On the latter, see Rob Ford and Maria Sobolewska’s discussion elsewhere in this issue of a range of such scenarios on migration. But such shifts would not be a panacea, and there may be pressures in the other direction. For example, productivity growth, while crucial in supporting young adults’ living standards, is unlikely to address a lack of asset accumulation. And while Brexit may reduce the political salience of divides on migration, it has to‐date reduced earnings growth and may entail significant new pressures on resources, exemplified, for example, by recent public commitments to a UK‐only satellite programme to replace the Galileo project. If luck does not solve these challenges then a supply‐side response from parties might, with political strategies beyond current superficial attempts such as the Conservatives’ offer of a millennial rail card and Labour’s promise to keep free pensioner bus passes. This would involve breaking out of current age coalitions to form a majority that allows the internalisation of trade‐offs in the combination of a generationally fair health and care funding solution and a wider package of reforms to make Britain work for the young. That is easier said than done. Labour may believe it has the best chance of such a breakthrough: after all, if this Parliament lasts, it will be running against a twelve‐year incumbent. However, much more sensitivity on issues of values and culture that appear to have reduced Labour’s support among older voters will likely be required. For the Conservatives, a sensible focus would be on those in their thirties and forties, rather than students who are unlikely to provide high volumes of support. Such a Conservative breakthrough hinges on youthful Labour support proving to be a life‐stage—rather than cohort—effect, with more optimistic scenarios for home ownership potentially underpinning middle‐age switching of party allegiance. Importantly, to achieve such a breakthrough, either party would need to establish a post‐Brexit political narrative that avoids all future outcomes and choices being refracted through the age cleavage that defined the Brexit decision itself. The parties could also tap into strong wells of generational harmony and support—we do not see the country as divided between generations, even if our politics is. There is already evidence of generational coalitions building for change, even where the beneficiaries are refined to a particular age group. On housing, since 2010 old‐age support for house building in the local area has doubled, while younger adults continue to back decent pensions and healthcare for the old. If nothing else, this reminds us that we live not as individuals or representatives of generations, but as parts of families. There are also many areas of policy that are far from zero‐sum, not least when the issue is not about tax and spend. For example, action to address the risks young people face in the labour market or in their pension regime needn’t have significant implications for older voters. Wider constraints, such as Labour’s loss of Scottish seats, mean we can’t necessarily rely on a government with a big majority in the years ahead. An alternative route for escaping generational locks might involve demand‐side pressures from voters encouraging a more creative politics. First, while we again have two‐party politics of a form not seen since the 1970s, a return to the longer‐term trend of political fragmentation is possible. Such a shift would add more volatility and possibly enable cross‐party and generational coalition building. Demand‐side pressure for change could also manifest itself if two‐party politics continues, by building to such an extent on specific issues that parties are forced to innovate, without owning the solutions themselves. Devices like the Turner Pensions Commission might be more frequently turned to in future. Conclusion British politics may enter the post‐Brexit era stuck in a bad generational equilibrium, with different generational blocs gripping our two main parties. That would pose impediments to delivering the changes Britain badly needs. However, now more than ever, future trajectories are uncertain. These challenges are not going away, but politics is more unstable than it seemed even a few years ago. Sometimes it feels as though our parties are just hoping something will turn up to break the deadlock. But providing a proactive response to these challenges—with honesty about the give‐and‐take required—may be how a post‐crisis, post‐Brexit political offer with a broader appeal emerges. That will entail good leadership as well as good luck. That does seem a lot to ask, but then again big change always does. Chapter extract from Britain Beyond Brexit, edited by Gavin Kelly and Nick Pearce, published on April 26th by John Wiley and Sons Ltd as part of the Political Quarterly Monograph Series. Available to pre-order. This chapter first published in The Political Quarterly.
Weak earnings have also undermined common myths that millennials are spending a fortune on avocado toast or city breaks: while young adults were spending the same as fifty‐five to sixty‐four‐year‐olds back in 2000, they are now spending 15 per cent less. Yes, they have more access to low marginal cost technology than previous generations had at their age, but most would be happy to swap that for a house and a pay rise. The pay experience of the young is one half of a profound twenty‐first century shift, with pensioner living standards overtaking those of the working‐age population. The introduction of more generous means‐tested benefits in the mid‐2000s and, more recently, higher employment and private savings levels, mean pensioner incomes have performed strongly and pensioner poverty has fallen by a third. These welcome improvements require us to change how we think about need today. While many (particularly older, female) pensioners remain poor, working‐age and working poverty have grown just as pensioner poverty has fallen. The nature, not just the pay, of the work that younger generations are doing raises wider questions of where risk lies in our society. Market forces and policy decisions have together left younger adults bearing significant risks that their predecessors were less exposed to. Young people are disproportionately likely to work on a zero‐hours contract or find themselves in lower‐qualified self‐employment. When it comes to housing, the number of children being brought up in the insecure private rented sector has trebled in the past fifteen years. And the decline of defined benefit pensions means individuals increasingly shoulder the risk of varying investment returns while saving, as well as the uncertainty around how long they may live. The first of these is suboptimal, while the second is indefensible. Importantly, these insecurities may undermine the appetite of young people to take on more desirable discretionary risks, exemplified by millennials having been 20–25 per cent less likely to voluntarily move jobs in their twenties than was the previous generation. This has implications for their pay progression and also for the economy as a whole, as the quality of matching of individuals to jobs is reduced. It is not just challenges facing young adults that should be central to a governing agenda for post‐Brexit Britain. Another long‐looming challenge with big generational implications is now coming home to roost—the cost of maintaining our welfare state and, in particular, providing the health and care that older generations rightly expect to receive. The retirement of the large baby boomer generation means growth in the older population, even before factoring in increased life expectancy. Combined with other pressures on health costs, this means spending on health, care and social security would need to rise by £36 billion by 2030 and by £83 billion by 2040 simply to maintain existing service levels. While these funding pressures are in the future, the implications of a system under strain are visible today. Healthcare is the most pressing area of worry for British adults: 42 per cent place it in their top three concerns, significantly above international norms. Increasingly underfunded social care provision in England means the number of older people who do not get the care they need has doubled since 2010. The status quo proves forcibly that policy failures can let down older generations too. However, addressing cost pressures carries generational challenges: the usual approaches of higher borrowing or taxes on working age income would bear down on the same younger generations at the sharp end of recent living standards pressures. So, today’s challenge is to give older generations the health and care they need, deserve and expect in a generationally fair way. That is easier said than done technically, and significantly harder politically. A bad equilibrium Ways of addressing these two economic challenges should be central (although far from exclusive) components of the governing agenda into the 2020s. But we can’t be certain that they will be, or that the right answers will be found. The political divide we started with could impose what we term ‘generational locks’ on both parties’ attempts to rise to these challenges. One well‐established lock is higher turnout at older ages, discouraging parties from focussing on younger adults’ needs. But in future, generational locks may operate more broadly, with parties highly reliant on one age group for support finding it hard to ask that group to engage in necessary trade‐offs—after all, the point of winning is that you win. So, the best strategy for voters at the other end of the age spectrum is to wait for their team to return to power. Generational locks can also operate in more complex ways. The inability or unwillingness of a party to address a generational issue can engender a lack of creativity or radicalism in their opponents, even when addressing that issue is core to their voters’ needs. And any attempt by parties to ask their own voters to make sacrifices can be easily lampooned by other parties as an abandonment of their base—an obstacle to attempts at lock‐breaking. It’s easy to see such generational locks operating in practice. Youth home ownership started falling from 1989, but continuing ownership increases for older families and their higher turnout at elections meant that it wasn’t until the financial crisis two decades later that housing moved centre‐stage. This is part of a wider trend of older wealth insiders benefitting from policy shifts when they happen, but also benefitting from the status quo. For example, there has been no growth in wealth taxation since the 1980s despite huge wealth increases over that period. Perhaps unsurprisingly, the Conservative party has chosen not to address this challenge and even actively to cut some wealth taxes, including inheritance tax. With no engagement from the Conservatives on the tricky issue of taxing assets, Labour has shied away from thinking creatively about significant reforms to wealth taxation. More recently, two clear examples of generational locks leading to bad outcomes stand out. First is the burden of welfare cuts since 2010. Reliant on older generations’ votes, the Conservatives majored on the protection or enhancement of pensioner benefits, meaning the focus of benefit cuts is on the thirty‐somethings who were worst affected by the financial crisis in their twenties. That is not to say that young people were particularly opposed to welfare cuts, even when bearing the brunt of their impact, but that the Conservative party’s reliance on older voters undermined the promise that ‘we are all in this together’ from a generational perspective. The second example is social care. All parties accept that the status quo is awful, and yet both have played a role in ensuring that no change takes place. George Osborne labelled Labour’s 2010 proposals for collective insurance drawing on the wealth in older people’s estates a ‘death tax’. Similar criticisms were then thrown in the other direction by Labour following the 2017 Conservative manifesto proposal that better‐off individuals contribute more towards their care costs from their assets. This was a case of the Conservatives asking an age group it relies on for support to engage in generational trade‐offs (admittedly, with flaws), leaving the party open to criticism from an opposition able to ‘hit them where it hurts’. In both cases politicians were (rightly) not prepared to ask younger voters to pay to resolve the situation. So, the social care crisis has dragged on. Failure in future to address these generational challenges—all the more likely if generational locks are tightened by an ongoing politics of blame or credit for the Brexit decision—would deliver similarly unattractive results. For example, the health funding challenge may echo the social care deadlock. However, widespread support for the NHS could mean that rather than nothing happening we settle for some, but insufficient, additional funding paid for in generationally unfair ways (such as national insurance on the working‐age population). The government’s announcement in June 2018 of £20 billion extra for the NHS, with no detail on the source of funds, raises this possibility. The result would be older generations let down on the quality of their healthcare, and young generations’ living standards squeezed again. On the needs of younger generations, their support for Labour been matched by a focus on some issues, such as tuition fees, but caution remains in other areas. On housing, the party went into the 2017 election with a more conservative council tax policy than in 2015, while Sadiq Khan explicitly ruled out action on green belt constraints during his London mayoral election campaign. Feeling little threat to their youth support from the Conservatives, Labour may feel worryingly comfortable in this position. Finally, it’s worth considering who will be hit hardest if generational economic challenges continue to be sidestepped. The least well‐off older people suffer most in our broken social care system, and those in younger generations without parental assets face the bleakest housing prospects. The irony might be that a partial shift in political divides from class to age puts locks on policy that mean that class‐based challenges are deepened, as well as generational ones enduring. Better outcomes While this bad equilibrium is clearly possible, it is far from certain. Luck, supply‐side responses in the form of more ambitious party strategies, or demand‐side pressure for change, could all precipitate better outcomes. Luck (or an unprecedentedly successful economic strategy) could trigger the return of meaningful productivity growth. This would directly support income progress for younger adults, help to maintain the existing welfare state without tax rises, and ease the political economy of generational trade‐offs by reducing the zero‐sum nature of choices. It is also possible that age‐based cultural cleavages will ease over time, opening up political choices. This could happen structurally as current younger cohorts age or, more optimistically, it could be because individual issues diminish in salience. On the latter, see Rob Ford and Maria Sobolewska’s discussion elsewhere in this issue of a range of such scenarios on migration. But such shifts would not be a panacea, and there may be pressures in the other direction. For example, productivity growth, while crucial in supporting young adults’ living standards, is unlikely to address a lack of asset accumulation. And while Brexit may reduce the political salience of divides on migration, it has to‐date reduced earnings growth and may entail significant new pressures on resources, exemplified, for example, by recent public commitments to a UK‐only satellite programme to replace the Galileo project. If luck does not solve these challenges then a supply‐side response from parties might, with political strategies beyond current superficial attempts such as the Conservatives’ offer of a millennial rail card and Labour’s promise to keep free pensioner bus passes. This would involve breaking out of current age coalitions to form a majority that allows the internalisation of trade‐offs in the combination of a generationally fair health and care funding solution and a wider package of reforms to make Britain work for the young. That is easier said than done. Labour may believe it has the best chance of such a breakthrough: after all, if this Parliament lasts, it will be running against a twelve‐year incumbent. However, much more sensitivity on issues of values and culture that appear to have reduced Labour’s support among older voters will likely be required. For the Conservatives, a sensible focus would be on those in their thirties and forties, rather than students who are unlikely to provide high volumes of support. Such a Conservative breakthrough hinges on youthful Labour support proving to be a life‐stage—rather than cohort—effect, with more optimistic scenarios for home ownership potentially underpinning middle‐age switching of party allegiance. Importantly, to achieve such a breakthrough, either party would need to establish a post‐Brexit political narrative that avoids all future outcomes and choices being refracted through the age cleavage that defined the Brexit decision itself. The parties could also tap into strong wells of generational harmony and support—we do not see the country as divided between generations, even if our politics is. There is already evidence of generational coalitions building for change, even where the beneficiaries are refined to a particular age group. On housing, since 2010 old‐age support for house building in the local area has doubled, while younger adults continue to back decent pensions and healthcare for the old. If nothing else, this reminds us that we live not as individuals or representatives of generations, but as parts of families. There are also many areas of policy that are far from zero‐sum, not least when the issue is not about tax and spend. For example, action to address the risks young people face in the labour market or in their pension regime needn’t have significant implications for older voters. Wider constraints, such as Labour’s loss of Scottish seats, mean we can’t necessarily rely on a government with a big majority in the years ahead. An alternative route for escaping generational locks might involve demand‐side pressures from voters encouraging a more creative politics. First, while we again have two‐party politics of a form not seen since the 1970s, a return to the longer‐term trend of political fragmentation is possible. Such a shift would add more volatility and possibly enable cross‐party and generational coalition building. Demand‐side pressure for change could also manifest itself if two‐party politics continues, by building to such an extent on specific issues that parties are forced to innovate, without owning the solutions themselves. Devices like the Turner Pensions Commission might be more frequently turned to in future. Conclusion British politics may enter the post‐Brexit era stuck in a bad generational equilibrium, with different generational blocs gripping our two main parties. That would pose impediments to delivering the changes Britain badly needs. However, now more than ever, future trajectories are uncertain. These challenges are not going away, but politics is more unstable than it seemed even a few years ago. Sometimes it feels as though our parties are just hoping something will turn up to break the deadlock. But providing a proactive response to these challenges—with honesty about the give‐and‐take required—may be how a post‐crisis, post‐Brexit political offer with a broader appeal emerges. That will entail good leadership as well as good luck. That does seem a lot to ask, but then again big change always does. Chapter extract from Britain Beyond Brexit, edited by Gavin Kelly and Nick Pearce, published on April 26th by John Wiley and Sons Ltd as part of the Political Quarterly Monograph Series. Available to pre-order. This chapter first published in The Political Quarterly.
The nature, not just the pay, of the work that younger generations are doing raises wider questions of where risk lies in our society. Market forces and policy decisions have together left younger adults bearing significant risks that their predecessors were less exposed to. Young people are disproportionately likely to work on a zero‐hours contract or find themselves in lower‐qualified self‐employment. When it comes to housing, the number of children being brought up in the insecure private rented sector has trebled in the past fifteen years. And the decline of defined benefit pensions means individuals increasingly shoulder the risk of varying investment returns while saving, as well as the uncertainty around how long they may live. The first of these is suboptimal, while the second is indefensible. Importantly, these insecurities may undermine the appetite of young people to take on more desirable discretionary risks, exemplified by millennials having been 20–25 per cent less likely to voluntarily move jobs in their twenties than was the previous generation. This has implications for their pay progression and also for the economy as a whole, as the quality of matching of individuals to jobs is reduced. It is not just challenges facing young adults that should be central to a governing agenda for post‐Brexit Britain. Another long‐looming challenge with big generational implications is now coming home to roost—the cost of maintaining our welfare state and, in particular, providing the health and care that older generations rightly expect to receive. The retirement of the large baby boomer generation means growth in the older population, even before factoring in increased life expectancy. Combined with other pressures on health costs, this means spending on health, care and social security would need to rise by £36 billion by 2030 and by £83 billion by 2040 simply to maintain existing service levels. While these funding pressures are in the future, the implications of a system under strain are visible today. Healthcare is the most pressing area of worry for British adults: 42 per cent place it in their top three concerns, significantly above international norms. Increasingly underfunded social care provision in England means the number of older people who do not get the care they need has doubled since 2010. The status quo proves forcibly that policy failures can let down older generations too. However, addressing cost pressures carries generational challenges: the usual approaches of higher borrowing or taxes on working age income would bear down on the same younger generations at the sharp end of recent living standards pressures. So, today’s challenge is to give older generations the health and care they need, deserve and expect in a generationally fair way. That is easier said than done technically, and significantly harder politically. A bad equilibrium Ways of addressing these two economic challenges should be central (although far from exclusive) components of the governing agenda into the 2020s. But we can’t be certain that they will be, or that the right answers will be found. The political divide we started with could impose what we term ‘generational locks’ on both parties’ attempts to rise to these challenges. One well‐established lock is higher turnout at older ages, discouraging parties from focussing on younger adults’ needs. But in future, generational locks may operate more broadly, with parties highly reliant on one age group for support finding it hard to ask that group to engage in necessary trade‐offs—after all, the point of winning is that you win. So, the best strategy for voters at the other end of the age spectrum is to wait for their team to return to power. Generational locks can also operate in more complex ways. The inability or unwillingness of a party to address a generational issue can engender a lack of creativity or radicalism in their opponents, even when addressing that issue is core to their voters’ needs. And any attempt by parties to ask their own voters to make sacrifices can be easily lampooned by other parties as an abandonment of their base—an obstacle to attempts at lock‐breaking. It’s easy to see such generational locks operating in practice. Youth home ownership started falling from 1989, but continuing ownership increases for older families and their higher turnout at elections meant that it wasn’t until the financial crisis two decades later that housing moved centre‐stage. This is part of a wider trend of older wealth insiders benefitting from policy shifts when they happen, but also benefitting from the status quo. For example, there has been no growth in wealth taxation since the 1980s despite huge wealth increases over that period. Perhaps unsurprisingly, the Conservative party has chosen not to address this challenge and even actively to cut some wealth taxes, including inheritance tax. With no engagement from the Conservatives on the tricky issue of taxing assets, Labour has shied away from thinking creatively about significant reforms to wealth taxation. More recently, two clear examples of generational locks leading to bad outcomes stand out. First is the burden of welfare cuts since 2010. Reliant on older generations’ votes, the Conservatives majored on the protection or enhancement of pensioner benefits, meaning the focus of benefit cuts is on the thirty‐somethings who were worst affected by the financial crisis in their twenties. That is not to say that young people were particularly opposed to welfare cuts, even when bearing the brunt of their impact, but that the Conservative party’s reliance on older voters undermined the promise that ‘we are all in this together’ from a generational perspective. The second example is social care. All parties accept that the status quo is awful, and yet both have played a role in ensuring that no change takes place. George Osborne labelled Labour’s 2010 proposals for collective insurance drawing on the wealth in older people’s estates a ‘death tax’. Similar criticisms were then thrown in the other direction by Labour following the 2017 Conservative manifesto proposal that better‐off individuals contribute more towards their care costs from their assets. This was a case of the Conservatives asking an age group it relies on for support to engage in generational trade‐offs (admittedly, with flaws), leaving the party open to criticism from an opposition able to ‘hit them where it hurts’. In both cases politicians were (rightly) not prepared to ask younger voters to pay to resolve the situation. So, the social care crisis has dragged on. Failure in future to address these generational challenges—all the more likely if generational locks are tightened by an ongoing politics of blame or credit for the Brexit decision—would deliver similarly unattractive results. For example, the health funding challenge may echo the social care deadlock. However, widespread support for the NHS could mean that rather than nothing happening we settle for some, but insufficient, additional funding paid for in generationally unfair ways (such as national insurance on the working‐age population). The government’s announcement in June 2018 of £20 billion extra for the NHS, with no detail on the source of funds, raises this possibility. The result would be older generations let down on the quality of their healthcare, and young generations’ living standards squeezed again. On the needs of younger generations, their support for Labour been matched by a focus on some issues, such as tuition fees, but caution remains in other areas. On housing, the party went into the 2017 election with a more conservative council tax policy than in 2015, while Sadiq Khan explicitly ruled out action on green belt constraints during his London mayoral election campaign. Feeling little threat to their youth support from the Conservatives, Labour may feel worryingly comfortable in this position. Finally, it’s worth considering who will be hit hardest if generational economic challenges continue to be sidestepped. The least well‐off older people suffer most in our broken social care system, and those in younger generations without parental assets face the bleakest housing prospects. The irony might be that a partial shift in political divides from class to age puts locks on policy that mean that class‐based challenges are deepened, as well as generational ones enduring. Better outcomes While this bad equilibrium is clearly possible, it is far from certain. Luck, supply‐side responses in the form of more ambitious party strategies, or demand‐side pressure for change, could all precipitate better outcomes. Luck (or an unprecedentedly successful economic strategy) could trigger the return of meaningful productivity growth. This would directly support income progress for younger adults, help to maintain the existing welfare state without tax rises, and ease the political economy of generational trade‐offs by reducing the zero‐sum nature of choices. It is also possible that age‐based cultural cleavages will ease over time, opening up political choices. This could happen structurally as current younger cohorts age or, more optimistically, it could be because individual issues diminish in salience. On the latter, see Rob Ford and Maria Sobolewska’s discussion elsewhere in this issue of a range of such scenarios on migration. But such shifts would not be a panacea, and there may be pressures in the other direction. For example, productivity growth, while crucial in supporting young adults’ living standards, is unlikely to address a lack of asset accumulation. And while Brexit may reduce the political salience of divides on migration, it has to‐date reduced earnings growth and may entail significant new pressures on resources, exemplified, for example, by recent public commitments to a UK‐only satellite programme to replace the Galileo project. If luck does not solve these challenges then a supply‐side response from parties might, with political strategies beyond current superficial attempts such as the Conservatives’ offer of a millennial rail card and Labour’s promise to keep free pensioner bus passes. This would involve breaking out of current age coalitions to form a majority that allows the internalisation of trade‐offs in the combination of a generationally fair health and care funding solution and a wider package of reforms to make Britain work for the young. That is easier said than done. Labour may believe it has the best chance of such a breakthrough: after all, if this Parliament lasts, it will be running against a twelve‐year incumbent. However, much more sensitivity on issues of values and culture that appear to have reduced Labour’s support among older voters will likely be required. For the Conservatives, a sensible focus would be on those in their thirties and forties, rather than students who are unlikely to provide high volumes of support. Such a Conservative breakthrough hinges on youthful Labour support proving to be a life‐stage—rather than cohort—effect, with more optimistic scenarios for home ownership potentially underpinning middle‐age switching of party allegiance. Importantly, to achieve such a breakthrough, either party would need to establish a post‐Brexit political narrative that avoids all future outcomes and choices being refracted through the age cleavage that defined the Brexit decision itself. The parties could also tap into strong wells of generational harmony and support—we do not see the country as divided between generations, even if our politics is. There is already evidence of generational coalitions building for change, even where the beneficiaries are refined to a particular age group. On housing, since 2010 old‐age support for house building in the local area has doubled, while younger adults continue to back decent pensions and healthcare for the old. If nothing else, this reminds us that we live not as individuals or representatives of generations, but as parts of families. There are also many areas of policy that are far from zero‐sum, not least when the issue is not about tax and spend. For example, action to address the risks young people face in the labour market or in their pension regime needn’t have significant implications for older voters. Wider constraints, such as Labour’s loss of Scottish seats, mean we can’t necessarily rely on a government with a big majority in the years ahead. An alternative route for escaping generational locks might involve demand‐side pressures from voters encouraging a more creative politics. First, while we again have two‐party politics of a form not seen since the 1970s, a return to the longer‐term trend of political fragmentation is possible. Such a shift would add more volatility and possibly enable cross‐party and generational coalition building. Demand‐side pressure for change could also manifest itself if two‐party politics continues, by building to such an extent on specific issues that parties are forced to innovate, without owning the solutions themselves. Devices like the Turner Pensions Commission might be more frequently turned to in future. Conclusion British politics may enter the post‐Brexit era stuck in a bad generational equilibrium, with different generational blocs gripping our two main parties. That would pose impediments to delivering the changes Britain badly needs. However, now more than ever, future trajectories are uncertain. These challenges are not going away, but politics is more unstable than it seemed even a few years ago. Sometimes it feels as though our parties are just hoping something will turn up to break the deadlock. But providing a proactive response to these challenges—with honesty about the give‐and‐take required—may be how a post‐crisis, post‐Brexit political offer with a broader appeal emerges. That will entail good leadership as well as good luck. That does seem a lot to ask, but then again big change always does. Chapter extract from Britain Beyond Brexit, edited by Gavin Kelly and Nick Pearce, published on April 26th by John Wiley and Sons Ltd as part of the Political Quarterly Monograph Series. Available to pre-order. This chapter first published in The Political Quarterly.
The nature, not just the pay, of the work that younger generations are doing raises wider questions of where risk lies in our society. Market forces and policy decisions have together left younger adults bearing significant risks that their predecessors were less exposed to. Young people are disproportionately likely to work on a zero‐hours contract or find themselves in lower‐qualified self‐employment. When it comes to housing, the number of children being brought up in the insecure private rented sector has trebled in the past fifteen years. And the decline of defined benefit pensions means individuals increasingly shoulder the risk of varying investment returns while saving, as well as the uncertainty around how long they may live. The first of these is suboptimal, while the second is indefensible. Importantly, these insecurities may undermine the appetite of young people to take on more desirable discretionary risks, exemplified by millennials having been 20–25 per cent less likely to voluntarily move jobs in their twenties than was the previous generation. This has implications for their pay progression and also for the economy as a whole, as the quality of matching of individuals to jobs is reduced. It is not just challenges facing young adults that should be central to a governing agenda for post‐Brexit Britain. Another long‐looming challenge with big generational implications is now coming home to roost—the cost of maintaining our welfare state and, in particular, providing the health and care that older generations rightly expect to receive. The retirement of the large baby boomer generation means growth in the older population, even before factoring in increased life expectancy. Combined with other pressures on health costs, this means spending on health, care and social security would need to rise by £36 billion by 2030 and by £83 billion by 2040 simply to maintain existing service levels. While these funding pressures are in the future, the implications of a system under strain are visible today. Healthcare is the most pressing area of worry for British adults: 42 per cent place it in their top three concerns, significantly above international norms. Increasingly underfunded social care provision in England means the number of older people who do not get the care they need has doubled since 2010. The status quo proves forcibly that policy failures can let down older generations too. However, addressing cost pressures carries generational challenges: the usual approaches of higher borrowing or taxes on working age income would bear down on the same younger generations at the sharp end of recent living standards pressures. So, today’s challenge is to give older generations the health and care they need, deserve and expect in a generationally fair way. That is easier said than done technically, and significantly harder politically. A bad equilibrium Ways of addressing these two economic challenges should be central (although far from exclusive) components of the governing agenda into the 2020s. But we can’t be certain that they will be, or that the right answers will be found. The political divide we started with could impose what we term ‘generational locks’ on both parties’ attempts to rise to these challenges. One well‐established lock is higher turnout at older ages, discouraging parties from focussing on younger adults’ needs. But in future, generational locks may operate more broadly, with parties highly reliant on one age group for support finding it hard to ask that group to engage in necessary trade‐offs—after all, the point of winning is that you win. So, the best strategy for voters at the other end of the age spectrum is to wait for their team to return to power. Generational locks can also operate in more complex ways. The inability or unwillingness of a party to address a generational issue can engender a lack of creativity or radicalism in their opponents, even when addressing that issue is core to their voters’ needs. And any attempt by parties to ask their own voters to make sacrifices can be easily lampooned by other parties as an abandonment of their base—an obstacle to attempts at lock‐breaking. It’s easy to see such generational locks operating in practice. Youth home ownership started falling from 1989, but continuing ownership increases for older families and their higher turnout at elections meant that it wasn’t until the financial crisis two decades later that housing moved centre‐stage. This is part of a wider trend of older wealth insiders benefitting from policy shifts when they happen, but also benefitting from the status quo. For example, there has been no growth in wealth taxation since the 1980s despite huge wealth increases over that period. Perhaps unsurprisingly, the Conservative party has chosen not to address this challenge and even actively to cut some wealth taxes, including inheritance tax. With no engagement from the Conservatives on the tricky issue of taxing assets, Labour has shied away from thinking creatively about significant reforms to wealth taxation. More recently, two clear examples of generational locks leading to bad outcomes stand out. First is the burden of welfare cuts since 2010. Reliant on older generations’ votes, the Conservatives majored on the protection or enhancement of pensioner benefits, meaning the focus of benefit cuts is on the thirty‐somethings who were worst affected by the financial crisis in their twenties. That is not to say that young people were particularly opposed to welfare cuts, even when bearing the brunt of their impact, but that the Conservative party’s reliance on older voters undermined the promise that ‘we are all in this together’ from a generational perspective. The second example is social care. All parties accept that the status quo is awful, and yet both have played a role in ensuring that no change takes place. George Osborne labelled Labour’s 2010 proposals for collective insurance drawing on the wealth in older people’s estates a ‘death tax’. Similar criticisms were then thrown in the other direction by Labour following the 2017 Conservative manifesto proposal that better‐off individuals contribute more towards their care costs from their assets. This was a case of the Conservatives asking an age group it relies on for support to engage in generational trade‐offs (admittedly, with flaws), leaving the party open to criticism from an opposition able to ‘hit them where it hurts’. In both cases politicians were (rightly) not prepared to ask younger voters to pay to resolve the situation. So, the social care crisis has dragged on. Failure in future to address these generational challenges—all the more likely if generational locks are tightened by an ongoing politics of blame or credit for the Brexit decision—would deliver similarly unattractive results. For example, the health funding challenge may echo the social care deadlock. However, widespread support for the NHS could mean that rather than nothing happening we settle for some, but insufficient, additional funding paid for in generationally unfair ways (such as national insurance on the working‐age population). The government’s announcement in June 2018 of £20 billion extra for the NHS, with no detail on the source of funds, raises this possibility. The result would be older generations let down on the quality of their healthcare, and young generations’ living standards squeezed again. On the needs of younger generations, their support for Labour been matched by a focus on some issues, such as tuition fees, but caution remains in other areas. On housing, the party went into the 2017 election with a more conservative council tax policy than in 2015, while Sadiq Khan explicitly ruled out action on green belt constraints during his London mayoral election campaign. Feeling little threat to their youth support from the Conservatives, Labour may feel worryingly comfortable in this position. Finally, it’s worth considering who will be hit hardest if generational economic challenges continue to be sidestepped. The least well‐off older people suffer most in our broken social care system, and those in younger generations without parental assets face the bleakest housing prospects. The irony might be that a partial shift in political divides from class to age puts locks on policy that mean that class‐based challenges are deepened, as well as generational ones enduring. Better outcomes While this bad equilibrium is clearly possible, it is far from certain. Luck, supply‐side responses in the form of more ambitious party strategies, or demand‐side pressure for change, could all precipitate better outcomes. Luck (or an unprecedentedly successful economic strategy) could trigger the return of meaningful productivity growth. This would directly support income progress for younger adults, help to maintain the existing welfare state without tax rises, and ease the political economy of generational trade‐offs by reducing the zero‐sum nature of choices. It is also possible that age‐based cultural cleavages will ease over time, opening up political choices. This could happen structurally as current younger cohorts age or, more optimistically, it could be because individual issues diminish in salience. On the latter, see Rob Ford and Maria Sobolewska’s discussion elsewhere in this issue of a range of such scenarios on migration. But such shifts would not be a panacea, and there may be pressures in the other direction. For example, productivity growth, while crucial in supporting young adults’ living standards, is unlikely to address a lack of asset accumulation. And while Brexit may reduce the political salience of divides on migration, it has to‐date reduced earnings growth and may entail significant new pressures on resources, exemplified, for example, by recent public commitments to a UK‐only satellite programme to replace the Galileo project. If luck does not solve these challenges then a supply‐side response from parties might, with political strategies beyond current superficial attempts such as the Conservatives’ offer of a millennial rail card and Labour’s promise to keep free pensioner bus passes. This would involve breaking out of current age coalitions to form a majority that allows the internalisation of trade‐offs in the combination of a generationally fair health and care funding solution and a wider package of reforms to make Britain work for the young. That is easier said than done. Labour may believe it has the best chance of such a breakthrough: after all, if this Parliament lasts, it will be running against a twelve‐year incumbent. However, much more sensitivity on issues of values and culture that appear to have reduced Labour’s support among older voters will likely be required. For the Conservatives, a sensible focus would be on those in their thirties and forties, rather than students who are unlikely to provide high volumes of support. Such a Conservative breakthrough hinges on youthful Labour support proving to be a life‐stage—rather than cohort—effect, with more optimistic scenarios for home ownership potentially underpinning middle‐age switching of party allegiance. Importantly, to achieve such a breakthrough, either party would need to establish a post‐Brexit political narrative that avoids all future outcomes and choices being refracted through the age cleavage that defined the Brexit decision itself. The parties could also tap into strong wells of generational harmony and support—we do not see the country as divided between generations, even if our politics is. There is already evidence of generational coalitions building for change, even where the beneficiaries are refined to a particular age group. On housing, since 2010 old‐age support for house building in the local area has doubled, while younger adults continue to back decent pensions and healthcare for the old. If nothing else, this reminds us that we live not as individuals or representatives of generations, but as parts of families. There are also many areas of policy that are far from zero‐sum, not least when the issue is not about tax and spend. For example, action to address the risks young people face in the labour market or in their pension regime needn’t have significant implications for older voters. Wider constraints, such as Labour’s loss of Scottish seats, mean we can’t necessarily rely on a government with a big majority in the years ahead. An alternative route for escaping generational locks might involve demand‐side pressures from voters encouraging a more creative politics. First, while we again have two‐party politics of a form not seen since the 1970s, a return to the longer‐term trend of political fragmentation is possible. Such a shift would add more volatility and possibly enable cross‐party and generational coalition building. Demand‐side pressure for change could also manifest itself if two‐party politics continues, by building to such an extent on specific issues that parties are forced to innovate, without owning the solutions themselves. Devices like the Turner Pensions Commission might be more frequently turned to in future. Conclusion British politics may enter the post‐Brexit era stuck in a bad generational equilibrium, with different generational blocs gripping our two main parties. That would pose impediments to delivering the changes Britain badly needs. However, now more than ever, future trajectories are uncertain. These challenges are not going away, but politics is more unstable than it seemed even a few years ago. Sometimes it feels as though our parties are just hoping something will turn up to break the deadlock. But providing a proactive response to these challenges—with honesty about the give‐and‐take required—may be how a post‐crisis, post‐Brexit political offer with a broader appeal emerges. That will entail good leadership as well as good luck. That does seem a lot to ask, but then again big change always does. Chapter extract from Britain Beyond Brexit, edited by Gavin Kelly and Nick Pearce, published on April 26th by John Wiley and Sons Ltd as part of the Political Quarterly Monograph Series. Available to pre-order. This chapter first published in The Political Quarterly.
More recently, two clear examples of generational locks leading to bad outcomes stand out. First is the burden of welfare cuts since 2010. Reliant on older generations’ votes, the Conservatives majored on the protection or enhancement of pensioner benefits, meaning the focus of benefit cuts is on the thirty‐somethings who were worst affected by the financial crisis in their twenties. That is not to say that young people were particularly opposed to welfare cuts, even when bearing the brunt of their impact, but that the Conservative party’s reliance on older voters undermined the promise that ‘we are all in this together’ from a generational perspective. The second example is social care. All parties accept that the status quo is awful, and yet both have played a role in ensuring that no change takes place. George Osborne labelled Labour’s 2010 proposals for collective insurance drawing on the wealth in older people’s estates a ‘death tax’. Similar criticisms were then thrown in the other direction by Labour following the 2017 Conservative manifesto proposal that better‐off individuals contribute more towards their care costs from their assets. This was a case of the Conservatives asking an age group it relies on for support to engage in generational trade‐offs (admittedly, with flaws), leaving the party open to criticism from an opposition able to ‘hit them where it hurts’. In both cases politicians were (rightly) not prepared to ask younger voters to pay to resolve the situation. So, the social care crisis has dragged on. Failure in future to address these generational challenges—all the more likely if generational locks are tightened by an ongoing politics of blame or credit for the Brexit decision—would deliver similarly unattractive results. For example, the health funding challenge may echo the social care deadlock. However, widespread support for the NHS could mean that rather than nothing happening we settle for some, but insufficient, additional funding paid for in generationally unfair ways (such as national insurance on the working‐age population). The government’s announcement in June 2018 of £20 billion extra for the NHS, with no detail on the source of funds, raises this possibility. The result would be older generations let down on the quality of their healthcare, and young generations’ living standards squeezed again. On the needs of younger generations, their support for Labour been matched by a focus on some issues, such as tuition fees, but caution remains in other areas. On housing, the party went into the 2017 election with a more conservative council tax policy than in 2015, while Sadiq Khan explicitly ruled out action on green belt constraints during his London mayoral election campaign. Feeling little threat to their youth support from the Conservatives, Labour may feel worryingly comfortable in this position. Finally, it’s worth considering who will be hit hardest if generational economic challenges continue to be sidestepped. The least well‐off older people suffer most in our broken social care system, and those in younger generations without parental assets face the bleakest housing prospects. The irony might be that a partial shift in political divides from class to age puts locks on policy that mean that class‐based challenges are deepened, as well as generational ones enduring. Better outcomes While this bad equilibrium is clearly possible, it is far from certain. Luck, supply‐side responses in the form of more ambitious party strategies, or demand‐side pressure for change, could all precipitate better outcomes. Luck (or an unprecedentedly successful economic strategy) could trigger the return of meaningful productivity growth. This would directly support income progress for younger adults, help to maintain the existing welfare state without tax rises, and ease the political economy of generational trade‐offs by reducing the zero‐sum nature of choices. It is also possible that age‐based cultural cleavages will ease over time, opening up political choices. This could happen structurally as current younger cohorts age or, more optimistically, it could be because individual issues diminish in salience. On the latter, see Rob Ford and Maria Sobolewska’s discussion elsewhere in this issue of a range of such scenarios on migration. But such shifts would not be a panacea, and there may be pressures in the other direction. For example, productivity growth, while crucial in supporting young adults’ living standards, is unlikely to address a lack of asset accumulation. And while Brexit may reduce the political salience of divides on migration, it has to‐date reduced earnings growth and may entail significant new pressures on resources, exemplified, for example, by recent public commitments to a UK‐only satellite programme to replace the Galileo project. If luck does not solve these challenges then a supply‐side response from parties might, with political strategies beyond current superficial attempts such as the Conservatives’ offer of a millennial rail card and Labour’s promise to keep free pensioner bus passes. This would involve breaking out of current age coalitions to form a majority that allows the internalisation of trade‐offs in the combination of a generationally fair health and care funding solution and a wider package of reforms to make Britain work for the young. That is easier said than done. Labour may believe it has the best chance of such a breakthrough: after all, if this Parliament lasts, it will be running against a twelve‐year incumbent. However, much more sensitivity on issues of values and culture that appear to have reduced Labour’s support among older voters will likely be required. For the Conservatives, a sensible focus would be on those in their thirties and forties, rather than students who are unlikely to provide high volumes of support. Such a Conservative breakthrough hinges on youthful Labour support proving to be a life‐stage—rather than cohort—effect, with more optimistic scenarios for home ownership potentially underpinning middle‐age switching of party allegiance. Importantly, to achieve such a breakthrough, either party would need to establish a post‐Brexit political narrative that avoids all future outcomes and choices being refracted through the age cleavage that defined the Brexit decision itself. The parties could also tap into strong wells of generational harmony and support—we do not see the country as divided between generations, even if our politics is. There is already evidence of generational coalitions building for change, even where the beneficiaries are refined to a particular age group. On housing, since 2010 old‐age support for house building in the local area has doubled, while younger adults continue to back decent pensions and healthcare for the old. If nothing else, this reminds us that we live not as individuals or representatives of generations, but as parts of families. There are also many areas of policy that are far from zero‐sum, not least when the issue is not about tax and spend. For example, action to address the risks young people face in the labour market or in their pension regime needn’t have significant implications for older voters. Wider constraints, such as Labour’s loss of Scottish seats, mean we can’t necessarily rely on a government with a big majority in the years ahead. An alternative route for escaping generational locks might involve demand‐side pressures from voters encouraging a more creative politics. First, while we again have two‐party politics of a form not seen since the 1970s, a return to the longer‐term trend of political fragmentation is possible. Such a shift would add more volatility and possibly enable cross‐party and generational coalition building. Demand‐side pressure for change could also manifest itself if two‐party politics continues, by building to such an extent on specific issues that parties are forced to innovate, without owning the solutions themselves. Devices like the Turner Pensions Commission might be more frequently turned to in future. Conclusion British politics may enter the post‐Brexit era stuck in a bad generational equilibrium, with different generational blocs gripping our two main parties. That would pose impediments to delivering the changes Britain badly needs. However, now more than ever, future trajectories are uncertain. These challenges are not going away, but politics is more unstable than it seemed even a few years ago. Sometimes it feels as though our parties are just hoping something will turn up to break the deadlock. But providing a proactive response to these challenges—with honesty about the give‐and‐take required—may be how a post‐crisis, post‐Brexit political offer with a broader appeal emerges. That will entail good leadership as well as good luck. That does seem a lot to ask, but then again big change always does.
More recently, two clear examples of generational locks leading to bad outcomes stand out. First is the burden of welfare cuts since 2010. Reliant on older generations’ votes, the Conservatives majored on the protection or enhancement of pensioner benefits, meaning the focus of benefit cuts is on the thirty‐somethings who were worst affected by the financial crisis in their twenties. That is not to say that young people were particularly opposed to welfare cuts, even when bearing the brunt of their impact, but that the Conservative party’s reliance on older voters undermined the promise that ‘we are all in this together’ from a generational perspective. The second example is social care. All parties accept that the status quo is awful, and yet both have played a role in ensuring that no change takes place. George Osborne labelled Labour’s 2010 proposals for collective insurance drawing on the wealth in older people’s estates a ‘death tax’. Similar criticisms were then thrown in the other direction by Labour following the 2017 Conservative manifesto proposal that better‐off individuals contribute more towards their care costs from their assets. This was a case of the Conservatives asking an age group it relies on for support to engage in generational trade‐offs (admittedly, with flaws), leaving the party open to criticism from an opposition able to ‘hit them where it hurts’. In both cases politicians were (rightly) not prepared to ask younger voters to pay to resolve the situation. So, the social care crisis has dragged on. Failure in future to address these generational challenges—all the more likely if generational locks are tightened by an ongoing politics of blame or credit for the Brexit decision—would deliver similarly unattractive results. For example, the health funding challenge may echo the social care deadlock. However, widespread support for the NHS could mean that rather than nothing happening we settle for some, but insufficient, additional funding paid for in generationally unfair ways (such as national insurance on the working‐age population). The government’s announcement in June 2018 of £20 billion extra for the NHS, with no detail on the source of funds, raises this possibility. The result would be older generations let down on the quality of their healthcare, and young generations’ living standards squeezed again. On the needs of younger generations, their support for Labour been matched by a focus on some issues, such as tuition fees, but caution remains in other areas. On housing, the party went into the 2017 election with a more conservative council tax policy than in 2015, while Sadiq Khan explicitly ruled out action on green belt constraints during his London mayoral election campaign. Feeling little threat to their youth support from the Conservatives, Labour may feel worryingly comfortable in this position. Finally, it’s worth considering who will be hit hardest if generational economic challenges continue to be sidestepped. The least well‐off older people suffer most in our broken social care system, and those in younger generations without parental assets face the bleakest housing prospects. The irony might be that a partial shift in political divides from class to age puts locks on policy that mean that class‐based challenges are deepened, as well as generational ones enduring. Better outcomes While this bad equilibrium is clearly possible, it is far from certain. Luck, supply‐side responses in the form of more ambitious party strategies, or demand‐side pressure for change, could all precipitate better outcomes. Luck (or an unprecedentedly successful economic strategy) could trigger the return of meaningful productivity growth. This would directly support income progress for younger adults, help to maintain the existing welfare state without tax rises, and ease the political economy of generational trade‐offs by reducing the zero‐sum nature of choices. It is also possible that age‐based cultural cleavages will ease over time, opening up political choices. This could happen structurally as current younger cohorts age or, more optimistically, it could be because individual issues diminish in salience. On the latter, see Rob Ford and Maria Sobolewska’s discussion elsewhere in this issue of a range of such scenarios on migration. But such shifts would not be a panacea, and there may be pressures in the other direction. For example, productivity growth, while crucial in supporting young adults’ living standards, is unlikely to address a lack of asset accumulation. And while Brexit may reduce the political salience of divides on migration, it has to‐date reduced earnings growth and may entail significant new pressures on resources, exemplified, for example, by recent public commitments to a UK‐only satellite programme to replace the Galileo project. If luck does not solve these challenges then a supply‐side response from parties might, with political strategies beyond current superficial attempts such as the Conservatives’ offer of a millennial rail card and Labour’s promise to keep free pensioner bus passes. This would involve breaking out of current age coalitions to form a majority that allows the internalisation of trade‐offs in the combination of a generationally fair health and care funding solution and a wider package of reforms to make Britain work for the young. That is easier said than done. Labour may believe it has the best chance of such a breakthrough: after all, if this Parliament lasts, it will be running against a twelve‐year incumbent. However, much more sensitivity on issues of values and culture that appear to have reduced Labour’s support among older voters will likely be required. For the Conservatives, a sensible focus would be on those in their thirties and forties, rather than students who are unlikely to provide high volumes of support. Such a Conservative breakthrough hinges on youthful Labour support proving to be a life‐stage—rather than cohort—effect, with more optimistic scenarios for home ownership potentially underpinning middle‐age switching of party allegiance. Importantly, to achieve such a breakthrough, either party would need to establish a post‐Brexit political narrative that avoids all future outcomes and choices being refracted through the age cleavage that defined the Brexit decision itself. The parties could also tap into strong wells of generational harmony and support—we do not see the country as divided between generations, even if our politics is. There is already evidence of generational coalitions building for change, even where the beneficiaries are refined to a particular age group. On housing, since 2010 old‐age support for house building in the local area has doubled, while younger adults continue to back decent pensions and healthcare for the old. If nothing else, this reminds us that we live not as individuals or representatives of generations, but as parts of families. There are also many areas of policy that are far from zero‐sum, not least when the issue is not about tax and spend. For example, action to address the risks young people face in the labour market or in their pension regime needn’t have significant implications for older voters. Wider constraints, such as Labour’s loss of Scottish seats, mean we can’t necessarily rely on a government with a big majority in the years ahead. An alternative route for escaping generational locks might involve demand‐side pressures from voters encouraging a more creative politics. First, while we again have two‐party politics of a form not seen since the 1970s, a return to the longer‐term trend of political fragmentation is possible. Such a shift would add more volatility and possibly enable cross‐party and generational coalition building. Demand‐side pressure for change could also manifest itself if two‐party politics continues, by building to such an extent on specific issues that parties are forced to innovate, without owning the solutions themselves. Devices like the Turner Pensions Commission might be more frequently turned to in future. Conclusion British politics may enter the post‐Brexit era stuck in a bad generational equilibrium, with different generational blocs gripping our two main parties. That would pose impediments to delivering the changes Britain badly needs. However, now more than ever, future trajectories are uncertain. These challenges are not going away, but politics is more unstable than it seemed even a few years ago. Sometimes it feels as though our parties are just hoping something will turn up to break the deadlock. But providing a proactive response to these challenges—with honesty about the give‐and‐take required—may be how a post‐crisis, post‐Brexit political offer with a broader appeal emerges. That will entail good leadership as well as good luck. That does seem a lot to ask, but then again big change always does.
The second example is social care. All parties accept that the status quo is awful, and yet both have played a role in ensuring that no change takes place. George Osborne labelled Labour’s 2010 proposals for collective insurance drawing on the wealth in older people’s estates a ‘death tax’. Similar criticisms were then thrown in the other direction by Labour following the 2017 Conservative manifesto proposal that better‐off individuals contribute more towards their care costs from their assets. This was a case of the Conservatives asking an age group it relies on for support to engage in generational trade‐offs (admittedly, with flaws), leaving the party open to criticism from an opposition able to ‘hit them where it hurts’. In both cases politicians were (rightly) not prepared to ask younger voters to pay to resolve the situation. So, the social care crisis has dragged on. Failure in future to address these generational challenges—all the more likely if generational locks are tightened by an ongoing politics of blame or credit for the Brexit decision—would deliver similarly unattractive results. For example, the health funding challenge may echo the social care deadlock. However, widespread support for the NHS could mean that rather than nothing happening we settle for some, but insufficient, additional funding paid for in generationally unfair ways (such as national insurance on the working‐age population). The government’s announcement in June 2018 of £20 billion extra for the NHS, with no detail on the source of funds, raises this possibility. The result would be older generations let down on the quality of their healthcare, and young generations’ living standards squeezed again. On the needs of younger generations, their support for Labour been matched by a focus on some issues, such as tuition fees, but caution remains in other areas. On housing, the party went into the 2017 election with a more conservative council tax policy than in 2015, while Sadiq Khan explicitly ruled out action on green belt constraints during his London mayoral election campaign. Feeling little threat to their youth support from the Conservatives, Labour may feel worryingly comfortable in this position. Finally, it’s worth considering who will be hit hardest if generational economic challenges continue to be sidestepped. The least well‐off older people suffer most in our broken social care system, and those in younger generations without parental assets face the bleakest housing prospects. The irony might be that a partial shift in political divides from class to age puts locks on policy that mean that class‐based challenges are deepened, as well as generational ones enduring. Better outcomes While this bad equilibrium is clearly possible, it is far from certain. Luck, supply‐side responses in the form of more ambitious party strategies, or demand‐side pressure for change, could all precipitate better outcomes. Luck (or an unprecedentedly successful economic strategy) could trigger the return of meaningful productivity growth. This would directly support income progress for younger adults, help to maintain the existing welfare state without tax rises, and ease the political economy of generational trade‐offs by reducing the zero‐sum nature of choices. It is also possible that age‐based cultural cleavages will ease over time, opening up political choices. This could happen structurally as current younger cohorts age or, more optimistically, it could be because individual issues diminish in salience. On the latter, see Rob Ford and Maria Sobolewska’s discussion elsewhere in this issue of a range of such scenarios on migration. But such shifts would not be a panacea, and there may be pressures in the other direction. For example, productivity growth, while crucial in supporting young adults’ living standards, is unlikely to address a lack of asset accumulation. And while Brexit may reduce the political salience of divides on migration, it has to‐date reduced earnings growth and may entail significant new pressures on resources, exemplified, for example, by recent public commitments to a UK‐only satellite programme to replace the Galileo project. If luck does not solve these challenges then a supply‐side response from parties might, with political strategies beyond current superficial attempts such as the Conservatives’ offer of a millennial rail card and Labour’s promise to keep free pensioner bus passes. This would involve breaking out of current age coalitions to form a majority that allows the internalisation of trade‐offs in the combination of a generationally fair health and care funding solution and a wider package of reforms to make Britain work for the young. That is easier said than done. Labour may believe it has the best chance of such a breakthrough: after all, if this Parliament lasts, it will be running against a twelve‐year incumbent. However, much more sensitivity on issues of values and culture that appear to have reduced Labour’s support among older voters will likely be required. For the Conservatives, a sensible focus would be on those in their thirties and forties, rather than students who are unlikely to provide high volumes of support. Such a Conservative breakthrough hinges on youthful Labour support proving to be a life‐stage—rather than cohort—effect, with more optimistic scenarios for home ownership potentially underpinning middle‐age switching of party allegiance. Importantly, to achieve such a breakthrough, either party would need to establish a post‐Brexit political narrative that avoids all future outcomes and choices being refracted through the age cleavage that defined the Brexit decision itself. The parties could also tap into strong wells of generational harmony and support—we do not see the country as divided between generations, even if our politics is. There is already evidence of generational coalitions building for change, even where the beneficiaries are refined to a particular age group. On housing, since 2010 old‐age support for house building in the local area has doubled, while younger adults continue to back decent pensions and healthcare for the old. If nothing else, this reminds us that we live not as individuals or representatives of generations, but as parts of families. There are also many areas of policy that are far from zero‐sum, not least when the issue is not about tax and spend. For example, action to address the risks young people face in the labour market or in their pension regime needn’t have significant implications for older voters. Wider constraints, such as Labour’s loss of Scottish seats, mean we can’t necessarily rely on a government with a big majority in the years ahead. An alternative route for escaping generational locks might involve demand‐side pressures from voters encouraging a more creative politics. First, while we again have two‐party politics of a form not seen since the 1970s, a return to the longer‐term trend of political fragmentation is possible. Such a shift would add more volatility and possibly enable cross‐party and generational coalition building. Demand‐side pressure for change could also manifest itself if two‐party politics continues, by building to such an extent on specific issues that parties are forced to innovate, without owning the solutions themselves. Devices like the Turner Pensions Commission might be more frequently turned to in future. Conclusion British politics may enter the post‐Brexit era stuck in a bad generational equilibrium, with different generational blocs gripping our two main parties. That would pose impediments to delivering the changes Britain badly needs. However, now more than ever, future trajectories are uncertain. These challenges are not going away, but politics is more unstable than it seemed even a few years ago. Sometimes it feels as though our parties are just hoping something will turn up to break the deadlock. But providing a proactive response to these challenges—with honesty about the give‐and‐take required—may be how a post‐crisis, post‐Brexit political offer with a broader appeal emerges. That will entail good leadership as well as good luck. That does seem a lot to ask, but then again big change always does.
The second example is social care. All parties accept that the status quo is awful, and yet both have played a role in ensuring that no change takes place. George Osborne labelled Labour’s 2010 proposals for collective insurance drawing on the wealth in older people’s estates a ‘death tax’. Similar criticisms were then thrown in the other direction by Labour following the 2017 Conservative manifesto proposal that better‐off individuals contribute more towards their care costs from their assets. This was a case of the Conservatives asking an age group it relies on for support to engage in generational trade‐offs (admittedly, with flaws), leaving the party open to criticism from an opposition able to ‘hit them where it hurts’. In both cases politicians were (rightly) not prepared to ask younger voters to pay to resolve the situation. So, the social care crisis has dragged on. Failure in future to address these generational challenges—all the more likely if generational locks are tightened by an ongoing politics of blame or credit for the Brexit decision—would deliver similarly unattractive results. For example, the health funding challenge may echo the social care deadlock. However, widespread support for the NHS could mean that rather than nothing happening we settle for some, but insufficient, additional funding paid for in generationally unfair ways (such as national insurance on the working‐age population). The government’s announcement in June 2018 of £20 billion extra for the NHS, with no detail on the source of funds, raises this possibility. The result would be older generations let down on the quality of their healthcare, and young generations’ living standards squeezed again. On the needs of younger generations, their support for Labour been matched by a focus on some issues, such as tuition fees, but caution remains in other areas. On housing, the party went into the 2017 election with a more conservative council tax policy than in 2015, while Sadiq Khan explicitly ruled out action on green belt constraints during his London mayoral election campaign. Feeling little threat to their youth support from the Conservatives, Labour may feel worryingly comfortable in this position. Finally, it’s worth considering who will be hit hardest if generational economic challenges continue to be sidestepped. The least well‐off older people suffer most in our broken social care system, and those in younger generations without parental assets face the bleakest housing prospects. The irony might be that a partial shift in political divides from class to age puts locks on policy that mean that class‐based challenges are deepened, as well as generational ones enduring. Better outcomes While this bad equilibrium is clearly possible, it is far from certain. Luck, supply‐side responses in the form of more ambitious party strategies, or demand‐side pressure for change, could all precipitate better outcomes. Luck (or an unprecedentedly successful economic strategy) could trigger the return of meaningful productivity growth. This would directly support income progress for younger adults, help to maintain the existing welfare state without tax rises, and ease the political economy of generational trade‐offs by reducing the zero‐sum nature of choices. It is also possible that age‐based cultural cleavages will ease over time, opening up political choices. This could happen structurally as current younger cohorts age or, more optimistically, it could be because individual issues diminish in salience. On the latter, see Rob Ford and Maria Sobolewska’s discussion elsewhere in this issue of a range of such scenarios on migration. But such shifts would not be a panacea, and there may be pressures in the other direction. For example, productivity growth, while crucial in supporting young adults’ living standards, is unlikely to address a lack of asset accumulation. And while Brexit may reduce the political salience of divides on migration, it has to‐date reduced earnings growth and may entail significant new pressures on resources, exemplified, for example, by recent public commitments to a UK‐only satellite programme to replace the Galileo project. If luck does not solve these challenges then a supply‐side response from parties might, with political strategies beyond current superficial attempts such as the Conservatives’ offer of a millennial rail card and Labour’s promise to keep free pensioner bus passes. This would involve breaking out of current age coalitions to form a majority that allows the internalisation of trade‐offs in the combination of a generationally fair health and care funding solution and a wider package of reforms to make Britain work for the young. That is easier said than done. Labour may believe it has the best chance of such a breakthrough: after all, if this Parliament lasts, it will be running against a twelve‐year incumbent. However, much more sensitivity on issues of values and culture that appear to have reduced Labour’s support among older voters will likely be required. For the Conservatives, a sensible focus would be on those in their thirties and forties, rather than students who are unlikely to provide high volumes of support. Such a Conservative breakthrough hinges on youthful Labour support proving to be a life‐stage—rather than cohort—effect, with more optimistic scenarios for home ownership potentially underpinning middle‐age switching of party allegiance. Importantly, to achieve such a breakthrough, either party would need to establish a post‐Brexit political narrative that avoids all future outcomes and choices being refracted through the age cleavage that defined the Brexit decision itself. The parties could also tap into strong wells of generational harmony and support—we do not see the country as divided between generations, even if our politics is. There is already evidence of generational coalitions building for change, even where the beneficiaries are refined to a particular age group. On housing, since 2010 old‐age support for house building in the local area has doubled, while younger adults continue to back decent pensions and healthcare for the old. If nothing else, this reminds us that we live not as individuals or representatives of generations, but as parts of families. There are also many areas of policy that are far from zero‐sum, not least when the issue is not about tax and spend. For example, action to address the risks young people face in the labour market or in their pension regime needn’t have significant implications for older voters. Wider constraints, such as Labour’s loss of Scottish seats, mean we can’t necessarily rely on a government with a big majority in the years ahead. An alternative route for escaping generational locks might involve demand‐side pressures from voters encouraging a more creative politics. First, while we again have two‐party politics of a form not seen since the 1970s, a return to the longer‐term trend of political fragmentation is possible. Such a shift would add more volatility and possibly enable cross‐party and generational coalition building. Demand‐side pressure for change could also manifest itself if two‐party politics continues, by building to such an extent on specific issues that parties are forced to innovate, without owning the solutions themselves. Devices like the Turner Pensions Commission might be more frequently turned to in future. Conclusion British politics may enter the post‐Brexit era stuck in a bad generational equilibrium, with different generational blocs gripping our two main parties. That would pose impediments to delivering the changes Britain badly needs. However, now more than ever, future trajectories are uncertain. These challenges are not going away, but politics is more unstable than it seemed even a few years ago. Sometimes it feels as though our parties are just hoping something will turn up to break the deadlock. But providing a proactive response to these challenges—with honesty about the give‐and‐take required—may be how a post‐crisis, post‐Brexit political offer with a broader appeal emerges. That will entail good leadership as well as good luck. That does seem a lot to ask, but then again big change always does.
