House of Lords select committee calls for state pension “triple lock” to end

The House of Lords Intergenerational Fairness and Provision Select Committee’s inquiry into intergenerational fairness has called for wide-ranging reforms to repair Britain’s intergenerational contract, including several eye-catching changes to pensioner benefits. How likely are they are to actually happen? David Kingman looks at what they said

One of the most remarkable signs that intergenerational justice has rocketed up the political agenda in recent years is that since IF was founded in 2011, there have been two major cross-party parliamentary inquiries into intergenerational inequality.

In 2016, the House of Commons Work and Pensions select committee (select committees are cross-party groupings of MPs which are convened to investigate a specific policy, which both make recommendations to the government and attempt to hold it to account over its previous policy measures) held an inquiry into intergenerational fairness, which was then followed last year by the House of Lords Intergenerational Fairness and Provision select committee’s own inquiry.

The House of Lords and intergenerational fairness

IF was invited to give evidence to these select committee inquiries both in writing and while being interviewed as expert witnesses; you can see me giving evidence as an expert witness on Parliament.tv (from about halfway through the video).

After many months of deliberating over the evidence that they were presented with, the committee members published their final report last week, which argued for a number of wide-ranging policy changes which would be aimed at improving the socio-economic position of young people.

What conclusions did they reach?

“Policy must be rebalanced in favour of the young”

The committee’s findings – published on 25 April under the title “Tackling Intergenerational Unfairness” – argued strongly that today’s young adults are doing worse than either previous generations when they were at the same stage in life or today’s older adults, and that this has been driven by the shifting nature of work (particularly the decline in secure, well-paid employment) and the declining affordability of housing.

They also criticised successive governments for failing to make adequate preparations for the ageing of Britain’s population – such as reforming old-age social care funding while the system was under relatively less strain than it is today – even though the changes in Britain’s demography which are taking place have been being projected for several decades.

Six conclusions

The select committee reached six main conclusions about intergenerational unfairness in its final report.

Firstly, they argued that the government lacks the right data to effectively measure inequalities between different generations and how government policy may affect them; this led to them calling for a new fiscal rule which would be designed to prevent governments from piling up large fiscal liabilities that future generations would then have to pay off without first considering the impact that this could have on intergenerational inequality.

Secondly, it argued that the housing crisis is one of the key areas in which today’s young adults are struggling, which is a consequence of governments doing too little to ensure that Britain builds more homes.

The select committee argued that that government should encourage more homes to be built by giving local authorities greater freedom to build new housing and by making it more straightforward for public bodies to dispose of unneeded land for housing.

They also called for further reforms to make the private rented sector a more secure option for long-term renters (although this recommendation may well have been conceived before the recent announcement that the government is banning no-fault evictions, which should go some way towards achieving this aim).

Thirdly, the report criticised the education system for not succeeding at educating young people in a way which would enable them adapt to the modern labour market, especially if they choose to pursue a non-academic career path.

It also highlighted the problem that the education system is still geared to providing education to young people, when rising life expectancy is likely to make re-skilling older people more necessary than it has been in the past. The committee argued for more investment in both vocational education and retraining to make it easier for adults to acquire new skills.

Fourthly, the select committee drew attention to the stagnating pay progression of the Millennial generation in comparison with previous cohorts. They argued that the government should strengthen employment law by ensuring that all workers – regardless of whether they are employed or self-employed – receive the employment status of “worker”, which would guarantee that they are entitled to basic employment rights, such as sick pay and holiday pay.

Fifthly, the committee’s report called for the strengthening of communities in order to tighten intergenerational bonds, although it didn’t lay out specific policy measures which could help to achieve this.

Sixthly, it called for reforms to pensioner benefits so that they become much better targeted towards older people who are living on low incomes, rather than remaining universal benefits which are enjoyed by all pensioners, regardless of income.

“End pensioner benefits to help young”

The select committee’s webpage explicitly breaks down these six conclusions into a list of 14 specific policy recommendations, of which the most eye-catching (and the one which has subsequently grabbed the most headlines) was the proposed reforms to pensioner benefits.

The select committee report specifically argued that the state pension “triple lock” – the rule under which the state pension automatically goes up each year in line with whichever is highest out of earnings growth, CPI inflation or 2.5% – is outdated now that only a minority of pensioner households still live below the government’s official poverty threshold.

This is an argument that IF strongly supports, as we believe it was both unfair and extremely detrimental to working-age households’ living standards that the government chose to implement the triple lock at the same time as it cut working-age social security programmes by introducing both an overall benefit cap for working age households and the freeze in uprating for most working-age benefits between 2015 and 2020.

Intergenerational inequality

More broadly, this report from the House of Lords Intergenerational Fairness and Provision select committee makes a number of very strong points about the extent and nature of intergenerational inequality in the UK today.

It offers an excellent overview of the debate about intergenerational fairness for anyone who would like to know more about why this issue is rising up the political agenda, and it makes a coherent set of recommendations for things that the government could do to try and ameliorate some of these inequalities.

Of course, whether the government will listen to the select committee’s recommendations is another matter entirely – but we have been provided with a good tool to keep the pressure up.

Photo by Filip Mroz on Unsplash: https://unsplash.com/@mroz

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