How positively should young people react to this year’s party conference season? Liz Emerson, IF Co-founder, offers an assessment of some of the housing, employment and transport policies launched from an intergenerational fairness perspective.
The Lib Dems came out of the starting blocks first with Mr Clegg announcing, “parents and grandparents who want to help their children and grandchildren buy a property of their own, we are going to allow those parents and grandparents to act as a guarantee.” According to conversations between the Press Association and Lib Dem aides, the details of the scheme have yet to be finalised but it seems that the lump sum element of pensions could be used as a guarantee. Such measures send a signal that without family financial help younger generations will be unable to afford a home of their own. Will this help to bring house prices down over the long-term? The answer is a resounding “No”.
Labour chose a different tack with the announcement that they will tackle the housing shortage by building 200,000 new homes each year until 2020. A signal was sent to developers who “landbank” plots in order to gain on land price increases over time with Ed Miliband stating, “Either use the land or lose the land.” Easy to say but in practice difficult to enforce, unless Labour brings in compulsory purchase orders. After all, why would developers, who have historically deliberately constrained supply to maintain high house prices, wish to flood the market with new housing unless they are forced to?
The Conservative’s solution is for government to intervene ever further in the housing market. David Cameron chose his speech at the party conference to bring forward the launch of the second stage of ‘Help to Buy’, defending his position by saying, “it was “not right” that young people and families had to rely on rich parents to get their foot on the housing ladder.” The first scheme, launched in the Spring of 2013, offered help in the form of interest-free five-year loans of up to 20% for deposits on new-build properties worth up to £600,000. Propping up the housing market by encouraging high loan-to-value mortgages may not be in the best interests of many young people who will still have to pay mortgages that are often more than ten times their annual salary on properties even outside London.
The Green Party was quiet on the need for new house building for the obvious reason that some of the desperately needed new homes will have to be built on greenbelt land, an issue that would not go down well with the party faithful. A truly intergenerationally fair policy would be to consider the interests of current young people alongside those of generations to come, thereby necessitating some building on greenbelt as well as brown-field and inner city micro sites. Instead, the Green Party chose to concentrate on the need for better protection for renters – helpful intergenerationally since more than half of renters are aged under-35 according to government figures.
The LibDems seem to be leading the pack on intergenerational fairness in employment. Tim Farron, Liberal Democrat Party President, called for removing National Insurance from the earnings of people on the minimum wage – as well as taking them out of income tax. This is good news for lower paid workers, many of whom are young and at the mercy of short-term and “zero-hours” contracts. However, this may not be enough to make up for the LibDem u-turn on tuition fees, which has meant many young people are now faced with paying an extra 9% tax on annual income over £21,000 for the next 30 years.
Labour came a close second by announcing help for parents to get back to work. Working parents would receive up to 25 hours of free childcare a week under a Labour government for any children aged three and four years old. Ed Balls unveiled the policy by saying, “for many families high childcare costs mean it doesn’t even add up to go to work. So to make work pay for families, we must act.” Labour also announced it would guarantee that childcare is available for all primary school children from 8am to 6pm. Part-time workers, often young mothers, would gain through this policy as long as Labour come through with meaningful amounts of funding, so from an intergenerational fairness perspective it is to be welcomed cautiously.
However, not all is intergenerationally fair in the Labour camp. Liam Byrne then pulled the rug from under younger generations’ feet by, on the one hand, announcing that Labour will support [email protected] (in order to tap into a potential 600,000-strong pool of new young voters), whilst on the other hand, announcing that the party would restrict out-of-work benefits for young people in order to give over-50s larger out-of-work benefits.
The Conservatives must win the prize for the most intergenerationally unfair conference proposal with David Cameron’s announcement that under-25s could lose state benefits if they are not in education, employment or training, lose housing benefit completely and be required to attend a Job Centre daily if claiming Job Seekers Allowance. With the withdrawal of concessionary transport fares for young people, just getting to a Job Centre on a daily basis may well be beyond the budgets of many young people, making this an extremely regressive policy that plays to the whims of hardening attitudes towards welfare for the young amongst the electorate.
Whilst investment in public transport infrastructure should in theory be in the interests of younger and future generations, the £50bn cost of High Speed 2, for example, as announced by the Conservatives, may in fact present unaffordable financial liabilities for future generations. This is because the UK’s fondness of “Public Finance Initiatives (PFIs)” involves borrowing money now and paying back the money borrowed, with interest, in the future. Current PFI debt stands at £240 billion with many PFI contract terms falling due in 2040. Since it is younger generations who will be picking up the bill, it seems only fare that they should have a seat at the negotiating table, but nowhere in discussions have the rights of future taxpayers been taken into consideration. IF calls for intergenerational impact assessments to be undertaken on all such spending programmes to ensure younger and future generations are better protected.
The announcement by Chancellor George Osborne to impose a freeze on fuel duty until polling day in May 2015 could be interpreted as a short-term political sop to middle Britain at the expense of younger and future generations. A more intergenerationally fair policy would be to support spending on public transport and re-introduce concessions for the many under-25s who simply cannot afford the fares to get to educational establishments or work places.
The LibDems’ Nick Clegg chose to support greater travel concessions for young people outside London by saying, “It cannot be right at a time when we’ve got high youth unemployment, when we’re desperately trying to give youngsters the opportunity to have access to training, to apprenticeships, that this huge cost of living is not imposed upon you in some parts of the country, and is in others.” All good so far, so let’s see whether concessionary fares for young people make it into the party’s manifesto.
Swings and roundabouts appear to be the order of the day at this year’s party conferences. A wait and watch approach may well be the best course of action, before younger generations sign-up to party manifestos.