As the Chancellor prepares to announce the budget, many young people fear yet another budget that overlooks the many problems society is facing. Housing, climate, low pay, student loans, and the cost-of-living crisis are issues that should be top priorities for a government that is serious about solving problems. Alec Haglund, IF Researcher, discusses policies that young people would like to see included in the budget.
The polycrisis continues
There is no shortage of crises currently facing our society. The housing crisis, the climate crisis, and the cost-of-living crisis, to name a few, continue to wreak havoc on the social fabric and the ecological systems our economy is dependent on.
Although we may have become accustomed to living in a world with yet another crisis around the corner and problems that are seemingly impossible to overcome, radical and bold policies could bring about a society that is socially and economically sustainable and fair towards all generations. We call for the government to step up its commitment to legislative action across policy fronts.
The housing crisis
The housing crisis continues to devastate lives across the UK, whether it’s in the form of homelessness, unaffordable rents, or substandard living conditions. Young people are often at the forefront of the housing crisis, regularly having to pay over one-third of their already low and declining wages just to rent a room.
Although not nearly enough has been done to tackle the issue of housing, IF welcomes the Renters Reform Bill, and calls for the government to immediately introduce the legislation proposed in the Renters Reform Bill to end no-fault evictions and address the balance of power between landlords and the 4.5 million private renters.
However, to seriously tackle the housing crisis, we need to build more housing across all tenures, particularly social housing. As the social housing stock has continued to decline, it has led to increasing prices in the private rental sector where affordable and secure tenancies are already far and few between. The government must urgently provide legislative and planning reform to massively boost the construction of homes and provide funding to build social housing homes across the country.
Climate policy is as urgent as ever
The climate crisis continues to deepen. For any economic plan to be successful in the long term it must put urgent climate action at the forefront of policy. Taking decisive action on climate policy also has positive effects on the economy as a whole, as investing in green energy, public transport infrastructure and energy efficiency not only creates jobs and boosts economic activity, but also sets the foundation for a much more resilient, productive and sustainable economy for future generations.
Massive investment in new renewable energy projects is urgently required. Also needed is the upgrading and improvement of public transport, the housing stock, energy networks and other infrastructure. A small but important step would be to make it easier to build onshore wind farms. IF has joined other campaigning organisation such as Possible to call for lifting all bans on onshore wind development.
Furthermore, instead of cutting air passenger tax on domestic flights as proposed by the government, research by IF has shown that it would be more sensible to ban domestic flights with alternative rail routes taking less than 4.5 hours. City-centre to city-centre travel times on such routes are only marginally longer by rail, and if combined with replacing air passenger duty with VAT and investing in rail and public transport, it would greatly improve our chances of meeting Net-zero targets.
End low pay
As real wages have been declining for decades, workers are now earning less than they did in 2008 in real terms. For policy to be fair to all, it is unacceptable that those teaching our kids or providing care for the elderly must use food banks so as not to go hungry. The government must allocate funding towards our public services to give workers fair wage increases to ensure the sustainability of the services we all depend on across generations.
It is wholly unfair that workers aged 18-22 have a lower legal minimum wage than workers aged above 22. The National Living Wage also needs to be raised to reflect the severity of the cost-of-living crisis we are currently experiencing. A majority of households in poverty are also in work, and the only solution to this problem is raising the National Living Wage to a level that is linked to the cost of living.
In the midst of the polycrisis, current and future students have fared particularly poorly. First, they have faced disrupted learning due to COVID, followed by the announcement that the repayment term for student loans will be extended from 30 years to 40 years. The unsustainability of the ever-expansive and financialised university model could be witnessed in the scenes at Durham where students had to queue overnight hoping to secure a place to live, however unaffordable the private rents might be.
Higher education should be thought of as an investment into our future, but instead students are seen as cash cows for universities and landlords alike. Additionally, low- and middle-income students are doomed to pay what is effectively a graduate tax for almost their entire working lives, while the wealthiest 10% of students are outside the graduate tax system as they can pay the cost upfront. Graduates must currently pay an additional tax of 9% on all earnings above £27,295, and those with a Masters degree must pay a further 6% tax on all earnings above £21,000. This results in a marginal tax rate that is 9% or 15% higher than that paid by those who were lucky enough to attend university when it was free.
Although a system of free education funded by progressive taxation is the ultimate goal, the government should immediately increase maintenance loans, which have risen by a miserly 2.8%, ensure that enough student housing is built, and cancel the increased payment term for student loans set to rise from 30 to 40 years.
Taxation, taxation, taxation
We need to provide enough funding for our public services to ensure that they are fit for purpose both for present and future generations, but the cost must be shared evenly across generations so that young people do not face a disproportionate tax burden.
The most visible intergenerational injustice of the current taxation system is that it does not tax earned and unearned income at the same rates. As young people primarily receive their income from work, while unearned income is overwhelmingly collected by older and wealthier people in the form of dividends and capital gains, this means that young people and those receiving their income from work are taxed at higher rates than wealthier, older people.
In the name of intergenerational fairness, the government should therefore equalise the taxation of all forms of income. Furthermore, in order to fund our public services and pay for green investment, supporting students, reducing child poverty, building genuinely affordable housing and many other vital policies, the government ought to close tax loopholes and consider how to institute a reasonable taxation of wealth.
The topics and policies outlined in this text would constitute a budget that is fair for all generations and would contribute to building a more sustainable society and economy for future generations. The current context of a multitude of crises requires bold action, and young people would like to see the government acting accordingly.
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