It’s the world’s second international Intergenerational Fairness Day on the 16 November. Organisations from across the globe will come together to call on their respective governments to better consider the interests of younger and future generations as well as report on developments in their respective countries. IF Researcher, Toby Whelton, introduces the participating organisations and gives an overview of the UK’s intergenerational fairness wins and losses.
Intergenerational fairness across the globe
To celebrate the world’s second Intergenerational Fairness Day, we will hear from voices and organisations from across the globe working to protect and promote the interests of younger and future generations.
Here is a quick-run down of what to expect:
Canada – Andrea Long from Generation Squeeze investigates whether the rhetoric of Canada’s national budget titled “Fairness for Every Generation” is being upheld or whether it is just another slogan.
Germany – Lena Winzer from the Foundation for Rights of Future Generations (FRFG) details the wins and losses for intergenerational fairness in Germany, focusing on: alterations to climate commitments; reforms to social security; the management of nuclear waste; and young people’s political engagement.
Australia – Thomas Walker, the CEO of Think Forward, discusses his experience as a member of the Australian government’s Aged Care Taskforce.
The view from the UK
But first, we will begin with IF’s perspective and review the current state of intergenerational fairness in the UK.
It has been a historic year in British politics with a General Election won by the Labour party in July, ending fourteen years of Conservative rule. Labour ran on a message of “change”, so what changes have we seen for younger and future generations in 2024?
Taxation
Currently, the UK tax system overburdens earned income and under-taxes the unearned income from wealth and assets. Given younger people are more likely to be reliant on earned income compared to asset-rich older generations, there is an intergenerational unfairness embedded within the British tax system.
Politicians’ attempts to address this over the past year have been a mixed bag. The most impactful policy decision came from Rishi Sunak, former Prime Minister, who cut employees’ National Insurance Contributions (NICs) from 10% to 8% in the Spring Budget (after cutting NICs from 12% to 10% in Autumn 2023). NICs are paid on earned income, but differs from income tax as it is not paid on pension withdrawals nor is it paid by over-65s in work. Thus, this tax cut was enjoyed chiefly by young workers and helped to equalise the tax burden across generations.
Other good news came from the recent Labour budget, which saw a modest increase to Capital Gains Tax (CGT), which will increase the taxation of wealth. However, less encouraging was Labour’s decision to increase employers’ NICs, which will likely be passed on to younger workers in the form of lower wages and rising youth unemployment.
Climate
Across the globe this year, previously agreed climate targets have become uncertain, watered down and rejected. However, the UK’s commitment to preserving the planet for future generations appears to be holding strong. Labour ran their election campaign on a promise of green growth, which has started to materialise with the creation of Great British Energy and the National Wealth Fund, both of which will invest billions of pounds into the green transition and renewables. Labour’s Autumn Budget announced more investment into public transport and domestic air travel will be taxed more heavily. These are all victories for young and future generations.
Housing
The impact of the housing crisis cannot be overstated. Home ownership amongst young people has collapsed and ever-increasing rent prices continue to swallow-up young people’s disposable income thereby exacerbating the cost-of-living crisis. Rent inflation was as high as 9.1% earlier this year. Meanwhile, shocking statistics have emerged on the housing crisis facing children: 150,000 British children are homeless and a further 1.5 million children live in homes below minimum health and safety standards. Housing remains the greatest area of intergenerational unfairness in Britain.
The new Labour government seem to acknowledge the problem. They have pledged to build 1.5 million houses within their parliamentary term with an emphasis on affordable housing and restoring the UK’s depleted supply of council homes. They plan to meet these targets by: building on the green belt; enforcing state-mandated building targets for local authorities; and by recruiting three hundred new planning officers. While promising, only time will tell if these targets are met.
Social security
Over recent decades, government spending on older generations in the UK has increasingly dwarfed spending on younger generations. Unless action is taken, the young and future generations will pick up a disproportionate amount of that bill. Despite the immense pressures of an ageing population, all main political parties pledged made manifesto pledges to maintain the state pension triple-lock. This is a policy which ensures that the state pension rises by the highest of inflation, earnings or 2.5%). In 2025, the state pension will deliver an above inflation increase of 4.1% − an extra £472 a year per person. Meanwhile, working-age benefits will rise by far less, continuing the trend of the withdrawal of the welfare safety net from the young in order to cushion the old.
An unexpected IF victory was the cut to Winter Fuel Payments (WFP). This was a lump sum payment given to all state pensioners every year since 1997, regardless of need or wealth. WFP will now be means-tested, which makes complete sense given the fact that over three million pensioners live in millionaire households according to the government’s Wealth & Assets Survey. However, the extreme anger and backlash provoked by this decision highlights the scale of the challenge campaigners for young and future generations are up against.
Student finance
The current system of student finance continues to cripple young people. English and Welsh graduates face an additional tax rate of 9% above the repayment threshold in order to pay off eye-watering levels of student debt. The interest rate on student debt reached a record 7.9% this year. This means that most graduates, despite forfeiting a large chunk of their payslips to repayment, will see their debt balance actually increase. The debt of future cohorts will be even greater following the new government’s decision to increase tuition fees will rise for the first time in six years. Fees will rise by the rate of inflation to £9,535. Meanwhile, students at university remain under-supported due to real-term cuts to their maintenance loans which are meant to cover the cost of living. This has left students impoverished with many having to rely on foodbanks, work excessive hours at part-time jobs alongside their studies and many have, or at least considered, dropping out.
More action is needed
The UK, like many economies around the world, has to balance government spending, respond to economic shocks, address the climate crisis, while also supporting a rapidly ageing society. The social contact between generations has never been more important. By taking away investment in the young, successive governments have undermined the long-term generational contract that is that each new generation should have better prospects than those who have gone before. On this Intergenerational Fairness Day, we ask governments around the world to better protect the interests of younger and future generations.