Levelling up between the generations in the post-pandemic world

There’s been lots of talk of levelling up between regions, but what of levelling up between the generations? After the coronavirus crisis is over, we are likely to see a worsening of the intergenerational inequality our young people already suffer. We must look at putting this right.

We all know that younger millennials and generation Z have on average been dealt a difficult hand in life. Housing costs are eye-watering and home ownership seems a distant prospect for most. Wage growth has been largely stagnant for many years (with a small uptick lately). There’s no prospect of a career for life and many jobs are insecure and on low wages. There’s a mental health crisis among this group. To top it all off, they’re the ones having to solve the environment crisis.

And now they have the fallout of the coronavirus to contend with. Figures from the Resolution Foundation show that those in the 18-24 age group are the most likely to have been furloughed, lost working time or lost their job entirely due to the economic impacts of the crisis. This will have a long-lasting impact on their careers and their lives.

The question for politics is one that those involved have failed to answer for some time: what is our settlement for young people? Politics is always very clear on what schoolchildren ought to have. Politics is pretty clear on what families should get. Politics is certainly (and rightly) keen on talking about the settlement for pensioners. But it is too often silent on younger people making their way in the world.

As liberals, we must be about empowering individuals to make their own choices while using the apparatus of the state to lift them up. Post-pandemic, we know the state will be playing a greater role. UBI might be part of the solution, but it is not specific to younger people and cannot stand alone. Our offer needs to revolve around three key areas that matter to all young people: homes, employment and education, and the environment.

On homes, in my view the answer is fairly simple. We have planning laws that allow certain secure and affordable properties to be ringfenced for older people. I have no objection to that. But we must recognise that while older folks are vulnerable and need help, so do plenty of school, college and university leavers. Let’s look at how we can make this a policy reality. And let’s build lots more houses regardless instead of focusing local campaigns on opposing development.

In employment and education, we know that the traditional settlement of on-the-job training exists in very few workplaces outside the public sector and larger employers. If you’re in Gen Z and you want professional training qualifications, you almost certainly have to pay for them yourself. Let’s look at bringing forward more generous settlements for those socially responsible companies that offer formal, accredited training schemes to their employees under 30, while building on the Skills Wallet we offered at the last election too. Whether we like it or not, the state will need to play a bigger role driving forward the skills agenda in the private sector.

And on the environment, let’s harness the big-hearted and can-do attitude of young people by formally recognising the work they do in this area. Why can’t we create projects, in partnership with the public, private and third sectors, that reward young people who volunteer their time on environmental activism? They deserve more than just warm feelings. We might look at a vocational award, we might offer tax incentives or we could look at other ideas.

Whether or not you agree with my diagnosis or my suggestions, I hope our party will take on the challenge of addressing the problems faced by young people. We must speak up for this disempowered generation.

Most of us became involved in liberal politics to fight inequality, help our communities and put faith in individuals. Let’s prove that we are still interested in doing this by showing our younger people that we care about their predicament in the post-pandemic world.

* Max Wilkinson is a councillor in Cheltenham and was the party’s candidate for the town in the 2019 General Election. He works as a communications consultant.

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19 Comments

  • Phil Beesley 20th May '20 - 7:26pm

    Max W: “We all know that younger millennials and generation Z have on average been dealt a difficult hand in life.”

    Only journalists talk about labels like Gen Z.

    Are we expected to believe that ‘baby boomers’ have been delivered a better hand?

    If you’re giving spin for the kids, don’t offend codgers.

    “If you’re in Gen Z and you want professional training qualifications, you almost certainly have to pay for them yourself. ”

    Let’s look at what government provided for professional development in the 1970s and 1980s. Loads of people went to work and they went to night school or the OU or part time at the FE college. Some people worked at a law firm or accountants to earn qualifications. They carried on working.

    Oh, they paid for their qualifications by grafting?

    Who are the poorest people, secure housing but not enough money for a holiday? Might it be ‘baby boomers’ ?

    I don’t proclaim to know anything. I owner about you.

  • Peter Davies 20th May '20 - 9:01pm

    The term “Levelling up” is at best optimistic. We will need some levelling but let’s not pretend that right now it will be anything other than levelling down.

    We don’t actually have to do much. Recessions actually have a levelling effect The only period in recent history when the Gini index fell was in the aftermath of crash (the first year of the coalition though we can’t claim much credit). Covid 19 has damaged all kinds of investments and pension funds have taken a massive hit. The biggest losers will be the rich and the old.

    The difficult bit is stopping inequality from rising again as we recover.

  • The unfair bit for young people is the wealth that a section receives from inheritance and/or parents paying the deposit on a house for them (using the money from exponential house price increases) so some confiscatory IHT and gift tax rules would sort that out, with means tested grants for further education/training further leveling things out. Don’t expect many people who actually vote to support it, though.

    On the other hand, it has never been easier for young people with some talent and energy to make money via the internet (some social media stars seem to have no talent so perhaps that is not even necessary).

  • James Fowler 21st May '20 - 10:00am

    I think this is a very serious issue and thank you Max for bringing it up. I have a couple of observations – purely anecdotal I’m afraid, but I think they humanise the scale of the problem.

    My Dad was born in 1947. He didn’t go university, but he did go to teacher training college – for free, plus a small grant. Aged 25, he and my mum bought their first house in 1972. It had no inside toilet and no central heating. It cost 2.5x his annual salary, and the council gave them a small grant to improve it. 25 years later his monthly salary was the entire price of his first house. He received his full state pension at 65 and has several other occupational pensions based on final salary indices.

    I was born in 1980. I did go to University, for a small fee and no grant. I bought a flat aged 30 for 3.5x my salary. If my monthly salary is the entire price by 2035, my annual salary will be £1 400 000 – something which I enormously look forward to. I expect I will retire aged 68-70.

    This a brief and very personal sketch of the problem as I see it.

  • Max Wilkinson 21st May '20 - 10:00am

    Thank you for all your comments so far.

    Phil – I don’t think I’m giving any spin for the kids or doing anything to ‘offend codgers’. I’m simply stating well-known facts about the plight of younger people. I’d be interested in some more evidence to back your assertion that in the 70s and 80s people were more willing to ‘graft’ than those born in the 90s and 00s. Perhaps we work to different definitions of ‘graft’.

    Peter – you talk of ‘levelling down’. That seems to be arguing that we can’t do anything positive to help the generation in question without depriving others. I believe the suggestions I’ve made can make a difference without depriving others, while adding to the overall output of the economy and wellbeing of communities.

    Frank – on housing deposits, you’re correct that lots of younger people get help with fees from their parents. I think getting into the realms of inheritance tax won’t be a useful discussion at this moment, though there’s certainly a wider debate to be had about equality between generations and different social backgrounds, involving that subject. However, I have to take issue with your assertion that it’s now easy to ‘make money on the internet’. Whether you’re talking about people trading goods online or becoming influencers on social media, that’s a loose statement made based on assumption rather than facts. The old adage applies “if it was that easy, we’d all be doing it”.

  • Max Wilkinson 21st May '20 - 10:04am

    James – your observation about the inter-generational injustice arising from housing market failure is instructive. I am in a very similar position, except I don’t expect to be able to retire (ever).

  • Peter Martin 21st May '20 - 10:09am

    ” And let’s build lots more houses regardless instead of focusing local campaigns on opposing development.”

    Don’t all political parties advocate some like this at National level? Maybe not at local level though. All politicians say they want to make housing more affordable but there are two major problems. Firstly, the economy depends on housing being expensive. It serves as the collateral for the loans we all are required to take out to keep aggregate demand up. A fall in prices would leave many in negative equity and lead to mortgage defaults. Secondly, many voters are also home owners and don’t want to see either their own home, their second and third homes, or their rental homes fall in value. So the default position, for all politicians with an eye on their voter base, is to sound concerned but do nothing.

    “Let’s prove that we are still interested in doing this by showing our younger people that we care about their predicament in the post-pandemic world.”

    This reminds me of the charge often used against US Democrats. Their policies aren’t often much different from Republicans (I’d say Obama might be different) but they care, or say they do, about the adverse social effects that free market capitalism can cause.

  • Peter Martin 21st May '20 - 10:53am

    “….. let’s harness the big-hearted and can-do attitude of young people by formally recognising the work……..We might look at a vocational award, we might offer tax incentives or we could look at other ideas.”

    Yes why not look at other ideas? What about the Job Guarantee?

    “The Job Guarantee: Delivering the Benefits That Basic Income Only Promises”

    https://ideas.repec.org/a/bpj/bistud/v7y2012i2p66-87n5.html

    There’s lots of other discussion on the JG that is easily discoverable by Googling “Pavlina Tcherneva”

    We’ve created for huge problem for younger people by pushing too many towards university courses that they probably aren’t that interested in and neither provide any real opportunities in the job market afterwards. At the same time they are landed with difficult to repay debts. Young people often wind up at university because they don’t have other viable options and can have pushy parents and teachers.

    So let’s provide some alternatives by way of meaningful jobs. This doesn’t necessarily mean there will be a lower take up of places. It probably will mean that young people might go to uni a few years later when they are better able to decide just what they wish to study.

  • This kind of thinking is the source of the problem
    “Firstly, the economy depends on housing being expensive. It serves as the collateral for the loans we all are required to take out to keep aggregate demand up.”

    The argument that economy depend on housing being expensive is based on behavioural economics i.e. if you feel wealthy you will consume more. Housing like food, utilities and clothing is a basic need. Expensive housing is a major impediment to productivity and real wage growth. The outcome of inflated housing is to inflate debt and maintain the absolute level of interest on higher debt when the rate of interest is falling.

    The answer is what it always has been. Land value capture for the public benefit. We can build houses quicker, more efficiently and cheaper now than when James Fowler’s father bought his first house in 1972. Houses depreciate just as cars do, What goes up in value is the site value – land- which costs nothing to produce. It is a gift of nature.
    Get control of the land market and the abundance of produced goods and services that we are able to produce at low cost in the 21st century will be available to all.
    An economy based on constantly increasing consumption is environmentally unsustainable. We have already reached a tipping point where climate change may be irreversible.
    Countries like Japan, Taiwan, Hong Kong and Singapore have caught up with and surpassed the UK and the west. As huge populations like China, India, Indonesia, Malaysia and Vietnam try to do the same the planet is being eviscerated. We are going to need a massive cultural change to learn to live within environmental limits and it starts with land and other natural resources.

  • Peter Martin 21st May '20 - 6:12pm

    @ JoeB,

    “The argument that the economy depends on housing being expensive is based on behavioural economics i.e. if you feel wealthy you will consume more.”

    That’s part of it. You’ve explained the rest of it yourself. When banks lend they create money. It’s the lending that has created the credit bubble, which has kept the economy afloat, and which will possibly be deflated by the needle of Covid-19. We’ll have to see if that happens.

    Personally I wouldn’t be wanting to put any money into the housing market at the moment. It’s far too risky.

  • Peter Martin 21st May '20 - 7:52pm

    @ Joe B,

    “Houses depreciate just as cars do, What goes up in value is the site value – land”

    Many houses aren’t freehold. They come with an obligation to pay ground rent but they appreciate in value just like any other.

    “Expensive housing is a major impediment to productivity and real wage growth.”

    Possibly. But the areas of the country with higher productivity growth and higher real wage growth are in areas with higher house prices.

    “An economy based on constantly increasing consumption is environmentally unsustainable”

    Yes. But you’ve just been trying to show how we can have an ” abundance of produced goods and services that we are able to produce at low cost in the 21st century (and) will be available to all.” All including “China, India, Indonesia, Malaysia and Vietnam” ?

    I agree it is a problem to be solved but you can’t have it both ways!

  • Peter Martin 21st May '20 - 11:54pm

    @ JoeB,

    “technological progress has long ago produced an abundance of goods and services.”

    You yourself have made the argument that we can’t spend recklessly on what we’d all like to spend money on in health, education and general public services. I seem to remember, in the pre Covid world, your talking about the Govt balancing its current account spending and only ‘borrowing’ for capital spending. That was, IMO, just an arbitrary rule without any real rationale. But we do/did agree that on the dangers of inflation. This is because the supply of goods and services is finite.

    You seem to have dual personas. The greenie who wants to shut down, or severely shrink, the economy and the neoliberal/georgist who wants to expand the economy, but in a way that won’t actually do that!

    The question is if we can have a high tech, non polluting and sustainable economy, and at the same time create jobs and a place in society for everyone. There’s no reason why not if we go about it the right way. But we have to get rid of a lot of contradictory thought patterns first!

  • Peter Martin 22nd May '20 - 7:36am

    @ Joe B,

    We’re talking about the high price of housing and intergenerational fairness. The economist article you’ve referenced, does describe why a LVT wouldn’t actually work as hoped:

    “A land-value tax would do little to change the underlying shortages that have driven up property prices. Contrary to the claims of some Georgists, it would not much change the incentive to develop or sell valuable land, argues Stuart Adam of the Institute for Fiscal Studies, a think-tank. Owners of vacant plots in pricey areas would indeed face the same costly levy as owners of adjacent tower blocks. They would have to pay the tax somehow, and a landlord short on cash may have to sell the plot. But there would be no change in incentives for owners with deep pockets, such as property-development firms.”

    In other words the IFS is saying that if there is money to be made developing the land it will happen anyway and this is just as true for a suburban block as a block of land in the city. Also, introducing a LVT and so forcing a landlord to sell, will mean that the price of the land and so the LVT collectable will decrease. The effect of the tax will affect the price of the land. The new owner will be then be more able to afford to do nothing with the block if they choose.

    The only sensible way to deal with the problem is to Nationalise all land and do with it what is democratically agreed. Kept as a nature reserve. Used for housing, industry, farming etc. But I doubt if that’s going to be Lib Dem policy any time soon!

  • Max Wilkinson 22nd May '20 - 11:36am

    In line with the instructions from the LDV editors, I have checked in to respond to comments. I note that, in an unusual and highly unexpected turn of events, a debate on a liberal forum has become stuck on the subject of Land Value Taxation.

    There is perhaps little I can add to this topic that hasn’t already been said. 😉

  • Peter Martin 22nd May '20 - 2:11pm

    @ Joe B @ Max,

    The only constructively new thing I have to say about links to articles such as the one to the Economist is that they are often behind a Paywall. Anyone with any sense should begrudge paying their hard earned money to be fed a whole lot of neoliberal tripe!

    Not that all articles are in this category and sometimes they worth a read – if you can get around the paywall. A couple of possibilities:

    1) Google the title directly. This sometimes works and gives you full access.

    2) Go to the article and right click. Select “View Page Source”. The text can be found by using the find command (Ctrl F) to look for a known word.

    This still works for Telegraph articles, and it worked for the Economist link, but I’ve noticed that other publications are getting wise to the work arounds.

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