Can intergenerational fairness ever be achieved?

The phoney war is back!   The media have been dutifully reporting on the House of Lords Committee on Intergenerational Fairness. One guess as to what the headlines were in most media?  Yup, you gottit – ‘scrap the free TV licence’ or ‘free bus pass under threat’.

Of course the peers, who pocket £350 a day tax-free for sitting in unelected splendour, have quickly been castigated for calling for an end to pensioner perks.

But as Refinery29 pointed out on its blog: “Given the current state of UK politics – which sees our Conservative government reliant on the votes of the elderly – it’s unlikely the report’s most headline-grabbing suggestions will be implemented, as least not any time soon.”

Yes they have recommended means-testing of benefits such as the automatic fuel allowance, and, quite rightly an end to the ridiculous ‘triple lock’ protection for pensions. (Because it devotes a disproportionately generous share of the country’s future wealth to fund a political bribe made by a coalition government.) And no, stoking up resentments by proposing a fantasy squeeze on oldie benefits is not really doing anything to address let alone tackle the real squeeze on millennials.

But the Lords at least have not resorted to the ‘bung transfer’ wheeze proposed last year by the Intergen Foundation. Remember that one? A phased handout of 10K to everyone under 35?

As I commented at the time:

Those with savvy investor families will end up doing a lot more with their £10,000 than someone on the breadline, who would be far better off with extended debt forbearance and some intensive guidance as to how to make their money go further. My generation is the last to leave school without formal financial education, and the first to really suffer for it.

Rewind to 2014/2017 and this was my take:

Personally, I believe it is the toxic housing situation, as well as the moral paucity in corporations which drive down tax receipts and the quality of workers’ lives, which needs serious political consideration. We need to pick our battles more astutely. This debate does not have to become fraught with politics, based on false choices between “us” and “them”…… I first wrote about the intergen war way back in 2012. The whole idea was unhelpful and false then, but at least it was new and interesting. Now, it’s old and boring.”

That probably explains why coverage of this latest report was so tired and muted.

But the committee did recognise that the real issues are not free TV licences but a prohibitively expensive housing ladder and a skills crisis.

Chairman Lord True said:

Young people told us they feel short changed by the housing market, so we are recommending policies to deliver a significant increase in the supply of social and private housing and recommend protections to give renters long term security be backed a new regulatory framework. We also need to change how we view education and training. Longer working lives mean older workers need support to reskill and continue to contribute in the workplace and younger people, particularly those who do not go to university need the government to prioritise and fund further education and vocational training.

On housing, the committee called for “innovative, flexible products”. Its main focus was guarantor mortgages, which have become scarce since the government’s mortgage market review in 2014.

I myself benefited from a guarantor mortgage back in 2011 before the shutters came down.

The report says 27 per cent of all housing purchases in the UK were made with contributions from older family members, with gifted lump sums averaging between £5,000 and £6,000, and 60 per cent of first-time buyers expected to need some help from family members to get on the first rung of the ladder.

FT Adviser reported:

Older homeowners looking to help their children or grandchildren often looked towards equity release, retirement interest-only mortgages or an intergenerational mortgage to release cash for a deposit.

It cited an IFA view:

Guarantor mortgages used to be the solution but lenders are very uncomfortable with these post-MMR. Intergenerational housing has been a fixture of the housing market in many other developed countries for decades now and the FCA and lenders should discuss how they can make this easier and create a nation of homeowners once more.

The peers also urged the government to do more to address the shortage of affordable housing for younger people to buy or rent.  Councils should have a greater ability to borrow to fund house building, and a new right to develop unused land owned by other public sector bodies.   “Our relatively radical proposal is the presumption of planning power for local authorities on all publicly owned land,” said Lord True.

The committee also called for measures to tackle insecure employment, notably in the gig economy, saying younger people working in this area should have the same rights as elsewhere to protect them from “exploitation or insecurity”.

Amen to that, but just more honeyed words or what? As yet, the only government response of any kind appears to be from various departments reassuring the oldies that nothing will change. Ah, thank God for that!

But what about us?!

I hate to mention the B-word, but it seems likely that after justifying their existence by helping the government force through its recent Brexit statute, the pondering peers may well see this report placed on the crowded shelf marked ‘too difficult’.

This Post Has 2 Comments

  1. Avatar
    Jim Davies

    Hi Iona, I’m working on an intergenerational finance project at the moment that I think will make a real difference to helping millenials get on the property ladder. Its got really strong economics and is potentially very scalable. I’m currently look to speak to a small number of industry experts to explore some ideas and refine the business model. Would love to talk to you!

    1. Iona Bain
      Iona Bain

      Hi Jim – Iona here. Sounds very interesting. Maybe you’d like to drop me some info? youngmoneyagency[at] Look forward to hearing from you.

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