This week, Phillip Hammond has a golden opportunity to make public finances fairer for the younger generations and to take bold, progressive steps to sort out their financial problems.
I believe policy has focused too much on taxpayer incentives to save and too little on the root causes of financial illiteracy and insecurity among young people, who are being denied the chance to build assets and reach financial milestones that their parents once took for granted.
We now accept that young people, regardless of their “snowflake” reputation and the many consumerist advantages they enjoy, have a tough time trying to navigate today’s complex financial sector and get on a secure financial footing. There are numerous cultural and physical barriers to progress, responsibility and level-headedness when it comes to money.
Some of these could be easily addressed in next week’s Budget, but others are deeply entrenched and require a change of mindset among policymakers and the voters they try to court. Looking after the prospects of the next generation shouldn’t be up for political debate – they are the UK’s future and in one way or another we all depend on their financial well-being.
This week’s Budget should set the tone for a much wider policy shift in the UK – from debt-fuelled short-termism to long-term financial responsibility among individuals and companies, from generational strife to enlightened self-interest and co-operation, from vote bribing to fair and balanced decisions that give both young and old a fair chance at financial empowerment.
- Rather than bonuses to save, which can disproportionately help those already in a position to buy property, regressive property taxes (like stamp duty) should be scrapped once and for all. This should also apply to older homeowners looking to downsize so that the property market can get moving again.
- Homes which are affordable should replace the now-discredited “affordable homes” tag, with stable, rent-controlled housing schemes in areas where young workers risk handing over most of their starter pay in private rent. In return, a percentage of rent could be diverted into a specially created savings pot that could be used in emergencies and eventually to help people move onto the ladder. This would be a new form of savings “auto-enrolment”, that would give young workers a lifeline and a real shot at saving for their first home (if that’s what they want).
- Every young person should be given the chance to have their own bank account linked to a savings account, with the option to manage both easily through smartphone apps.
- A day of financial learning for every child in the UK, funded by the Treasury, should be as vital to the school curriculum as sex education. And every young worker should have an entitlement to a financial health-check as they enter the workplace to help prevent debt, overspending, and apathy, from wrecking their financial chances.
- Finally, credit card companies should no longer be allowed to capture consumers at the earliest stages of their lives with promotional mailshots, targeted advertising and offers of ever-increasing credit limits. But rather than a cap on the interest rate, a commitment to ban credit cards for students, to stop credit card limits being automatically raised, and to bring forward the six- week “breathing space” for those in persistent debt (possibly extending it to three months), would all go some way towards helping young people escape the mental and financial nightmare of prolonged debt.
Of course, some of the familiar proposals around scrapping the triple lock and rethinking certain universal benefits for the elderly might go some way towards redressing the balance. But this risks pitching the debate as “old versus young”. This is not the point we should focus on. We desperately need positive policies – and yes, funds where appropriate – that will demonstrably help the next generation to feel more secure, less exploited and ultimately respected by those in power today. Those who ignore, belittle or mock this need will ultimately pay the price.
IONA WILL BE GIVING HER REACTION TO THIS YEAR’S BUDGET ON BBC RADIO 4’S MONEYBOX ON WEDNESDAY AT 3.00PM AND BBC BREAKFAST ON THURSDAY MORNING (6AM ONWARDS). TUNE IN!