If anyone has ever fancied being Chancellor for a day, they probably wouldn’t pick Wednesday. Could you make a real difference, with potential spending so constrained and the testing politics of minority Government? Add to this the challenge of getting Britain match-fit for Brexit, at a time of poor productivity growth, and you can see why some of the more controversial issues - like intergenerational fairness - might not get a look in.
The trouble is, it’s only by tackling the toughest issues (or at least starting to map them out) that the UK will be fit for the future.
Noise has been building around intergenerational fairness for some time. Pensioner incomes have eclipsed those of working age people; degrees are now costly and have become a prerequisite for many jobs; and once the norm final salary pension schemes have all but disappeared.
The inequalities are particularly stark when it comes to housing costs and homeownership. House prices have rocketed during the last fifty years, benefitting those who’ve ridden the wave, but putting home ownership out of reach for many. In 1991, 67% of the 25 to 34 age group were homeowners. By the financial year ending 2014, this had declined to 36%
It’s easy to see why millennials may feel short-changed.
The Government certainly recognises the problem, and there was initial speculation that tackling intergenerational imbalances could be the cornerstone of the Budget. But this now seems less likely, given downgrades in productivity growth and the costs attached to any significant measure.
To keep the Budget ‘fiscally neutral’, i.e. spending in line with tax receipts, the Chancellor could look to fund measures to help the young with tax rises for older generations. But given the backlash provoked by the so-called Granny Tax of Budget 2012, it seems highly unlikely that the Chancellor will risk alienating core voters with anything that could be perceived in this way.
Perhaps most likely are relatively small, simple steps that show the concerns of millennials concerns are not unnoticed.
These could include boosting the Lifetime ISA, which was launched in April aimed at the under 40s. Increasing the amount that can be saved each year, and allowing savers to make withdrawals without harsh penalties, would make this product much more attractive.
Likewise, we could see stamp duty holidays for first time buyers. Getting more people on the first rung of the property ladder would encourage more activity higher up, compensating for the loss in tax receipts at the bottom end.
When we brought together a cross section of the public to discuss intergenerational fairness, our ‘Citizens’ Jury’ favoured stamp duty holidays for people downsizing. While this could benefit wealthy downsizers, participants felt the main priority was encouraging the right behaviours.
Ultimately these are just sticking plasters. It’s tackling the bigger issues like housing, public transport and broadband connectivity, that will make younger people’s lives easier. The Chancellor has signalled that house building is top of his agenda, with the Government committing to building 300,000 new homes each year. More detail on this and his broader vision for the future could provide some of the positivity all generations are looking for.