Sebastian Milbank is a Senior Researcher at the Centre for Social Justice.
Young people need a better deal — but can Britain’s political class deliver it?
Young Britons are getting a rotten deal. If you’re a kid today, the path ahead of you is strewn with traps and obstacles. A third of kids are not school ready at reception year, and by year 6, one in five pupils had fallen behind the expected reading standard. And once you fall behind, you stay behind, with poor academic performers most likely to join the over one million young NEETs (Not in Education, Employment or Training).
But if you do get to university, you aren’t necessarily better off. Only 57 per cent of graduates were in full time work 15 months after graduation, and the graduate “premium” is worth £80,000 less over the course of a lifetime than it was 20 years ago. Saddled with student debt, graduates who do find work will end up paying higher effective marginal tax rates, and will go from cramped student halls, to spending much of their 20s and 30s living in cramped HMOs (Homes of Multiple Occupation). By ages 25-34, over a quarter of people are still living in shared accommodation, a proportion that rises in London, where a third of all renters live in HMOs. Many bypass renting altogether, instead living at home with their parents.
In fact, nearly half of 25-34 year olds either live in HMOs, or live with their parents, and 34 has become the average age at which people buy their first home. In the 1990s, the average age was 29. People are living like students well into their mid 30s, and unsurprisingly, they are having fewer children, with 600,000 women expected to miss out on motherhood entirely. We build fewer homes than we did 90 years ago, despite adding millions of people to the population via mass migration. Housing is controlled primarily by the old, with 55 per cent of housing wealth owned by the over 60s, and a growing proportion of state spending goes on pensioners, rather than children or adults. On the current trajectory, it seems unlikely that today’s young workers will see the same level of state support in their old age, a reality quietly implicit in the implementation of compulsory private pension contributions.
These are lives delayed.
And lives delayed, are lives destroyed. 1 in 4 young people has a mental illness, and 70 per cent feel lonely. Young people are less optimistic about the future and less likely to think their efforts will be fairly rewarded by society than older generations. The loss of material opportunity, social connection and practical purpose in the lives of the young has created a spiritual malaise.
Politicians are at last trying to come up with answers.
Kemi Badenoch called for a new “social contract” for young people at ARC, and Andy Burnham promised to make a “major offer” to the young. Identifying the problem is welcome, but it has come at a late stage and at a time of profound fiscal constraint and global instability. This means that any serious new deal for the young has to involve hard choices and difficult trade-offs. Sacred cows will have to be butchered. The CSJ called for the scrapping of the pension triple-lock, a call echoed by the Tony Blair Institute. Prioritising the young is a bet on the future, and will involve older voters making short term sacrifices, rather than demanding further damaging sacrifices from the young.
An open question is who, and which part of the political spectrum, will make the tough decisions and put young workers first?
On paper, it seems like Labour and the Greens, who have the youngest voter base, can most easily tip the balance back towards the young. Yet Labour’s inherited commitments to high public spending, welfare and social housing may prove fundamental impediments to a better intergenerational deal, unless they can successfully reform welfare and the public sector.
Nowhere is this more visible than on the issue of housing. Badenoch has pledged to scrap Stamp Duty, whilst Burnham is promising a social housebuilding spree and tax cuts for young people to help them save for a deposit. However it comes about, new housing is welcome. But a danger lies in the road ahead. In its current form, not only may additional social housing not be enough to help, but it could also even worsen matters, thanks to an alarming new pattern of worklessness.
Nearly half of NEETs claim benefits, much of them citing mental ill health, rather than claiming unemployment. Unlike unemployment, much of the job seeking requirements are waived or softened, meaning young disability claimants are under less pressure, and access less support, to seek work. Due to statutory duties to prevent homelessness social housing is currently assigned almost entirely on the basis of need. This means that those on benefits, and those not in employment, will go to the front of the queue for state housing.
Not only is dependency the currency of access to social housing, but matters are also not necessarily improved when a social tenancy is secured. Right to Buy has been greatly watered down, making the path to ownership much harder than for a previous generation. At the same time, social tenants cannot easily switch to council housing in other areas, meaning that they have little ability to move for work or education.
These factors combined create a situation of incredible danger for young NEETs. Already locked out of education and employment, going on disability offers an apparent escape. Rather than the hard, rocky road of trying to get training and work, disability status offers the prospect of cash in your hand, a Motability car, and a flat. Unlike those who rely on the welfare system later in life, young NEETs on disability may never acquire any of the vital experience of work. On top of being massively expensive to the taxpayer, this path locks those caught in it into a lifetime of material deprivation and dependency, unable to realise their potential or improve their lot in life. Evidence suggests that 70 per cent of young people claiming benefits today are likely to still be claiming a decade on.
Our current model of welfare and social housing, relentlessly focused on need rather than fairness and reciprocal support, risks strangling the prospects of an entire generation in its cradle. The resources needed to fight poverty are not only material, but spiritual and psychological. Young people need something to strive towards and to aspire to.
The golden ticket to a good life is not a mystery. Every successful middle-class person knows (even if they don’t practice what they preach) that stable two parent families, employable skills, and a strong social network unlock lasting prosperity. Socially isolated, mentally ill, and failing to start families, young people are seeing this ticket to the good life torn up.
Currently we tax young people for getting an education that often doesn’t enhance their income, tax employers for hiring them, tax them for coupling up, ration the asset they most need to access adult life, and, when they fall into depression and despondence, reward them for giving up.
This is a rotten deal whose terms we need to not only reject, but to reverse. A new intergenerational contract, and a new deal for young people, needs to see their education and employment rewarded, marriage and fertility favoured in the tax system, the housing supply increased in the areas where young people work, and those with poor mental health assisted to rejoin the workforce.