It was with some sense of relief that I watched Philip Hammond’s 2017 Budget. There was, after all, quite a lot of chatter about “intergenerational fairness” in the run-up to the announcements, and, indeed, it has been one of the most fashionable topics for political debate for some time. So the wealth and pensions of those who have spent decades working hard for them have not, after all, been raided to help relatively affluent 20-somethings make some money on the housing market. For that the nation should be grateful.
I still don’t understand why taxpayers, some of whom are poor, are being asked to help subsidise people buy residential property. The taxpayer will receive no dividend from these schemes, no return on the “investment”, as any profits will be kept by the lucky homeowners. That is the opposite of fairness, intergenerational or otherwise.
It is indeed strange that successive governments have ever felt that they have some sort of responsibility to deliver this supposed sacred British “dream” of home ownership. Especially Tory ones.
Even now, even with the public finances still under strain, even when commerce and industry require investment to lift the country’s appalling productivity performance (the only way to guarantee higher real wages), Hammond has added to the array of schemes and subsidies to ease younger people into home ownership – with the abolition of stamp duty for first-time buyers being the most eye-catching of them.
Housing will not, in fact, raise productivity and the growth rate of the economy in the long run; investing in plant, machinery, national infrastructure and skills will.
This is not, in other words, so much about making sure everyone in the country has a roof over their heads as much as ensuring the Tories manage to win the support of at least a portion of those under 40 years of age. What’s more, these tax breaks will only make matters worse in the housing market, by increasing effective demand and pushing prices even higher.
Now I, as a “non-millennial”, am also being asked to subsidise the rail travel of 25 to 30-year-olds who may well be richer than I am, as the railcard is not means-tested. This cohort has long since left university, and their railcards will be used to get them to their stag dos and honeymoons. Obviously, I wish them every happiness, but see no need why I should help them boost their personal booze budgets.
Last, it should be pretty clear that “intergenerational fairness” is a very silly concept indeed. Is it fair that my parents’ and grandparents’ generations had to live through and fight in a couple of world wars?
Is it fair that, say, gay people of my age group had to live with massive prejudice, blackmail and violence, in stark contrast to the much more humane attitudes of today?
Is it fair that so many couldn’t get any work during the Thatcher era, when (real) unemployment was approaching four million? The reason why houses and flats were cheaper back then is because there was less money around – simple as that. I don’t want or need or ask for compensation for living in the run-down, jobless, dull, uptight and repressed Britain I grew up. Even the food’s better nowadays.
The notion that there was some easy age of affluence in the recent past is plain wrong. Making your way in the British economy of the 1970s was tough, and the 1980s were even worse. Even if there was – and I admit that property values have increased substantially, as they always have – there is no law of nature that states that every generation has to be better off than the last one, and for most of human existence they were not.
I wonder, too, if the millennials of today who are being lifted onto the housing ladder will feel quite as hard done by when they cash in their tax-free profits and have to listen to the complaints about the price of a flat from their own children or grandchildren. Will they want to hand over some of their capital gains in taxation to the next generation? Or will intergenerational fairness be a concept that strangely goes out of fashion in about 2050?
Read the other side to the debate here