The Guardian view on generational inequality: it’s time for a new deal | Editorial

Housing and health are at the centre of a much-needed holistic approach to a fresh trade-off between young, middle-aged and older Britons

It will soon be a year since Theresa May’s mid-election U-turn in 2017 on her party manifesto social care proposals. That volte-face changed the outcome of the general election and reshaped British politics. Opponents were able to damn the proposal as a “dementia tax” and to force Mrs May to scuttle the idea, even while she continued to protest, absurdly, that nothing had changed. Mrs May has never quite recovered – and nor has the debate about long-term care. Twelve months on, her humiliation still casts a shadow over the politics of social policy.

It must be hoped that today’s final report of the intergenerational commission set up by the Resolution Foundation thinktank is not destroyed on the launch pad in the same way. There are good reasons to think that it won’t be: this is not an election campaign and it is not being put forward by the government. In fact, this report is potentially far more significant than last year’s botch. It is vital that British politics at the highest levels in all parties begins to address the issues and the proposals put forward by David Willetts and his well qualified and politically balanced commission – his team included the heads of both the TUC and the CBI. For unless the intergenerational contract, between the old, those in working families and the young, is convincingly reset in the 21st-century terms that the commission proposes, the tensions between the successful and the struggling in society will widen and the credibility of consensual democratic politics will suffer another destructive jolt.

Unlike Mrs May a year ago, Lord Willetts and his colleagues have put forward an interlocking and holistic set of proposals. They have spent two years looking at health and social care, the housing market, the pension system and the decline in real wages, especially among the young. Their proposals are not in separate silos. The whole thing is predicated on the mutual dependence of the generations – rather than on their rivalry in the contest for resources. An intergenerational pact underlies and defines the possibilities of the welfare state, as it does for many families. At the moment, however, the pact is frayed and the outcomes are unfair. That must change.

The commission’s recipes range from the cradle to the grave and from the mainstream policy idea to the novel. All 25-year-olds would receive a £10,000 “citizen’s inheritance” payment for restricted housing or business use, financed out of a new lifetime receipts tax to replace inheritance duties. Older people would benefit from a £2bn boost to social care, paid for out of higher property taxes. The health service would get an extra £2.3bn levy as a result of new national insurance rules on the earnings of those above pension age. Reforms to housing are central to the approach and are aimed at young people and those with young families. Health, social care and pensions would meanwhile be strengthened for older people.

The commission is coy about providing a comprehensive costing of all its proposals, though individual plans are mostly linked to a wide variety of tax changes. But there is no shirking the centrality of the state in engineering the restoration of social interdependence through a new social deal. That new deal would reshape the burden of taxation in favour of the young and at the expense of many of the old. Much of this is a very direct challenge to recent political orthodoxy, because older voters – more pro-leave and pro-Conservative – would be expected to do more than at present to finance the life chances of young ones – more pro-remain and pro-Labour.

Resources are unfairly distributed, but they are not infinite. Not all injustices can be solved by higher health spending or by higher taxation confined to the very rich, although some of them can. The commission is right that public sentiment remains wholeheartedly in favour of intergenerational fairness, but it is also right that society has changed, particularly as a result of ageing. Reforms and trade-offs are inescapable. A year ago, Mrs May’s attempt to confront the electorate with one of the hard policy dilemmas in this field was a disaster. Now politics must begin that task again – and do it properly.

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Editorial

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