The Government is turning the Budget into a generational war. It's time to stop pandering to millennials

It was an exception, not the rule, that so many people in their twenties were able to ‘buy’ homes in the 1990s and early 2000s. The easy credit that made this possible contributed to the financial crisis (which is the real culprit for the economic woes of almost everyone today)

The Chancellor should have no truck with the generational warriors (Getty)

What a cacophony! Everyone, but everyone, is noisily tuning up before the Budget next week. With a Government seen as weak, an Opposition chafing at the bit, and public-sector staff scenting an end to austerity (for them), the Chancellor’s calculations are even more contested than usual in the anticipation this year. What is more, this is the first annual Budget to be delivered in the autumn, which could reduce the lead time for any big changes: the new financial year is less than five months away.

Within the past 24 hours, both the Communities Secretary and the Shadow Chancellor were in action on podiums and on the airwaves. The one was defending the Government’s record and pledged more housing for frustrated would be home-owners. The other called for an “emergency budget” and vast new infrastructure and social housing programmes. Well, we will see what is decided soon enough.

But I would submit that no lobby has been more vociferous, or more effective, at least in the public sphere, than the one demanding “generational fairness”. You can only salute Lord Willetts, his analysts at the London-based Resolution Foundation think tank, and a host of articulate millennials (and their influential parents) for their success in getting their message across.

I have almost lost count of those who now reel off, with supreme confidence, the headline “facts” that show how appallingly the “pampered baby boomers” treat the young. Today’s under-25s, we are told, will be the first generation ever to experience worse living standards than their parents. They will forever be “generation rent”, locked out of the housing market by selfish grannies, unable to climb that celestial “ladder”. And the most deceptive – and seductive – “fact” of all? That “your average pensioner household” is now better off than “your average working-age household”, I hear this time and again, including from those old enough to know better.

Let me try to explain why this fomenting of a generation war is so wrong. First, the hypothesis about falling living standards. We simply don’t know how today’s young people will be living their lives 20, 30, 40 years hence. But living standards depend to a great extent on how and what is measured. At least some of today’s pensioners grew up without an indoor loo, central heating, their own home phone, and with no “connectivity” beyond a “wireless” and two channels on a black and white TV. The advances in services, of all kinds, from shops to food, to cars, to transport, even in housing, just over the past two generations are enormous.

Life expectancy may now have reached a plateau; it might even be falling slightly. But this has to be set against huge strides in the past 50 years. And some of any decline surely has to do with unhealthier lifestyles, fostered in part by the availability of cheap (poor-quality) food, cars, and a preference for computer games over field games.

Second, “generation rent”. It was an exception, not the rule, that so many people in their twenties were able to “buy” homes in the 1990s and early 2000s. The easy credit that made this possible contributed to the financial crisis (which is the real culprit for the economic woes of almost everyone today). Absurdly low mortgage rates over the past decade are one cause, perhaps the main cause, of high house prices (in those places, such as London, where there is high demand). Homes are not “unaffordable”; if they were, prices would drop – as, in London indeed, they are starting to do.

Which brings us to that “ladder” – which may soon be a ladder no more, if house prices start to fall or stagnate. If this stemmed the fetish with home-ownership in general, halted the destructive proliferation of “buy-to-let”, and triggered the growth of a decent, professional and long-term rental market, all recent assumptions would be called into question. If prices do not rise precipitately, if our housing market starts to become more continental (Brexit or no), not “getting on the ladder” might come to be seen as a boon, as the ladder becomes a snake.

Of course, there is a need for more social housing. The proceeds from those Thatcher sell-offs should have been used to replace; conditions for exercising the right to buy more stringent. But those complaining the loudest at present are not those who would qualify for social housing, and their own, or other people’s grannies are not to blame. Those grannies (and grandpas) paid mortgage rates well into double figures. Many would love to downsize – but what to? Their requirements, for decent, convenient housing, preferably with a caretaker and without stairs, have been as neglected as those of their grandchildren. Arguably, this is where the housing focus needs to be.

And now the big one: the notion that “pensioner households” are on average “better off” than households of working age. To start with, the definitions used are deceptive. A “pensioner household” includes any household with even one pensioner (who may also be working), which is probably not what most people would think of as a pensioner household. Averages are deceptive, too. A relatively small number of very rich pensioners drags the average income up; but there are very many poor pensioners, too. What is more, their income is fixed and their savings, if any, yield almost no interest. They are paying the penalty for the near-zero rates that allow the young to service giant mortgages and run up credit card debt.

Also deceptive is what constitutes “household income”. The comparison is for disposable income “after housing costs”. Whether rent or mortgage, however, housing costs are generally going to be higher when you start out and have a family than after you retire. But the calculation makes no equivalent allowance for the additional costs that older people must pay – for maintenance of their often ageing homes, for getting about, for (ruthlessly means-tested) care. The comparison is, quite simply, not like for like.

What is more, partly because of this distorted comparison, the idea has got about that pensions are lavish – so “off with the triple lock”, they say. But this disregards one salient fact: very many people have no retirement income beyond the state pension, and the UK’s state pension is among the lowest in the industrialised world; inflation-proofing an already small sum adds not very much. As with the rest of life, the disparity is less between pensioner prosperity and working penury, but across the same age group. And a gap among pensioners is growing, as secure, final-salary pensions are increasingly confined to the public sector, and everyone else faces the vagaries of the market.

There is but one gripe I will allow the millennials: the student fee and loan system that leaves them indebted, whatever qualification, whatever institution, they choose. That the fees currently charged bear no relation to the cost or quality of the course represents a huge failure of government.

Abolition of all fees, however, would favour only the better-off. Should there be a return to means-tested grants, or big discounts for those who commit to spend, say, 10-plus years teaching in the state sector or working in the NHS? Something has to change, both to lighten the debt burden for graduates and to ensure that the Exchequer is not left with a ballooning debt that will never be paid.

Now it may well be that the age of continual economic growth is nearing its end, not just for post-Brexit Britain, but across the developed world, and that this will restrict the choices open to governments even more than they are restricted today. But it is high time to scotch the idea that today’s pensioners are the adversary of the next generation or that theirs has been a uniquely gilded life. The Chancellor should have no truck with the generational warriors. They talk a persuasive talk very loudly, but when you examine the detail of their statistics and look around you, their arguments fall apart.