Intergenerational Unfairness

[justthisbloke]

Who was old enough to retire at 50?.......this is how inequality will gradually manifest itself......as if we don't notice.

Well I'm 45 and living off divis. True, this has been achieved through inequality - I've invested massive percentages of my income not remotely equal to the savings rates of peers. I'll be hacked off if some Corbynite taxes my stash from me because I saved inequitably.

[winkie]

Well I'm 45 and living off divis. True, this has been achieved through inequality - I've invested massive percentages of my income not remotely equal to the savings rates of peers. I'll be hacked off if some Corbynite taxes my stash from me because I saved inequitably.

Fair enough.....but the people who work hard to create profits should also have a share in those profits......hard work as you and many others have done takes priority over people who speculate on markets......and I have never voted Labour, I believe and vote for fairness.

[Richmond]

Well I'm 45 and living off divis. True, this has been achieved through inequality - I've invested massive percentages of my income not remotely equal to the savings rates of peers. I'll be hacked off if some Corbynite taxes my stash from me because I saved inequitably.

Always concerns me when thinking about saving and possible changes to taxes, confiscation etc on savings. How do you differentiate between a low earner who has scrapped together a decent stash to keep them and a high earner who has more money than they know what to do with? The rich guy will just earn more, the poor guy will take another lifetime to save that money......

Makes annuities look better........

[Guest]

3. Someone upthread mentioned that BOMAD, HOMAD, and other intergenerational help is a bad thing. Sorry but it ain't. As long as I'm alive I'll be helping my kids. Otherwise, what's the point? Work to pay tax? Happy about inheritance tax, but for as long as I breath, I'll do the natural thing and help my family.

So it's totally fine for the Duke of Westminster to inherit half of London, live in luxury his entire life, and ensure that his children do the same, until the end of time? All he's doing is helping his own family, after all. That's the outcome of the current situation, where parents help their own kids to the exclusion of the rest of society.

There's no way I can compete with someone who inherits hundreds of thousands of pounds. Or, more commonly, even just 10k towards their deposit - that's at least a year or two's worth of saving I need to make up out of my own efforts. I'll be outbid, and house prices will probably have risen another 60k in the time it takes me to catch up.

'Natural' or not, inheritance means the kids of the rich will get the best education, the best houses, the best jobs, and the best lives. The rest of us will end up their serfs - and inequality has reached the point where that means we'll be rinsed for rent or interest payments our entire lives. Politicians used to talk about a meritocracy, but the truth is that some people start life already over the finish line.

I wouldn't care quite so much, except we've now reached the point where my own work can't even buy me a modest two-bedroom flat near a job and my friends. The kind of money you inherit (in many cases, the result of twenty years of runaway house price inflation) is worth so much more than the kind of money that I can earn for myself, even with a very good job. There's almost no point in trying to compete. Unless you have parents in the home ownership club willing to pass on their golden ticket, you'll be locked out in the cold.

[winkie]

.....Where the balance has become skew-wiff is wealth from assets has overtaken wealth from long hours hard work.....who needs to work when the money keeps pouring in by doing little or nothing.

[Exiled Canadian]

So it's totally fine for the Duke of Westminster to inherit half of London, live in luxury his entire life, and ensure that his children do the same, until the end of time? All he's doing is helping his own family, after all. That's the outcome of the current situation, where parents help their own kids to the exclusion of the rest of society.

There's no way I can compete with someone who inherits hundreds of thousands of pounds. Or, more commonly, even just 10k towards their deposit - that's at least a year or two's worth of saving I need to make up out of my own efforts. I'll be outbid, and house prices will probably have risen another 60k in the time it takes me to catch up.

'Natural' or not, inheritance means the kids of the rich will get the best education, the best houses, the best jobs, and the best lives. The rest of us will end up their serfs - and inequality has reached the point where that means we'll be rinsed for rent or interest payments our entire lives. Politicians used to talk about a meritocracy, but the truth is that some people start life already over the finish line.

I wouldn't care quite so much, except we've now reached the point where my own work can't even buy me a modest two-bedroom flat near a job and my friends. The kind of money you inherit (in many cases, the result of twenty years of runaway house price inflation) is worth so much more than the kind of money that I can earn for myself, even with a very good job. There's almost no point in trying to compete. Unless you have parents in the home ownership club willing to pass on their golden ticket, you'll be locked out in the cold.

+1

High house prices combined with the removal of grants for higher education (for the most academically gifted 10%) are already wreaking untold damage to social mobility in this country.

I left University in 1992 with a small amount of student debt having been previously educated in the state system, I was the first person in my family to go to University. Despite receiving no material financial help from my parents I was able to move to London, qualify in a profession and buy a 1 bedroom flat in a reasonable area within 5 years of arriving in London.

I just don't think that this would have been possible for me now. Even if I had still gone to University (the prospect of taking on a debt that would likely have been equally to 2 years of my fathers salary would have given me pause for thought) I'd have never had any prospect of owning my own place in London - newly qualifieds in my field earn £50kish now at the top firms - £200k gets you nothing. This will be highly damaging as the UK is getting to be less and less a meritocracy. This is becoming apparent already in the "quality" of our politicians - I have no doubt that many other professions are similarly, but less visibly, afflicted.

[CunningPlan]

Inheritocracy? If it is not a word it should be.

[giesahoose]

I've never really considered that the older folk with multiple buy to let's leveraging the properties up and "spending" the equity have actually hollowed out the whole pyramid as they have driven it upwards. There actually won't be anything to pass on except a big pile of debt unless they pay off those mortgages.

A few weeks ago I went to view a flat that would have been at the top end of my budget. Guy selling it had bought it for his daughter to live in while she was at uni. I could see that they had let out the other rooms to other students too as an illegal hmo.

Really busts my chops as they were hoping to get tens of thousands of pounds of equity for the few years his daughter had been at uni. This nonsense really needs to stop. At the group viewing I could pick out the few landlords in amongst the young couples looking to get w house for them self. Saying they don't compete with first time buyers is a lie.

[Nabby81]

So it's totally fine for the Duke of Westminster to inherit half of London, live in luxury his entire life, and ensure that his children do the same, until the end of time? All he's doing is helping his own family, after all. That's the outcome of the current situation, where parents help their own kids to the exclusion of the rest of society.

There's no way I can compete with someone who inherits hundreds of thousands of pounds. Or, more commonly, even just 10k towards their deposit - that's at least a year or two's worth of saving I need to make up out of my own efforts. I'll be outbid, and house prices will probably have risen another 60k in the time it takes me to catch up.

'Natural' or not, inheritance means the kids of the rich will get the best education, the best houses, the best jobs, and the best lives. The rest of us will end up their serfs - and inequality has reached the point where that means we'll be rinsed for rent or interest payments our entire lives. Politicians used to talk about a meritocracy, but the truth is that some people start life already over the finish line.

I wouldn't care quite so much, except we've now reached the point where my own work can't even buy me a modest two-bedroom flat near a job and my friends. The kind of money you inherit (in many cases, the result of twenty years of runaway house price inflation) is worth so much more than the kind of money that I can earn for myself, even with a very good job. There's almost no point in trying to compete. Unless you have parents in the home ownership club willing to pass on their golden ticket, you'll be locked out in the cold.

I'm in position where my parents were both poor and died early , grandparents died before I was born also .My peers all have homes thanks to parents /Grandparents but hey thats life.The real guy punch is when not only do you have to do things alone but you find by time you got money together yourself the kind of places your friends own have inflated out of reach.

[Bland Unsight]

3. Someone upthread mentioned that BOMAD, HOMAD, and other intergenerational help is a bad thing. Sorry but it ain't. As long as I'm alive I'll be helping my kids. Otherwise, what's the point? Work to pay tax? Happy about inheritance tax, but for as long as I breath, I'll do the natural thing and help my family.

Again, its the rapid transformation of the proposition. Chatting earlier to a pal who is a piece older than me. By 22 he was married, had bought a house and was paying into a defined benefit pension. In a time when in general those who wanted to could buy something with their earnings, BOMAD wasn't politically contentious. When its availability becomes the dividing line between access to freehold property rights or exclusion, that's a big deal.

I feel there is a deeper, subtler point here. If we allow house prices to escape the reach of earnings and create a situation where access to freehold property rights depends on BOMAD, then BOMAD is politicised anew. To attempt to set aside these realities because you want to do right by your kids is a dog that won't hunt.

[iamnumerate]

State pension provision is certainly massively weighted towards the 'lucky generation' but that's a secondary issue for me. The real issue is that of the multiple ladders that have been drawn up at all stages of life. If only my generation (and the ones following) had had the same opportunities throughout our lives that our parents did!

That would have meant:

• Free University for the brightest.
• Secure jobs where wages kept pace with inflation.
• Final salary pensions.
• And decently sized houses in good locations available for 3 or 4 times single salary.

Almost every time I discuss property or education or pensions with an older person online I get told a fairy story about leaving school early and working hard and doing the right thing and it's only right that they have all the wealth now due to their life of toil.

No concept of how much harder they've made it for their children. Try leaving school at 16 and working for 30 years now - there's no way you'd be able to compete on wages without a degree. There's no way you'd live in anything but a rented house. There's no way you'd have a decent pension. There's just no way you'd end up back in your same comfortable position, at retirement.

Someone voted for these changes, and kept returning the same governments even as house prices went crazy and tuition fees arrived and council houses were sold off and pensions were raided and the banks were bailed out.

To resolve the 'intergenerational unfairness' I'd need my student loan back, in full, plus interest. I'd need house prices to be a third of what they are now. I'd need a decent return on my savings. I'd need my two measly private pension pots to magically become an employer's final salary scheme.

And finally, I'd need other people's children to stop receiving untaxed 'help' from their privileged, oblivious parents, who don't give two hoots about other people's children, as long as they can give their own children an unfair leg up.

To be fair it is a lot easier for people who want to be pro single parents than it was 30 or 40 years ago. Which is one reason why we can't afford free student education etc.

[PopGun]

You missed a big one: young people are now competing for jobs with the entire world. Even local jobs.

This tends not to show up in statistics that measure the economy of the British Isles, but not the performance of British people.

Creating a job here doesn't particularly help someone born here, if that job will be filled by someone from elsewhere.

Global wage arbitrage ... A concept completely lost on some retired boomers. Also try explaining how their tupperance a week they used to earn was more than enough to buy a decent house at the time but really did not pay into the system "ten times over" against what they're drawing out now.

[PopGun]

What a cop out. 'There was no alternative'. Older people had a lot more alternatives than we do now.

Someone kept voting for Labour after tuition fees. Someone kept voting Tory after Right to Buy. I wasn't even old enough to vote.

A lot of people are still voting for the establishment. When have we ever had a government that wasn't red or blue? The vast majority of constituencies have more than two candidates.

You've answered your own question. Since 1979 there has been no alternative to the current political agenda. Also remember that precious few voters actually have a say on who get the keys to no 10 anyway.

Apart from the <200k who live in swing/marginal constituencies every one else is effectively disinfrancised from the entire process.

[PopGun]

have you all understood this point before you bash

the median income for retired households has increased in most years, with the value rising to £21,100 in 2014/15, that is, £1,800 higher than in 2007/08. By contrast, the median income for non-retired households decreased, and was £2,300 lower in 2012/13 than in 2007/08. Since 2012/13, the value of the median for non-retired households has risen to £28,100, but is still around £800 below 2007/08 levels (£28,900).

households = 2 people each with a state pension and personal allowance

lots of pensioners live alone and have far far less than that income

pensioners pay tax and council tax

the median for non-retired housholds is above that for retired housholds

families get topped up with tax credits - remember those and the amounts they bring in

pensioners only get tax credits IF they qualify under the means testing - approximately 1 in 10 I think

I note your wish list

• Free University for the brightest.
• Secure jobs where wages kept pace with inflation.
• Final salary pensions.
• And decently sized houses in good locations available for 3 or 4 times single salary.

you do realise that not every person iin a particular generation had the good fortune to have all these gifted to them

1 in 10 went to university

many did not have secure jobs with good wages (particularly women)

very few had final salary pensions

lots of them rented and had no access to mortgages and large houses

It never fails to surprise me that so many intelligent people have this blind spot about how things were in the 70s and 80s - some people were very lucky and were in the right job, the right place at the time and fortune smiled on them

if you want to blame someone blame nulabour and its 'open door', blame the policy to get 50% of young people to uni, blame 'globalisation' for the loss of manufacturing and skilled jobs

but you cannot really blame an entire generation for the mess we are in

I get your point completely. Yet as a generational cohort you can't deny this generations position against those both after or before them.

[crashmonitor]

Main reasons for me why the present generation has been shafted are to do with budget allocation and Government policy.

(1) an ageing population means the social budget has switched from housing to health. (this one is unavoidable unless we stop treating heart disease and cancer)

(2) education education education.

What's the most useful use of public money a social housing unit or two human geography degrees. One could be a forever asset the other is two three year rites of passage to indulge both parent and kids to the detriment of the latter who would be better off with more housing.

Who actually benefits from this University nonsense...boomer BTL, employees of universities where salaries on the humblest of jobs match management elsewhere.

(3) Allowing in the world for competition with housing and jobs. immigration.

2 and 3 tony Blair's dream and shafting everybody under 40 in the process. Things at the edges that don't help like generous IHT and triple locks.

Edited January 18, 2016 by crashmonitor

[Tresbon]

Global wage arbitrage ... A concept completely lost on some retired boomers. Also try explaining how their tupperance a week they used to earn was more than enough to buy a decent house at the time but really did not pay into the system "ten times over" against what they're drawing out now.

The preferred term for this appears to be Global Labour Arbitrage, but for some reason Global Wage Arbitrage seems to fit better for me. Any which way, anyone under the age of 35 should be reading up reading up on, learning about and understanding what this is and how it is affecting them. In fact, so should the older lot, so they can understand why in terms of jobs, wages and career prospects, they had is so much better than their kids.

[winkie]

What is unfair today is that earning an average wage no longer buys an average home and support a family of 2.5 kids without some sort of 'Help'.

What is unfair is holding assets and debt can make more money than hard work and long hours.......those with few opportunities, born into life and a place with little opportunity will see life chances become little or no chance.

[Neverwhere]

Main reasons for me why the present generation has been shafted are to do with budget allocation and Government policy.

(1) an ageing population means the social budget has switched from housing to health. (this one is unavoidable unless we stop treating heart disease and cancer)

(2) education education education.

What's the most useful use of public money a social housing unit or two human geography degrees. One could be a forever asset the other is two three year rites of passage to indulge both parent and kids to the detriment of the latter who would be better off with more housing.

Who actually benefits from this University nonsense...boomer BTL, employees of universities where salaries on the humblest of jobs match management elsewhere.

(3) Allowing in the world for competition with housing and jobs. immigration.

2 and 3 tony Blair's dream and shafting everybody under 40 in the process. Things at the edges that don't help like generous IHT and triple locks.

The idea that there is a massive difference in access to education is also a red herring, and essentially a statistical slight of hand on the part of the Government: for older generations Polytechnics were classed as "further education" not "higher education", then in 1994 they were removed from the "further education" figures and added to the "higher education" figures, thus massively inflating this statistic despite offering exactly the same standards of education as they had done previously; to make matters worse the government also started to include Sixth Form Colleges in the "further education" figures from 1993 so it really is an absolute mess if you're trying to compare like with like. Once Polytechnics are considered it's fairly easy to see that a much larger cohort of the older generation attended what would now be termed "higher education" than is generally acknowledged. There is a straight to download link for the official government statistics here for anyone who can make sense of them. I think that it's fair to say they indicate that proportionally the numbers who attended what would now be termed "University" are, broadly speaking, similar.

[pig]

Main reasons for me why the present generation has been shafted are to do with budget allocation and Government policy.

(1) an ageing population means the social budget has switched from housing to health. (this one is unavoidable unless we stop treating heart disease and cancer)

(2) education education education.

What's the most useful use of public money a social housing unit or two human geography degrees. One could be a forever asset the other is two three year rites of passage to indulge both parent and kids to the detriment of the latter who would be better off with more housing.

Who actually benefits from this University nonsense...boomer BTL, employees of universities where salaries on the humblest of jobs match management elsewhere.

(3) Allowing in the world for competition with housing and jobs. immigration.

2 and 3 tony Blair's dream and shafting everybody under 40 in the process. Things at the edges that don't help like generous IHT and triple locks.

1) Social housing pays for itself - feck all to do with health. It's currently being dismantled, presumably for ideological/crony reasons. Simultaneously and for the same reasons renting options have been deliberately kept insecure and of poor quality* (but see recent BTL measures which may indirectly help).

2) The economy is imbalanced - London vs UK,Service industry vs productive economy. Speculating on property vs home creation. QED debt powered university cannon fodder confused as to the purpose of their degrees. No greater indicator of how screwed up it all is than London, a hotbed of left-wing voting.

3) Welcome to capitalism. Best fix the above clusterfeck before diversionary whining about immigrants eh ?

*see for example filibustering on revenge evictions and the recent housing bill - in particular rejected amendment on quality. If you are young you have no choice - you cannot buy so you will slave at work for the priveledge of living in an insecure hovel provided by your feudal overlord...

[crashmonitor]

Really, building 400,000 homes a year post war when the NHS budget was one tenth of its current size in real terms speaks for itself. Do you honestly think we could have built that many homes with the current calls on our Welfare system.

At the end of the day you have to adjust budgets to the demographics you have.

Social housing does not pay for itself, certainly not for decades at any rate, not ever really. The rents barely cover the depreciation of fixtures and running costs, not least the housing association staff in their air conditioned palaces.

I was actually suggesting a switch from the education budget to a house building programme, the health budget is non negotiable in any case, an end to useless degrees and a help to real jobs like builders and apprenticeships.

Edited January 18, 2016 by crashmonitor

[pig]

Really, building 400,000 homes a year post war when the NHS budget was one tenth of its current size in real terms speaks for itself. Do you honestly think we could have built that many homes with the current calls on our Welfare system.

At the end of the day you have to adjust budgets to the demographics you have.

Social housing does not pay for itself, certainly not for decades at any rate, not ever really. The rents barely cover the depreciation of fixtures and running costs, not least the housing association staff in their air conditioned palaces.

I was actually suggesting a switch from the education budget to a house building programme, the health budget is non negotiable in any case, an end to useless degrees and a help to real jobs like builders and apprenticeships.

Really yes. Has anybody explained to you that we have a little problem with what we are increasingly paying for shelter ? With the Housing Benefit bill for example ?

[crashmonitor]

Really yes. Has anybody explained to you that we have a little problem with what we are increasingly paying for shelter ? With the Housing Benefit bill for example ?

Yes further calls on an already overstretched budget deficit we could do without. At the end of the day politicians wont build because it props up the housing Ponzi, makes the banks' loan book good and is good for boomeres' balance sheets. And even if they wanted to there is no money.

Edited January 18, 2016 by crashmonitor

[pig]

Yes further calls on an already overstretched budget deficit we could do without. At the end of the day politicians wont build because it props up the housing Ponzi, makes the bank's loan book good and is good for boomer's balance sheets. And even if they wanted to there is no money.

Let me get this straight - there is no money but over half a London salary goes on rent ?

[billybong]

It's also extremely unfair to allow UK home prices to be set by rich overseas buyers. Then at the other end encouraging cheap labour to compete via offshoring and onshoring.

In unfairness terms it's outrageous and beyond the pale.

Edited January 18, 2016 by billybong

[PopGun]

It's also extremely unfair to allow UK home prices to be set by rich overseas buyers. Then at the other end encouraging cheap labour to compete via offshoring and onshoring.

In unfairness terms it's outrageous and beyond the pale.

You'd start to think it was planned to be this way...