UK ‘failing its young’ as gulf grows between generations

http://www.theguardian.com/society/2015/jul/11/uk-young-fairness-george-osborne-budget

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The prospects for young Britons have deteriorated sharply since the Tories entered government in 2010 as money and resources have been targeted at the older generation, according to a devastating new report by economists.

The latest findings of the Intergenerational Foundation, to be published this week, highlight a sharply widening gap on its “fairness index” between people under 30 and those over 60.

The report illustrates how the younger generation is increasingly paying the price for supporting those already in, or approaching, older age as the cost of funding their pensions and healthcare rises.

Since 2010, the report shows, there has been a 10% decline in young people’s prospects across a range of measures including housing, education, health, income and debt. It comes amid a growing backlash from young people against George Osborne’s budget last week in which he announced welfare cuts that will hit many young families, ended automatic entitlement to housing benefit for those aged 18 to 21, and replaced maintenance grants for students with a loan system. Osborne also unveiled plans for a new “national living wage” that will rise to £9 an hour by 2020, giving millions of people a pay rise. But it will not apply to those under 25.

Related: For too many families work is no longer an escape route from poverty

The bishop of Manchester, the Rt Rev David Walker, raises deep concerns over the effect of the budget on poorer families, particularly those with children. While he welcomed the national living wage, he described as a “huge leap backwards” the cuts in tax credits for those trying to make ends meet, often taking several jobs at once.

The bishop, writing for the Observer online, says: “It asks those already struggling to keep their heads above water to take on an extra burden. Bad enough we were thinking about those of working age, but that is to forget the real losers from the tax credit cutbacks. The number of children who will be adversely impacted by the budget change is almost certainly above the number of adults.”

Young people who tried to climb the ladder out of poverty found there was no route to do so. “In Britain in 2015, for far too many households, work has ceased to be the escape route from poverty.”

The report will show a worrying picture of a society that is piling debt on young people while denying them educational opportunities and the prospect of buying their own homes. It will show that levels of spending on education as a proportion of GDP have fallen steadily since 2010, from 5.95% to 5.28%, while levels of participation in higher education have also declined.

The number of houses built fell to 140,000 in 2014, a level that the foundation says is “pitifully low” and a main reason, along with stagnating wages between 2010 and 2014, for rising prices which make buying a home unaffordable for many young families.

Despite the rosy picture painted by the chancellor, the report says that the number of young people out of work is three times higher in the UK than in Germany. By contrast the cost of healthcare and pensions for the elderly rises exponentially.

Commenting on the report, a former World Bank economist Professor Lawrence Kotlikoff said inequality between old and young was the “moral issue” of the day.

“The foundation’s vitally important index makes it clear that the UK is failing its young,” he said. “The UK, like other developed economies, has engaged in fiscal, educational, health and environmental child abuse.”

Angus Hanton, co-founder of the foundation, said the situation would be exacerbated by the budget. “One of the things we’re doing is drawing to the attention of the older generation exactly what they are doing. Unfortunately human nature means people think ‘We did something to deserve our comfortable lives, we’re entitled’ – and the baby boomers are experts at that. A lot of people have a moment of dawning, when they start joining the dots. A lot of politicians are very aware of what’s looming, but they won’t dare say it.”

On Saturday a campaign group called Youth Fight for Jobs took their tents and placards to Parliament Square in London to protest at what they said was a government “declaration of war on young people”. One of the organisers, Ian Pattison, said the budget was an attempt to “snatch our future”. Pattison added that “the grim outlook of increasing hardship for young people stands in stark contrast with Osborne’s treatment of the rich. We’re erecting tents to highlight the devastating effects of housing benefit cuts on vulnerable young people.”

Following the budget, Andy Burnham, seen by many as the favourite to be the next Labour leader, wrote to every party member insisting that the living wage should apply to young people. Burnham said that the budget “divided young from old” and “represents everything that’s wrong with Westminster politics”.

He added: “What possible justification can there be for excluding under-25s from the ‘national living wage’?”