James Sean Dickson: A better deal for younger generations is existential for the Conservatives

James Sean Dickson is a data analytics engineer and researcher who substacks at Himbonomics.

It is becoming increasingly clear that the gap between the young and the old is creating an existential threat to the prospects of Britain’s young people. Wages are stagnant, housing prices are at an all-time high, and there appears to be little reason for optimism.

This is not merely an issue of fairness between the young and the elderly, though this self-evidently matters a great deal. Widening intergenerational inequality pushes much more insidious second and third order effects on our economy and society. The ways in which it is expressed are a drag anchor on the productivity and economic growth that Britain desperately needs.

A high cost of housing in our most productive regions and cities chokes off the supply of our best and brightest workers to our most productive and highest-growing employers. Putting the brakes on our top firms in this way lowers overall productivity and economic growth.

Low growth is not just something that should be of concern to policy wonks – a disastrous combination of stagnation and our ageing population means that taxes will get higher without corresponding improvements to public services, and we will get poorer.

The present impasse seems impossible to overcome; our current politics caters primarily to older homeowners who prioritise the public services and character of where they live, and who have been the beneficiaries of expanded benefits.

However, public polling undertaken for the Adam Smith Institute’s new paper, Boomer and Bust: Realigning Incentives to Reduce Intergenerational Inequality, found that there is political support for a re-engineered policy agenda. Indeed, overall, the polling found a clear case for substantial reform.

People are starting to notice that the current system isn’t working, and is stacked against Britain’s young. Facile and insulting notions of an avocado toast-eating, Netflix-bingeing, and financially irresponsible generation are giving way to genuine concern. A majority of people understand that it is harder to get on the property ladder, with 52 per cent of people now supporting more development in the area, an increase from the 38 per cent polled by the ASI in 2021.

The polling also found support for other fair reforms to tax and welfare policies. In particular, the young are exposed to ‘stealth taxation’ while the elderly benefit from increased welfare spending.

There is huge support for unfreezing income tax thresholds; the vast majority of people do not support the threshold freeze when it is made clear to them how it works. Unfreezing thresholds would increase the personal allowance to such a number that would effectively bring the youngest out of income tax entirely, especially as they start out on low-income or part-time work.

The burden on the working age population necessitated by current high welfare spending on pensioners could also be reduced through replacing the triple lock on pensions with a smoothed earnings link. As we explain in the paper, this would reduce the long term cost of the state pension, whilst ensuring that pensioners do not experience an income cut on the occasional year that real incomes fall.

There are clearly significant short-term electoral challenges involved in making the kind of changes outlined here. But this is existential for the Conservatives.

Many political commentators assume that the declining Conservative voting intention in the young is due to young people holding new social values which are fundamentally at odds with those of the Conservative party.

This commentary ignores the fact that there are few incentives left for young Britons to vote Tory. The Conservative Party of 1992 was arguably far more socially conservative, yet it managed to easily command the 18-54 vote.

But now, access to the fruits of a productive society is now almost impossible without familial wealth. If the young have no stake in capital, what reason is there for them to lend their vote to the party that sees itself as the home of capitalism?

The message is clear: if the Conservatives want the younger generations to vote for them, they should give them something to vote for. As previous research has shown, young people are willing to change their vote for a party that boosts home ownership.

This doesn’t mean pitting generations against each other. The boomer generation have not been purposefully ‘stealing the future’ from the young.

But it is the case that they have been benefitting from the unintended consequences of our current structure of political incentives. And we should hardly be surprised that people have been acting in their own self interests and vote against changes they see to be threatening their existing way of life.

However, our polling has found that many politically feasible policy changes that could realign these incentive structures, without going against these entrenched interests head-on. Turkeys don’t vote for Christmas, but they might be tempted by a nut roast.

We shouldn’t expect voters to make the complex but vital link between a lack of new developments and unequal tax and welfare policy and a high-tax, low-growth economy. But we should expect it of our politicians. Tackling intergenerational inequality is about addressing the fundamental issues that plague our economy and nation.