Generation Y needs an Office for Inter-Generational Responsibility
This article originally appeared in CapX
Britain has a long history of young people achieving more than their parents. Unfortunately, many young people today do not share that hope. The key to reviving it is not only more economic growth and less spending, but a way of evaluating effects of new policies on Generation Y, those born between 1980 and 2000. Centre for Policy Studies Research Fellow Michael Johnson has proposed an Office for Inter-Generational Responsibility to assess the effects of new policies on the young, Generation Y.
Gen Y is in trouble. There was a time when if you worked hard at school you could reasonably expect to find a job in Britain. Even if you were an early school leaver, jobs were available in manufacturing, mining, or services. Today, jobs are scarce for young people, no matter how well or poorly they do at school. In addition, housing is expensive. To make matters worse, if the young are employed and pay taxes, taxes go to programs primarily used by the old. The system is biased against the young, who lack jobs and housing.
Young people aged 16 to 24 are nearly three times more likely to be unemployed than the rest of the population, the largest gap in more than 20 years. Their unemployment rate is 16 percent, according to the Office of National Statistics, compared with an average unemployment rate of 5.5 percent. In 2005 the youth unemployment rate was 11 percent.
Mr. Johnson suggests placing the Office for Inter-Generational Responsibility alongside or within the Office of Budget Responsibility. It would provide assessments of spending and tax proposals with a view to how they affected Generation Y. All draft legislation would be accompanied by such an assessment. The Chancellor would not be bound by the assessment, but he could take it into account. The assessment would be open and transparent, so members of the public could weigh in.
It used to be that a person who did well at university could be catapulted to the top of society. Britain has many of the best universities in the world, but graduates are burdened with more debt than the previous generation. Full-time students now graduate with an average of £15,000 in debt. The sum total of student loans is expected to reach over £100 billion by 2018, according to the House of Commons Library Student Loans Statistics report.
A generation ago top university graduates could reasonably expect to own homes as part of a normal career progression. Today, home ownership is increasingly postponed for even those graduates.
Builders have been unable to produce houses to keep pace with increased housing demand as a result of limited space and new regulations. In particular, rules for handicapped accessibility have made it harder to get planning permission for low-cost, simple homes. One alternative to alleviate the housing shortage would be to modify some of those rules, according to Nicholas Boys Smith of Create Streets.
Gen Y's jobs often offer little prospect for advancement. The young are overwhelmingly represented in sales (such as retail assistants) and low-skill occupations (such as waiters and bar staff). These account for 45 percent of employed young people compared to just 16 percent for those aged 25 and over. These jobs have not only been hit by the recession, they have also been in long-term stagnation and decline. They generally do not lead to high-paying careers.
Long-term prospects for young people are no better than short-term prospects. The UK's net liability of £1.852 trillion grew by 51 percent in the 5 years ending March 2014. This measure of net liability excludes net liabilities for the state pension, which, if included, would make the net liability per UK household worth £221,000. This debt is an extraordinary inheritance to leave to the next generation.
Increased economic growth would help to remedy some of these problems. George Osborne already announced plans to reduce personal and corporate income taxes, as well as fuel duties. Plans for eight enterprise zones will reduce red tape, potentially encouraging regional development in Plymouth and Blackpool. With new hydrofracturing, or "fracking" technology, a process in which gas and oil trapped in shale rock is released and brought to the surface new technology, Britain could tap some of the natural gas below Lancashire and Yorkshire, which contain some of the largest shale gas reserves in Europe.
An Office for Inter-Generational Responsibility would be able to calculate the effects on Generation Y of these proposed policies, including the possible reduction in pensioners and women. It is time to look at the young, who arguably need more help now.
Diana Furchtgott-Roth, director of Economics21 at the Manhattan Institute, is the coauthor of "Disinherited: How Washington Is Betraying America's Young." Follow her on Twitter here.
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