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Spending Review: Intergenerational Fairness and Well-being

Volume 797: debated on Monday 20 May 2019


Asked by

To ask Her Majesty’s Government what steps they are taking to ensure that issues of (1) inter- generational fairness, and (2) well-being, are properly considered as part of the forthcoming spending review.

My Lords, inter- generational fairness and improving living standards are core considerations for the Government’s tax and spending policy. The Government routinely assess the impact of all their policies, in line with the obligations of the Equality Act and their strong commitment to promoting fairness. To fulfil these commitments, the Government will consider carefully the distributional impact of spending decisions made in the forthcoming spending review.

I thank the Minister for his Answer. Given that the idea of intergenerational fairness is coming ever more under the spotlight, with real concerns that our current younger generation will be the first to experience worse pay, job security and housing prospects than their parents, what specific steps are the Government taking to collect regular data on the intergenerational impact of tax and benefit policies and spending decisions, and to publish a distributional breakdown of the effects of government budgets and spending reviews by age group to allow for independent scrutiny of their long-term sustainability?

I commend the noble Baroness and her colleagues on the Select Committee on Intergenerational Fairness and Provision for its report. It has just come out and I read it over the weekend. I like the sentence in paragraph 3:

“Policy based on the expectation that future generations will disproportionately pay for present or past consumption cannot be considered just or sustainable”.

I agree with that. One of the ways of reducing intergenerational unfairness is to take further steps to reduce the deficit, and the report explains exactly why it is unfair for any Government to go on borrowing and borrowing and load on to subsequent generations ever higher debt. I hope that that part of the report will encourage support for the difficult decisions that the Government may have to take on public spending.

On the specific question about publishing a distributional analysis of the impact, I understand that that is quite difficult to do. If, for example, the Government decide to spend more money on high-quality childcare, would that score as an advantage for the child, who is getting the benefit of the childcare, or as a benefit for the parent, who would then be able to go out to work or who would not have to pay for that childcare? There are some real issues about definition before we can go too far down the road of identifying a solution along the lines suggested by the noble Baroness.

My Lords, does the noble Lord agree that one of the most important problems here is the enormous debts that young people are building up through university charges? Our generation did not face such huge debts but the next generation does. As far as I can see that is one of the most important issues. I wonder what the noble Lord thinks about that point.

Steps were taken last year to raise the threshold at which debt starts to be repaid. However, as I said in my original reply, one of the report’s recommendations is to take this issue into account in the spending review. However, we have seen a huge reduction in unemployment among young people, with the rate among 16 to 24 year-olds having halved since 2010, which is a good record.

My Lords, the Minister is being somewhat complacent in his answers to the third Question of the day. He must be aware that a large number of young people feel outrage because the scales are tilted against them not just on university fees but on the kind of jobs that he has just identified, which are often in the gig economy, where young people are exploited rather than rewarded. Does he appreciate that a great deal of the anger in our communities is being generated by this Government having presided over an economy in which, in the past decade, ordinary wage earners have had absolutely minuscule increases while the bosses of the FTSE industries have been coining fortunes?

I am not sure that that is an intergenerational issue; rather, it is about income levels between different groups in the population. Perhaps I may put this into context. This Government have legislated to raise the retirement age, which has begun to tilt the terms of trade between the older and younger generations. Over the past 10 years, interest rates have been at a record low, which has tended to disadvantage those who have retired and may have savings, while tending to help younger people with mortgages. That is not wholly reflected in the report before us. As regards exploiting young people, in December we introduced the Good Work Plan to protect agency workers and give more rights to people on short-term contracts. Moreover, I have just received some in-flight refuelling: university fees—30 years to pay off and a new threshold of £25,000.

My Lords, the Social Mobility Commission’s report has highlighted that twice the number of disadvantaged 16 to 18 year- olds are in further education than are in sixth forms. Does the Minister agree that this, combined with the 20% decrease in FE funding in real terms, is limiting opportunity and social mobility, and that the forthcoming spending review should therefore propose an increase in FE funding?

This was another recommendation made in the report and can again be taken into account when we come to the spending review. On educating 16 to 19 year-olds, I am advised that there is a £7 billion spend on that particular age group. The right reverend Prelate has pointed to the discrepancy in funding between FE colleges and sixth forms, which I know has been an ongoing issue. I will ensure that that is taken on board in the spending review.

My Lords, I recognise the Government’s investment in children with a disability, but does the Minister recognise that we now have 1 million disabled children in this country, that this is 33% more than a decade ago and that local authorities are so short of funds that they are finding it difficult to provide the specialist services these children need? Will he keep this in mind in the spending review?

The noble Earl is a tireless advocate on behalf of the disadvantaged, and he has reinforced the case. I will ensure that Ministers at the DWP and the MHCLG, which funds local government, are aware of the point and that this is taken on board in the next spending review.