Generations at War Talking Business

Now on BBC News - Talking Business Wood. We tend to take it for granted

that our children would be better off than we are, but that may be

about to end. Millennials, people born in the 1980s and 1990s, could

be the first generation in history to be worse off than their parents.

In this week's programme we take a look at generations at war.

Those able to work and provide for their children and generations to

come until they become too old to work and they themselves are looked

after, that social contract is the basis of civilisation all over the

world, it evens out wealth over lifetimes, and ensures that we

invest for the future rather than just consume today. Rising

productivity and technological advance has meant that each

successive generation has enjoyed better living standards than the

last. But that may be changing, according to the resolution

foundation, people born between 1945 and 1965 will urge an average of

?740,000 over their lifetime. The impact of the financial crisis

and the changing labour market means that millennials could earn just

?825,000, a fall of 1%. But it is not just about incomes, we spoke to

one father and daughter about their lives. I left university in 2015 and

because of this I am in just over ?40,000 worth of debt. I feel very

positive about the opportunities available to me and the career ahead

of me but I do feel like I am less advantaged in the generation before

me. Like a lot of people my age, I live in a shared house, the idea of

buying a house on my own is pretty unforeseeable, as a young person and

in today's market, finding a job, let alone a pension, can be hard. I

think I'm not only speaking for myself when I say that life can feel

a little precarious. My 1970s university education was free, at

203I was in a secure big company job with a good pension scheme and

bought my first modest house, and was paying off a mortgage, not

student debt. My grandad retired at 65 and live two years, IM62 and

hoping for a lot longer to enjoy life with a good pension, debt free

home and savings, plus free bus pass, prescriptions, winter fuel

allowance... I ask myself, do I really need it, when young people

are finding things so much tougher than I did. Here to discuss this are

three experts and three generations, a millennial, a senior researcher at

the research Boro solution foundation and author of the report

stagnation generation. Angus, a baby boomer, entrepreneur, and founder of

the intergenerational foundation. And a member of the so-called silent

generation. In between the world wars, president of the pensions

policy Institute and chief executive of the International longevity

Centre, which looks at demographics. Let me start with you, millennials,

your generation, they have seen the workplace change a great deal in the

last 20 years or so. How is that affecting the picture, this

disparity of wealth and opportunity that we are seeing between

generations. A lot of people like to focus on the impact of the financial

crisis and the downturn when they think about millennials in the

labour market. That really is quite important because this pay squeeze

in particular hit millennials just at the point where you expect your

paid to be rising quickly, getting into your jobs in your 20s you

expect quick progression and quick pay increases, the millennials were

unlucky to be coming into the labour market in those turbulent times. It

is not all about the financial crisis, there are more structural

things at play here. We might look to the rise in insecure work,

particularly for young people, and the slowdown in productivity growth,

which is really the key. That started before the financial crisis.

A mixture of cyclical changes connected to the downturn, and

structural changes in the way that we work and how much productivity we

have in our labour market seem to be hitting millennials in terms of

their current earnings and future prospects. Certainly true that the

environment is very different, not least because many young people now

come to the workplace already saddled with debt from educating

themselves. We have created a packhorse generation where many will

leave with ?50,000 of debt, and that has a very high rate of interest on

it, as high as six and a half percent, now almost 5%, which the

government is charging on the debt, that is paid out of income, when

they earn over 21,000 a year. The effect of it is that combined with

income tax and national insurance, there are marginal rate of tax, is

over 40%, 41%, it makes it very hard for them to save, and those student

debts will weigh on them for the whole of their working lives. I

would dispute the idea that the generations are at war because when

you talk about the older generation, particularly in Europe, but in the

UK more than anywhere else, that I know of, the older generation has no

wish to fight the younger generation. This is their children

and grandchildren. But it might be fair to say that the older

generation have set up a situation which is almost automatically

disadvantageous to young people but suits the older generation

themselves very well. You could say that but there is certainly an

adjustment needed because we were underspending terribly, certainly,

in the UK, on older people, huge pensioner poverty, really bad

poverty, and we dealt with that, to some extent, which is good. You are

not quite right to say there is no conflict, there is not conflict

between individuals but there is a conflict of interests and a conflict

over resources and our argument is not only in the UK but across

Europe, the older generation have taken more than their share. It is

reasonable for the younger generation, millennials in

particular, to complain and say it is not fair. Many people entering

the workplace, when I entered the workplace it was possible to buy

somewhere at least small, some sort of small property, for many young

people now, even if they are entering with a solid salary, Jihad

to achieve. Absolutely right, we have already talked about pay, but

it is probably in housing where the generational diversity is starkest,

a millennial at university is 80% less likely to own their home than a

baby boomer at the same age, that affect shortages in the supply of

housing, which has rapidly driven up costs. -- too -- that's hard to

achieve. People focus upon millennials, they mostly don't want

to do that, but the real challenges for the future, owning your home

represents stability, it represents a way of building up an asset, which

you can now depend upon in retirement. If we have asked the

more in this current young generation who gets to retirement in

many years' time without that assets to fall back on, that is a challenge

for those individuals but also for the state. What if we have to pay

the housing benefit or whatever the future of that looks like, the

housing costs of all these gnome non-homeowners. The current

challenge, the real concern is the future. To what extent, certainly in

Angus's generation it was very much part of the financial plan that you

would buy a house, a it off by the time you retire, so that would not

be one of the costs that when you retire, what do you feel warehousing

plays into this? So many older people are living in places that are

quite unsuitable, and what... In what way? As you get old because the

bathroom is upstairs, you are downstairs, stares make people fall

and go into hospital. They are damp very often. We need to attract older

people to specifically built housing for older people with care if they

need it, make this so attractive that people move, and then there is

plenty of housing which can be adapted very easily for the young.

And we need to get a very strong public message that retirement

housing with care for people who need it will make housing available

for the young. And make every local authority, have a duty to consider

all this, have a legal duty to do it, and build more housing for

retired... Angus? It is a solution to some extent but it is not just

building more housing and helping older people to have suitable places

to downsize, it is a question of freeing up the housing stock, at the

moment, to put it bluntly, the older generation are hogging the housing.

Perhaps not doing it deliberately, it is partly because they are living

longer, partly because there is not suitable places to downsize but

again, as in other areas, taking more than their share, and one of

the problem is they are over consuming... There is a limit to how

prescriptive you can be, people have a right to live where they want to

live, that is part of our society. In many European countries the local

property tax, the cost of housing is higher, that pays for social care

and other things, and that encourages people to downsize. We

need to build more housing and use more housing, effectively. The

fundamentals of downsizing in this country do not work at the moment,

and nor do the type of houses that we are building. And at what stage

of their lives. The other big-ticket item is the pension, this is the

other big area in which millennials are facing a challenge, harder

because they are earning less, but also because we have changed the way

we do pensions in this country, in the UK, but many baby boomers would

have been used to, particularly at their peak of earnings, getting into

a defined benefit pension, guarantees you a salary for the rest

of your retirement. Those have disappeared. All the FTSE 100

companies offer than 20 years ago, now maybe two or three. Millennials

are faced with a much less attractive pension saving vehicle,

and not necessarily earning enough to put into it. On housing and

pensions, what retirement looks like is much more unstable than parents.

Late in the programme we will be looking at how changes to

demographics and government policy has changed the balance of power

between the generations and even within families. But first,

representing Generation X, comedy consultant has this weeks talking

point. Are you Generation X or generation Y, perhaps a snowflake...

What generation are you? If pushed, I think I am Generation X, some

describe me as a millennial, one thing is for certain, I am not a

baby boomer. Apparently, wheat, at the end of the alphabet, are cheesed

off with baby boomers, with their retiring in their mid-60s and their

pensions and their comfortable trousers, but intergenerational

discussion, it's a lot more complicated than that.

To get the full historical picture, I went to the Epic Ireland Museum of

the Irish diaspora, it is all very well to find out about what previous

generations went through, what about the transfer of money between them?

Neil has been studying social mobility, associate professor of

economic history at the London School of economics, studying

intergenerational wealth mobility and researching it using rare

surnames. Surnames can be used to track families over most of the past

millennium. These surnames often had characteristics that enabled you to

detect what the status of the original surname holder was. We were

shocked when we first did this analysis, we got far higher

correlate is, a far more static society, and social mobility is

glacial, as opposed to rapid, as was originally thought by economists

when they estimated the numbers. Being here at the centre really

gives a sense of the tribulations of previous generations. While I got a

job when I came out of college, generation after me had to emigrate

again during the great recession, resume agree that generation after

that will have it good in the next boom but in general, you always

assumed that the people who come after you are slack-jawed ingrates

who don't know they're born, and you have to tell them about the time

before there were marble phones. -- mobile phone. Research in Ireland

suggests the relationship between generations may be more complex than

imagined. Alan Barrett, director of the economic and social research

Institute, explains the surprisingly finding from a long-term study

called the Irish longitudinal study on ageing, Tilda for short. You

often find that there is this notion of a working population paying taxes

to pay the health care for the older generation, at the public level, the

transfers go in that direction, but what was really revealing from Tilda

was the extent to which the private level, the transfer of money from

the older generation to the younger generation fastly exceeds anything

going in the other direction. All this talk of surnames has made me

think about my own past, who am I, really, and more importantly, is

there any intergenerational wealth that I can inherit? Let's take a

look. Would you look at that, my name means "king", turns out I am

royalty after all, the question is, where did all the money go? STUDIO:

You can find more official films on the website.

Our guests are still with me here in the studio talking about

generational divides. Sally, let's come to you and ask about this

business of the demographics, very simply we have more people retired

now, people living longer and living more healthily, the government has

responded to that by making sure they are able to have sufficient

income to do that, in more cases than before. That, in a way, one

might argue, is part of the problem. What has the government is done

right and wrong? The government has done right, almost a whole thing is

right, because we had shameful levels of pensioner poverty in the

UK. And what they have done is to make sure in the way pensions are

provided that this does not happen largely now. But, what has not

happened is because they have been protecting older people, bear in

mind there are so many more, we have to spend more money on them, because

they are a very important part of the population, but we need to look

again at the way that pensions have been protected in the light of

fairness across the generations. And, one of the ways the government

has worked is by maintaining the pension level regardless of how much

the national income is going up. They need to look again at that and

perhaps consider what is known as a triple lock in Britain, perhaps a

double lock, which would make sure from now on that state pensions keep

up with the rising costs and the costs of living generally. Can they

be more radical than that, you are saying they have been increasing the

state pension and that is good in terms of addressing pensioner

poverty but we have a huge number of pensioners who are wealthy in the

UK, probably 2 million over 60s who live in households with ?1 million

of assets, even if they are income poor, from a young person's point of

view, it seems odd that they should be getting this hand-out of the

state pension? Over the lives of baby boomers, they have seen their

incomes progressively rising but they have also been beneficiaries of

government support as well. They have done well in that sense from

two quarters. Absolutely right, we often think about what will happen

to tax and benefit policies in the next five years, but for a true

intergenerational perspective we need to look across lifetimes. That

is hard, we have to make assumptions about the future but the best

analysis suggests the baby boomers, if you add up all the taxes they pay

in and all the benefits and welfare support they take out, they have

been net beneficiaries of the welfare state, partly because there

was lots of them in working age and fewer retirees ahead of them said

they did not need to pay so much tax to fund the health and care. As they

move into retirement, that starts to shift and it looks like the

generations coming after the baby boomers take much less benefit over

the lifetime from the welfare state or may even be net contributors.

Paying in more than they get out. The ups and downs of generations

connected to the ups and downs of demographics to create an unequal

picture in terms of what the welfare state does for each of them. Let's

ask you about what you made of the Brexit vote in terms of whether it

is revealed in intergenerational divide? The problem is that we have

a divide in how people vote, younger people much more likely to vote for

remain, older people much more likely to vote for the leave. Of

course there were some younger people were voting for leave but

what it highlights is that younger people and older people tend to vote

differently, but the problem is for younger people that the older

generation have more voting power now. The next general election in

the UK, there will be more over 50s voting than under 30s, not only are

there more of them voting but they lobby more, the MPs and the

policymakers are more likely to be baby boomers and so their interests

tends to be treated as less important. That raises a really

important practical challenge, basically two things underlined what

you said: there is quite a lot of baby boomers, they are a big cohort,

but also they are much more likely to vote, this turnout divides did

not always exist, to some extent it did but it opened up in the 1990s.

Our research shows that the turnout among the younger generation fell by

one third in the past few general elections in the UK. We have said

that we don't necessarily think this should be thought of as a war, that

generations want the best for each other but if we make tough decisions

then we need a democratic consensus to doing that. You are a keen

supporter of working past the official retirement age. Work is

changing dramatically and there is no reason why we cannot work, we

work flexibly, we then have a break and take up a new career, or a new

sort of skill. We have two are just very quickly to the new workforce,

and there is really very little in the way of an age barrier to that in

the same way as women and men can now work later, take breaks, come

back, keep learning, keep changing. It is up to employers as well to

make sure that their employees can continue to train and learn and

retrain. Let me ask you, do you have a sense that people in your

generation are planning their lives differently? Do they expect to

re-educate themselves in their 40s or 50s when they become middle age,

is that an expectation, that they will simply have to work longer? Do

you see a difference between you and people in their 50s? There is

definitely something is that members of my generation see differently,

working longer is a part of that. Really big-ticket items, your house,

your pension, what you want from retirement, settling down and having

kids, the really striking thing is attitude across the generations have

not shifted. We may have iPads and be able to travel all over the

world, we may be seen as footloose and fancy free as a generation but

on the important economic milestones, we want the same things,

we want the house, the pension, the stability, we want to bring up

children in a world where growth and progress means they will do better

than we did. That is what binds together the generations. We have

said it is not war, politicians need to pursue those ends for us. Dinky

very much for all of you. That is it brought this edition of

talking business, next week, we will be in Washington for inauguration

special. -- Talking Business. Looking at the challenges ahead for

president Donald Trump.