The government are continuing to prioritise the old over the young. But millennials won't forget it.
During his Budget speech, the Chancellor said he was, “driven by a determination to ensure that the next generation will be more prosperous than ours.” The truth is somewhat different.
The Chancellor’s Budget decisions on taxation and social security hurts millennials and helps older generations.
Around three quarters of social security cuts announced since the 2015 election have still not been reversed and of those that remain, the Joseph Rowntree Foundation have identified the working age benefit freeze as the one that will, “increase poverty more than any other policy”.
This cut disproportionately hits young people – over half of those affected by the freeze are millennials.
The Chancellor could have chosen to reverse this cut in order to boost the incomes of millennials and, in turn, stop half a million more people from falling into poverty. It would have cost around £2bn a year.
Instead, he chose to implement tax cuts that will predominantly help older citizens. The cost of those tax cuts? Around £2bn a year.
Pensioners, of course, continue to be protected while cuts fall elsewhere. The Triple Lock – which ensures that the state pension always increases faster than average wages – is almost sacrosanct. The tax treatment of pension payments is “indefensibly generous”, and pensioners still don’t pay National Insurance Contributions when working.
This protection, coupled with a drastic undersupply of housing, has led us to the point where pensioners now have higher average incomes (after housing costs) than non-pensioners.
While older generations own houses and benefit from record low interest rates, millennials struggle to get on the housing ladder and face the highest housing costs of any generation.
Millennials spend more than a quarter of our income on housing, and while this Budget did contain some eye-catching housing policy announcements, they will not significantly reduce housing costs for young people.
The measures in this Budget that help young people to buy houses, such as Help to Buy, will only help wealthier millennials get on the housing ladder while stoking demand and raising prices for the rest.
And the policies that aim to increase housing supply are underwhelming. The OBR predicts that allowing councils to borrow more in order to build social housing will only lead to 9,000 more affordable homes by 2023 and even if the other housing announcements do lead to the government reaching their target of 300,000 new houses a year (and that’s a big if), this still would not significantly reduce housing costs for young people.
Millennials know exactly the sort of deal we got from this Budget.
It is the same deal we have been getting from this government for almost a decade. It is the same deal that led to only a quarter of us voting for the Conservatives at the last election. It is a deal that my generation will remember when we vote in the years and decades to come.
Jeevun Sandher is an Economist currently undertaking PhD research at King’s College London. Prior to this he advised the Somaliland Ministry of Finance, HM Treasury and the Department of Work and Pensions.
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