Britons in their thirties are stuck in a dark age

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Pthe a thousand years. Graying at the temples, thinning on top and drying around the middle. Once shorthand for rebellious youth, now even the prime minister (born in 1980, uses more than two fingers to type) falls into this ever-growing category grow older. The typical millennial is inundated with Instagram ads for fertility treatments, wills and Viagra.

If the ravages of time weren’t bad enough, the wickedness of British society makes matters worse. Life is very difficult for the generation entering their middle years. It is a time when people are supposed to be starting their careers, raising children and, often, caring for aging parents. But it is also a time when housing and childcare costs combine with uneven taxation and an unequal welfare state to create a miserable time. It’s called the Dark Ages. (Bagehot should disclose involvement: it’s slap-bang in the middle.)

Like most problems in British politics, it all starts with housing. The average age of a first-time buyer is 32. Those who have recently bought a house may be on the wrong side of a leveraged bet on the most expensive property they will ever buy. If house prices come down, it will be easier for young people to buy; older homeowners will be insulated, having built up more equity. Those in the Dark Ages will be filled. Even before mortgage costs rose, affordability was stretched. The average house costs around £300,000 ($362,000). When the median wage is around £33,000, it takes two earners to pay one. That makes childcare inevitable, unless Grandma and Grandpa are around.

Unfortunately, childcare in Britain is among the most expensive in the world. British parents spend between a quarter and a third of their income, depending on how it’s calculated, on paying others to look after the sprogs. The government has shelved plans to offer more free childcare for parents, alongside a scheme to reduce the number of staff required in a bid to make it cheaper.

However, 30-somethings on average earnings can be assured that their basic rate of income tax will be just 20%. Unfortunately, things sometimes go wrong in the tax system – and those in the Dark Ages often suffer. Policies such as removing child benefit from the moderately well off mix badly with a byzantine and often cruel working age welfare system. An unlucky household with children could in some circumstances face a modest reduction rate of between 80% and 96%, according to the Resolution Foundation, a think tank.

Every generation thinks it’s rough. Someone who had a mortgage in the early 1990s may have struggled with rising interest rates (even though lower house prices made these loans cheaper). Houses may have been cheap in the 1960s, but there was lead in the petrol, men dropped dead in their 60s and women couldn’t open a bank account in their own name.

Some have it better than others, though, although they don’t always like to admit it. Those who are now of retirement age will benefit greatly. On average someone born in 1956 will pay around £940,000 in tax over their lifetime. But they are expected to receive state benefits worth around £1.2m, or £291,000 net. Less than half of that figure will be enjoyed by someone born in 1996: a fresh-faced 27-year-old today will barely earn more than someone born in 1931, around a decade before the term to use a “welfare state” first.

And so a fundamental part of the social contract has broken down. Before Britons exchanged miserable middle age for golden retirement. “Giving goods to an old man is really giving goods to yourself in old age” is a quick statement from Paul Samuelson, an economist. Those in the Dark Ages will pay more and get less. Boomers used their demographic weight to sway the state to their advantage, said David Willetts, a Conservative bigwig, in “The Pinch,” a landmark book published in 2010 on intergenerational inequality. Millennials bear the cost.

It would be better – politically, economically and socially – to offer something to today’s younger voters. It is in the political interest of the Tories. Britain’s millennials are the first generation to stop moving properly with age, according to one study by the Guardian Financial Times. For some mps this is proof that the generation has been awakened flawlessly. More thoughtful Tories take a material view: it is difficult to vote for the party that offers them so little. At the moment, there is little reason for young people to vote Tory, either head, heart or wallet.

Helping those trapped in the Dark Ages could also boost the economy. Better access to childcare could increase output per worker by 30% according to one controversial study, if able-bodied women replace incompetent male workers. Even if the benefits of better childcare are smaller, they would be welcome for an economy in dire need of productivity growth.

More self-interested millennial complaining below

Inequality between generations leads to conflict between generations. Some pensioners are poor, but more are rich. Although one in five pensioners are in poverty, one in four live in a household with assets of more than £1m, thanks to a booming property market and generous pensions. There will inevitably be friction between guards and non-guards, even if they are separated by age. Just waiting for inheritances to trickle down through the generations is a recipe for an unhappy society.

Each of these problems is solvable. The government could and should do more for young parents. It is not a fact of life that childcare is unaffordable, as any German can attest. Britain’s houses are small and expensive, not a law of nature, but a choice of successive governments. It is a policy decision that the British tax system is too biased towards income, while property wealth is left untaxed. The government could choose differently. Shed some light on the Dark Ages and everyone would be better off.

Read more from Bagehot, our British politics columnist:
Another Westminster Cathedral (December 20)
Why do Harry and Meghan pull people up? (December 15)
Britain’s real problem with free speech (December 8)

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