In 2010 the government guaranteed to increase older people's pension by at least 2.5% per year, the policy was called the triple lock – and it was very expensive.
But new figures obtained from the Department of Work and Pensions for this programme show that from 2010 to 2020 all government spending on pensioners - including the triple lock - will rise by a hefty 26%.
Former Work and Pensions Secretary, Iain Duncan Smith, cut billions from the welfare budget, he says he was told to keep cutting – but couldn't do it anymore:
"I resigned simply because I think that, that government in its pursuit got very narrow and I wanted it to remind itself that it came on a pledge that we would all be balanced and fair about this and that with, you know, the word and phrase in it together means that those can, carry the biggest share, rather than those who can’t.
I remember looking at a spreadsheet of this. The guys at the DWP were showing me and they were showing me that, just on an annualised basis that it had gone from what was forecast of a few hundred million to well over a billion above that and it was rising fast and they, they all said the Treasury knows this, everybody knows this is growing, and I think the latest figure was something in the order of, it cost an extra 18 billion I think by the time you get round.
I think there's a mixture of politics in a sense that, once you start something, with that particular group it's very difficult to change it, obviously for political reasons for people you know.
Int: When you say for political reasons you mean that pensioners tend to vote more often than non-pensioners?
Iain: "Yeah there’s always an element of that - people say that's a bit selfish but the truth is that governments need to get re-elected."
• According to the ONS one third of all 25 year olds are still living with their parents – two decades ago it was only a quarter[i]
• Research provided by the Resolution Foundation says that Millennials are 75% more likely to be renting in their late 20s than their baby boomer parents[ii]
o Crucially, they are spending more on rent than ANY previous generation; about a quarter of their income goes on rent.
o When Theresa May was a student approximately 10% of income was spent on rent, over forty years the cost of renting has risen four and a half times.
• In 1991 one third of 20-somethings owned their own home, it is now one in eight.[iii]
• In Bristol, property prices in some areas have increased by more than 500% since 1995; homeownership is at a thirty year low.[iv]
• This is the most educated generation in British history, some 40% of millennials have a degree but just 30% of baby boomers finished school and just 10% of them have degrees
• There are nearly 14 million millennials in the UK, more than 800 thousand millennials don’t have full time jobs[v]
• 80% of baby boomers grew up in what we now call absolute poverty.
• One in seven pensioners are now millionaires on paper
• New figures obtained for this programme show that from 2010 to 2020, government spending on pensioners will go up by 26% but the rest of government spending is due to fall by 3%
• The amount handed down in wills is expected to surge by an unprecedented 47%, from £5.7bn last year to £8.4bn in 2020 – but that money will only be in the hands of a lucky few.[vi]
The True Impact of Quantitative Easing
After the financial crash in 2008 the government put billions into the economy to try and get it moving again. But has this had a lasting negative impact on young millennials?
Pension’s campaigner and former minister Ros Altmann says, “What quantitative easing has done has stoked up asset prices. That’s the aim of the policy of the Bank of England has always stated that but it has caused property prices to go up so much that it has made property pretty much unaffordable for most young people on ordinary salaries”
Former Tory Cabinet Minister and Chair of think tank Resolution Foundation, David Willetts says, “We are offering a very raw deal to the younger generation, the big assets we all care about, the pension and the house, those are the hardest to achieve and that does raise questions about how we’re going to ensure that the younger generation enjoy the benefits of this continuing innovation and technology and continuing economic advance… It’s very hard for the younger generation to have anything like the opportunities which the older generation have, and that is because of deliberate policy decisions.”
Leading economist Louise Cooper, “The thing that all of this income data doesn’t look at is the balance sheet, which is the assets and the debt and what we know is that things that were free in the past, university education, are no longer free so the young people are far more indebted than they ever were in the past and things that they have to buy or genuinely want to buy, a home, have become significantly more expensive”
David Willetts agrees, “The housing costs of the younger generation now, which affects their actual living standards are much higher than they were for people 20 or 30 years ago. During their 20s the younger generation now will pay £44,000 more in rent over that period than the previous generation and in fact, the boomers ended up by the age of 30 owning their house, where very few young people own their houses.”
Deliberate policies to keep the older voting generation happy?
Political pollster Ben Page, “It’s a pretty sensible thing for any politician to do simply because older people vote, the turnout amongst the over 70s is 70 or 80 or 90% depending on the election. The turnout among the under 30s has been struggling to hit 50%, back in 2015 it was only 43%. So if you’re a politician, go to the old people’s homes, don’t bother with the youth clubs”
Ben states that old voters are worth 3 or 4 times more than their younger counterparts, not only because there are plenty of older people but because they are living longer and there is a large bulge in the population in that age group.
Fraser Nelson’s concludes that decades of economic progress means that today’s young have more opportunities than ever before and far better tools to begin their journey in life. But for millions their only experience so far is of an economic system that seems to be geared against them - and a government that seems to ignore their needs. The government seems to have indicated it wants to change course - it'll need to otherwise the tensions might just spill over.
BRITAIN’S WEALTH GAP: CHANNEL 4 DISPATCHES, MONDAY 10TH OCTOBER 8PM
Reporter: Fraser Nelson
Producer/Director: Duncan Staff
Executive Producer: Lucie Kon
Production Company: Blakeway