For my generation, and several subsequent ones, there was an assumption that we would better off financially than the generations before us. It was not that we expected great wealth; most of us most certainly did not. We did assume, however, that we would be able to afford to buy a house, with a mortgage that would not swallow up all our income. We could also assume that our children would be able in due course to inherit the house — a major part of our estate — without fear that its value would have gone down.
These were comforting assumptions, given that the memories that we, or possibly just our parents, had were memories of great financial difficulty. The period just before the World War II, as I know from talking to people who lived through it, was a period of financial depression. The feeling of the adult post-war generation, therefore, that we could afford to buy a house without crippling our income was encouraging and reassuring.
In recent months, there has been much discussion of the cost of living in the U.K. and it has dominated debate in Parliament. That is the background against which we need to consider a study recently published by the Institute for Fiscal Studies (IFS).
For people born in the 1960s and 1970s, the study provides rather grim news. It found that people of those generations now in their forties and fifties are less likely to own a home than were those 10 years older. It found also that incomes, which had risen steadily since the World War II, are no longer rising.
There are other factors which affect the financial circumstances of the latest generations. Among them, notably, is the cost of higher education. My contemporaries, if we gained access to a university, would enjoy the benefit of a scholarship, which meant that we were not liable to pay fees. Even when our children went to universities the fees payable, by present day standards, were notional.
It is not, of course, quite as simple as it sounds. In “my” day, the number of university places, and indeed the number of universities, was much lower than today. Those of us benefiting from a university education were greatly privileged — and the privilege came with virtually no fees. I have no doubt at all that that was an untenable situation. Extending the number of universities and university places was unarguably desirable, and if achieving that was possible only by increasing the cost to individuals, then so it must be.
That, too, is not as simple as it sounds. We are living now in a time when employment possibilities are quite restricted. Paying off the debt acquired by experiencing higher education is, for many people, not at all easy.
Of course it is easy to find reasons for all this. It is easy to make the point that expenditure by those in the “younger” generations has tended to be noticeably higher than that in “ours” — but in making that sort of point it needs to be recognised that increasing affluence, and changing ways of life, bring with them certain assumptions. The significant thing is that the assumptions are different from those of the earlier generations.
The challenging thing about all this is that, for whatever reasons, the expectation of steadily increasing wealth that my generation was able to make no longer seems to exist. If this is true — and the IFS is a highly respected organisation — people in the more recent generations will need to come to terms with some pretty radical changes. At the root of it all will be the need to try and ensure that whatever the changes are, their effect will not be to turn everything backwards. I would certainly not want to see my children’s, and grandchildren’s, generations having to go back to conditions from which our society has steadily escaped during the past half century or so. I do not have any magic solution to offer. What I do have is a feeling of certainty that some solution must be found.
I am by nature an optimist, and I apologise for presenting my readers on this occasion with a more gloomy view than usual. Let me counteract it, without any sense of doing so with tongue in cheek, by wishing all of you a happy 2014, and thanking you for your many positive comments.
E-mail: bill.kirkman@gmail.com
