Tuesday, 7 January 2014

Which Generation are we saving here?

British Chancellor George Osborne said yesterday that another £25 billion in welfare cuts are needed to close the deficit:

"Do we say: the worst is over; back we go to our bad habits of borrowing and spending and living beyond our means - and let the next generation pay the bill? Or do we say to ourselves: yes, because of our plan, things are getting better. But there is still a long way to go - and there are big, underlying problems we have to fix in our economy."

With the pensions part of the welfare budget protected under the Conservative promise of the triple lock - that pensions will increase in line with average earnings, inflation or by 2.5%, whichever is the largest - and the under-25s the targets of most of the cuts, it's an odd rhetorical direction to take. It's traditional austerity rhetoric to insist that the costs of borrowing mean that the next generation is being weighted down by debt instead of the current generation dealing with their own problems.

But the under=25s are the main target of these austerity policies, be it an end to housing benefits or employment benefits. It's difficult to claim that the generation that finds itself under the 25 year threshold played a part in causing the current deficit or economic crisis. When did they speculate on house prices or recklessly run financial institutions? Are these people not the "Next Generation"? Even if they're not, presumably the benefits will still remain withdrawn for whoever this Next Generation turns out to be until they are 25.

This raises a few questions about what the morals behind the Tories' version of austerity. Why should the under-25s have access to fewer benefits than the rest of the population? At 25 you can vote, serve in the army, pay taxes, are entitled to the full minimum wage... but you can't be trusted with housing benefit? Which implies that you won't be seen as a full citizen in the eyes of the British state until you're over 25, and that you're really expected to live with your parents in tough times.

Protecting pensioners - a key voting group for the Conservatives - might be seen as a cynical political ploy (and to an extent it is), but I think you can see the basis of the Tory view of the state in the targeting of the young to close the deficit. The state, or the welfare part of it, it really a giant insurance vehicle in the Conservative view: benefits should really only be paid out to those who pay in. Pensioners have paid in, so their contribution must be protected; under-25s cannot safely be assumed to have paid much tax yet, so they should not have access to the same range of benefits as other citizens. Taxpayer payment to (or investment in) the state should be prioritised.

The problem with this view is that young people start off with nothing or not-very-much (unless they have a generous family) because they are just starting off in life and have yet to establish themselves in work and the world at large. Generally there is a redistribution of resources to the young (education, etc.) to equip them with the skills to establish themselves (and to give the state higher earning workers who will pay higher taxes). People established in careers are expected to pay not only because they have benefited from the system in the past, but also because they want their children to have a good start in life and they want later generations to continue to be able to pay for the state (including eventually their pensions).

By focusing so much on who pays in as a taxpayer, and that on an individual level they broadly get what they paid in back out in the end, it misses the point that the state acts as an investor. Taxpayers matter more than citizens, so if you can't be assumed to have paid much in, then it's not that big of a deal to withdraw benefits. So if you are in (university) education, you're expected to pay tuition fees and to take on debt to do so because you're investing in yourself, and if you're under 25, you don't deserve access to the same benefits as anyone else because we can't assume that you've paid in yet. Of course this kind of thinking means that the welfare state becomes more about those who can or have been able to pay at some point, leading to more inequality.

This attack on the young is an extremely clear sign that we aren't "all in this together", particularly as youth unemployment remains high.

Ironically it seems to be the "pro-business" Conservatives that don't know much about investment - after all, the Royal Mail was sold off at a bargain basement price while the government guaranteed its returns for a year, and the oldest student debt was sold off at a loss rather than the government even bothering to maximise the returns on even the loan system. No wonder the Tories think the private sector can do it better when they do it so badly.

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