by
John Hills
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If we are looking for a reason for pressure on those with middle incomes, it is not at the bottom end we should be looking. Rather, it is at the top. If anyone got too expensive, it has, in fact, been the rich.
[...] there is both continuity and change in people's circumstances from year to year. We do not live in a country where there is an annual lottery to determine at random who is rich and who is poor for the coming year regardless of where they started last year. But nor do people generally stay stuck in the same place. Those who start poor are more likely to stay poor the next year than those who do not, and those who start rich more likely to stay rich. But many in each group--and those in between--move up or down the income ladder each year.
[...] Today, social housing--rented out at below market rates by councils and not-for-profit housing associations--is in many people's minds synonymous with housing people with low incomes. But it was not always like that--back in 1979, more than 30 per cent of people with incomes in the top half of the income distribution lived in social housing. By 2004, it was less than 10 per cent. Between those years, the supply of social housing available to let to new tenants each year dwindled--fewer new houses were built; property was sold off through the 'Right to buy', so that when occupants moved or died it was not available as social housing, and fewer tenants moved out of social housing or died.
didn't actually know that stat
- they can act as disincentive to additional earnings;
- they can give an incentive to behaviour that reduces reported income (including misreporting of circumstances to slip below particular thresholds);
- they can lead to feelings of injustice, if those just below a threshold are treated much more favourably than those who are only slightly better off;
- uncertainty about which side of a threshold someone will fall once all the calculations are done can add to barriers to access.
this section is specifically about students but those caveats apply generally
The equity issue--and the challenge for polices in a range of years--is not simply of one fortunate generation versus another. It is about the advantages of the better-off half of baby-boomers compared to_both_ poor baby-boomers and to those members of younger generations who do not stand to inherit. It is one thing to be one of a small number of grandchildren of owner-occupiers living in the South East of England, and quite another to be one of a large number of grandchildren of tenants or even of owners in parts of the country with low house prices.
[...] while it makes sense to protect state pensions, better-off pensioners could contribute more through the tax system. But the politics of this are fraught--when George Osborne announced the end of the extra tax-free allowance for those aged over 65, it was instantly condemned as a 'granny tax'. Other proposals that might affect better-off pensioners often face objections where some low-income pensioners who would be affected are held up in front of them as a kind of political and fiscal human shield.
Up to a basic level, it can be argued that there are public benefits from encouraging pension saving, as otherwise the state and taxpayer could end up having to do more of the job. But tax relief is worth most to the highest paid and goes disporportionately to them. For instance, a higher rate taxpayer putting £1,000 into a pension pot at age 40, and paying basic rate tax in retirement, would get an eventual net return back of £5,500, compared to only £4,150 for a basic rate taxpayer, of £3,900 if either had invested in a tax-free ISA getting the same underlying return on investment.
didn't really consider this angle before, good point
[...] The issue is not just between a lucky generation of baby-boomers now approaching retirement who got the best pension deals and benefited most from the house price boom, and a younger 'jilted generation' who have little. Many baby boomers have little wealth, and only a minority enough to see them through retirement without state pensions playing a major role. And a significant proportion of younger people stand to gain a great deal from inheritance and lifetime help from parents and grandparents. The conflict of interest is ultimately between the more affluent half of the baby-boom generation and poorer members of their own generation and younger households with the 'wrong' relatives, for whom advantage will not cascade down the generations.
the whole idea of young people being 'helped' by their parents has a lot to do with wage suppression and rising (rentier-led) inequality, which makes the idea that parents are graciously supporting their kids a bit dubious to say the least ... a little bit disappointed that he didn't go more into why the younger generation isn't doing so well, cough neoliberalism (or maybe he did and i can't remember idk)
Nearly all political parties across the spectrum aspire to the idea that there should be 'equality of opportunity'. What people mean by equality of opportunity varies, however, sometimes concentrating on relative chances of ending up at the top or bottom of a social or economic ladder, sometimes on their absolute chances of reaching worse level of attainment or outcome. What is needed to achieve the former is more tougher politically than to achieve the latter--in relative terms, increasing one person's chances of going up also increases another's of going down. [...]
OR YOU COULD EVEN THE PLAYING FIELD AND THEN GRAVITY HAS NO POWER, MAKES U THINK
[...] there are lots of things that money can buy, such as:
- high-quality pre-school care
- houses in the catchment areas of the best-regarded state schools (which then command a significant premium)
- after-school activities, private tutors, etc
- private schooling
- parental support in going on to tertiary education (and reduction in the worries associated with student loans)
- support in taking a Master's degree (for many better-paid careers this now represents the same basic required qualification that a first degree did a generation ago)
I believe he uses this list to explain why parents need cash benefits in addition to services. but most of these are things THAT SHOULD BE SERVICES. pre-school should be free. 'catchment areas' are dumb. after-school activities should be free. private tutors are probably unnecessary if you just make public education better. private schooling--don't even. tertiary education should be free (that covers the last two points).
actually, i should think more about the catchment area thing. why are these houses more expensive? who does the money actually go to??? to the seller? why should they need more money? surely if they were planning to sell the house anyone they would do it anyway, without a premium? and if they weren't, but just wanted to cash in, then maybe that's not a good reason? just another case of a 'free market" result in an inefficient system
basically the evidence he lists points to a much, much more overwhelming problem (and thus asks for a much more radical solution) than what he is suggesting