Willetts warns of generational imbalance
David Willetts has warned of a generational imbalance in Britain and has urged the government to tackle it.
Speaking at Keele University, Lord Willetts, a former Conservative minister and current head of living standards think-tank The Resolution Foundation, said wealth owned by retirees has grown out of proportion to that of working age people.
Warning of the endemic shift in wealth, he said: “There has been a long-term shift in the share of household wealth across the UK, which has been accelerated by the recent financial crash and subsequent downturn.
“The wealth of recently retired households has now overtaken that of the larger group of households headed by someone under 45-years-old.”
A new report by the Resolution Foundation, called The Pinch, focused on this imbalance of wealth and drew attention to the fact that those aged between 55 and 64 own a disproportionate amount of Britain’s £9.4trn of wealth (64 per cent) yet make up just 18 per cent of the country’s total population.
Meanwhile, the report said, the 16 to 44-year-old age bracket, which forms 34 per cent of the nation’s population, control just 16 per cent of its wealth.
The government has been criticised for protecting benefits for pensioners - such as the state pension through the triple lock - while cutting those for working age people.
The Institute for Fiscal Studies estimated in October that the median income of pensioners (£394 a week) is now higher than that of the rest of the population (£385 per week), with the think tank’s director Paul Johnson calling for the triple lock to be scrapped.
Lord Willetts did say the generational disparity is being addressed through other means, with recent retirees transferring wealth to younger relatives, particularly through helping them onto the property ladder.
But the former science minister warned against becoming reliant on this system of wealth redistribution.
He said: “We cannot rely on families alone to offset intergenerational inequalities, particularly if the state transfers wealth in the opposite direction. Such a pattern has serious implications for social mobility.”
Lord Willetts called on government intervention in order to redress the current balance.
He said: “To ensure that younger households enjoy the same wealth in older age as recently retired households, we need to see a relentless focus on productivity to get wages growing at a healthier rate.”
