Young commuter

Things go swimmingly for those generations who shout the loudest

Published on 3 July 2023

"Right now, it is younger generations who are again bearing the brunt of economic failure." Paul Johnson writes for The Times.

I have been swimming regularly — several times a week — at the men’s pond on Hampstead Heath for about five years now. I love it; it’s become an important part of my life. It costs me the princely sum of £139.50 for the year — less than a pound a time. Nevertheless, during last Tuesday’s swim I was fulminating about the injustice of it all. For, by chance, I discovered that for the over-60s a morning swim in the pond is free. There are concessionary rates if you are poor, or disabled, or a student. But other than those caring for another swimmer, the only people who get in for nothing are the over-60s.

And only before 9.30 at that — exactly the time that we wage slaves need to go to fit it into our daily routine. That may explain why the early-morning swim is the only time, other than my weekly game of bridge, when I still feel relatively young.

I had just about got used to older colleagues and friends luxuriating in their free travel passes, but this one additional trivial example of the coddling of the country’s wealthiest generation just about pushed me over the edge. My mood wasn’t helped by last week’s commitments, emanating from both government and opposition, to retaining the pension triple lock for at least the period of the next parliament. Spending on education, working-age benefits and local government may be squeezed and squeezed again, but we must guarantee that the state pension will rise every year by the higher of price inflation, earnings growth and 2.5 per cent.

There are some older people who are poor and struggling. Of course, there are. But let us be absolutely clear. Older people are less likely to be poor than younger people, they are far wealthier, and they have disposable incomes that are at least as high on average. The minimum income that the state will provide to most reaching state-pension age is about two and a half times the minimum available to younger people. That’s a gap that has grown tremendously over the past couple of decades as working-age benefits for the poorest have been cut while benefits for pensioners have increased.

Right now, it is younger generations who are again bearing the brunt of economic failure. The Bank of England is raising interest rates to manage inflation by taking demand out of the economy — that is, to reduce our capacity to spend. The direct hit from this will be felt disproportionately by the minority with a mortgage: there are now fewer mortgagors than there are outright owners. Those in their thirties will suffer the biggest hit. They are the most likely to have taken out a big mortgage in recent years. According to calculations by my colleagues at the Institute for Fiscal Studies, on average, mortgagors in their thirties will lose more than £350 a month. Altogether, nearly 1.5 million households will suffer a fall in their disposable incomes of 20 per cent or more.

It is true that higher interest rates will affect outright owners too, in the sense that the real value of their house will probably fall. But that will have a much smaller effect on their immediate economic wellbeing. And, of course, any such fall will come after decades of strong growth. It was really only the asset-rich, and older, generations who prospered through the 2010s as interest rates hit rock bottom. For younger generations high house prices, stagnant earnings and, for some, benefit cuts, all took their toll. Those who scraped together a deposit for a house and took out a mortgage several multiples of their salary are being hit once more.

It’s not just mortgagors who are struggling. Private rents are also rising at their fastest rate in years.

About four in ten renters in the private sector have incomes low enough that they are entitled to some support with their rents through the benefit system. But benefits have been frozen while rents have rocketed. Only one in twenty properties advertised on Zoopla have a rent low enough to be fully covered by housing benefits. That’s down from nearly one in four just three years ago. Again, this barely affects the pensioner generation. The large majority own their homes outright, the poorer minority tend to rent in the social sector.

The prime minister says that he is committed to halving inflation this year, and squeezing it out of the economy. Good. I bow to no one in my conviction of that necessity. But perhaps it’s time for fiscal policy to lend a helping hand and rebalance some of the costs. How about levying some small part of national insurance on occupational pensions in payment, to offset some of the huge subsidy they have enjoyed? Or pare back some of the additional benefits — free travel, winter fuel payments and the like — enjoyed by the over-60s. In the longer term we should take the chance to reform council tax so that it applies fairly, taking more from those in the most valuable properties. Higher interest rates are the only tool available to the Bank of England, but government can play its part if it wants.

The reason, naturally, this probably won’t happen is the voting power of the older population.

Back to the ponds. I presume that the reason for the free swim is that when the City of London Corporation started charging it was the over-60s who made the biggest fuss, not the hard-pressed, younger, private renters and mortgagors who enjoy the same facilities. It is not always those who shout loudest who have the greatest needs. But hey. In three and a half short years I’ll be 60. Don’t anyone dare take away those privileges before I get to enjoy them too.

This article was first published in The Times and is reproduced here with kind permission.