‘Saddling young people with eye-watering debts before they have even begun their working lives is more than unfair: it amounts to a levy on ambition and on the future of this country.’
Gavin Williamson, former education secretary (2019-2021)
Does lowering the voting age to 16 really matter for young people? Parliament is just about to begin legislating for this, but will it really achieve the changes they need?
Compared to the ‘Baby-Boomers’ generation (of which I am one), today's young people have a really hard entry into adulthood and family formation. Student loans, house prices and major reductions in employment opportunities are making their transition into adulthood seriously difficult.
Over the past twenty years, there have been two major assaults on public finances: first, the financial crisis in 2008, which necessitated the austerity programme for the incoming coalition government; and second, the pandemic, and the need to keep the economy ticking over with the furlough scheme which cost over £400 billion.
Neither of these assaults were in any way due to young people, but they are carrying the brunt of the resulting burden. In my view, the financial crisis had its roots in the move to ‘dual capacity’ in financial markets in the 1980s and the consequent inability of financial service businesses to cope with their resultant conflicts of interest.
The pandemic saw young people denied education and employment opportunities, but it didn't prevent old people benefiting from triple-lock pensions and continuing to enjoy universal free healthcare, no matter what their financial circumstances were.
It is therefore the denial of economic empowerment which matters most for young people, and handing voting rights to 16- and 17-year-olds will make no difference to that.
There was an interesting article in The Times on Saturday headed, ‘Student loan architect admits system designed in “mad rush”’. There's been a lot said about the dysfunctionality of the student loan system over the past fortnight: last week, it was the headline issue for ‘This is Money’, and it is generally recognised that the system is broken.
But Nick Hillman, who was a special advisor to Government when the student loan arrangements for those starting university between 2012 and 2023 were introduced, explained how the scheme was rooted in that time when austerity had been necessitated by the 2008 financial collapse.
The whole concept of placing such a heavy burden on young people’s shoulders as they graduate is, of course, just the opposite of what's needed to encourage them to achieve their potential in adult life: as Gavin Williamson points out in the quotation at the start of this commentary. We referred to this student loan albatross hanging around their necks over a year ago (‘The OBR should analyse generational impact’), but Chancellor Rachel Reeves has now increased that pressure even more by imposing a freeze on the earnings level at which graduates have to start repaying their loans — another form of stealth tax.
It's therefore hardly surprising that emigration of younger British people, fed up with this country and the student loan system, is rising as they seek better opportunities elsewhere.
Once again, this is an example of universality being applied to the wrong things. Just as with health care, it simply provides another way of letting wealthy parents and grandparents off the hook.
If they are able to pay for their children's education, both at school and university, they should. If they are not, grant funds should be provided: and these should be drawn down from hypothecated inheritance tax receipts, not from general taxation.
This is what inter-generational rebalancing means: enabling young people from disadvantaged backgrounds to benefit from some of the wealth left behind by wealthy old people when they die.
That's one of the key challenges for young people. The others include the prices needed for independent living, either through home ownership or by renting, and the attrition in quality employment opportunities, neither of which will be much helped by giving 16- and 17-year-olds the vote.
Again, the Chancellor is not doing much to help with housing costs. Pushing down interest rates as a result of our low-growth economy and increasing the extent to which mortgages can be taken out simply exacerbate the problem of high-cost housing. Building more houses could help to balance out supply and demand, but we also need to look carefully at the extent to which people can share living accommodation — and the most logical way to achieve that is by family formation at an earlier age.
This calls for quite a major change in mindset, so that young adults can enjoy building their own family at an earlier stage of their career, rather than having to wait until fertility is waning.
As for economic growth — the problem here is that the Government seems to think it can only be delivered by public sector stimulus, rather than by reducing the size of the state and allowing free and competitive enterprise to take the lead. However, public sector stimulus means more and more public sector debt, and we can all see where that is leaving us: the formal debt is now £2.8 trillion, but if you add unfunded pension liabilities (£1.4 trillion — £2.6 trillion) and that total student loan debt (most of which will end up being carried by Government) at £267 billion, that's a total of over £5 trillion.
We do therefore need a total change of mindset in order to give young people a chance to achieve their potential. Lowering the voting age to 16 is a bit like removing the two-child benefit cap: it might provide an attractive soundbite, but it won't deliver change.
This is why the whole subject of inter-generational rebalancing needs serious analysis, and it's why we hope you will take the opportunity either to join us at the Share Alliance conference in May, or to watch the presentations and discussions afterwards, once they are published.
Gavin Oldham OBE
Share Radio