Let’s avoid a battle of the generations

 

      One of the latest ruses by those who want the state to do more, spend more and interfere more, is to encourage a battle of the generations.  Mr Milburn was at it this week.  The young can only do better if we spend more public money on them, so we need to take more money away from the old.

     I have never bought into the theory that the Baby bulgers are a lucky generation who have sucked up too much of the country’s wealth. The amount of a country’s wealth is not limited or static. Many of the baby boomers made their own luck. They worked hard to advance their own and the nation’s wealth. Their children should be able to go further and faster, as they after all will benefit from the huge sums spent on their health, welfare and schooling (far more than was spent on the baby boomers), and will come to inherit the wealth their parents have built up.

 

The baby bulgers with wealth are fairly generous to their children. They are already giving them money for deposits on homes, assisting their family budgets and giving money to grandchildren where they have a surplus. Those who don’t have a surplus are often working hard for no reward as child minders and family assistants to their children.

 

The true battle should be over policy to help to ensure that the next generation can be wealthier and more successful than the baby bulgers. We should not settle for nasty fights over distributing what has already been made or created. We should be more active in debating how to create conditions in which the next generations can be more successful. They too must add to the stock of the nation’s wealth, and earn the higher incomes they naturally seek.

 

That is why on this site I try to spend more time describing the policies that would liberate enterprise, attract more capital, create more jobs and drive forward higher productivity. Such policies will mean  higher average real living standards. Robbing richer Peter to pay poorer Paul will not create higher living standards and may simply alienate, demotivate or lose us Peter. Paul needs a job. Once he has a job he needs help to make a success of it, to move on to a better paid job.

Too many are fatalistic about low wages and no wages. They think people have to stay trapped by them all their lives. They think it unrealistic to suggest people can help themselves to a better life by working hard, undertaking training, venturing in a business of their own and many other ways. Fortunately, in  practice, many still do walk from poverty to success, and many more walk from modest beginnings to a more comfortable middle age. Of course state policies should help, and should take care of those who cannot, but the state needs to say more people can succeed.

 

If we spend all our time arguing over how to distribute what we have, we will put off the entrepreneurs, innovators and grafters who would otherwise stay here and create more wealth, employment and income here. That is the challenge. To do that requires lower tax rates and less government interference with those who are energetic and hard working, not more.

As for the elderly, it is true they have benefitted from recent Coalition improvements to state pensions, and from tripartisan policies of  free services and income top ups. They too would benefit more from an improved climate for savings and investment, so they can enjoy a better return on their pension investments, and have a better deal from annuities.

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123 Comments

  1. Brian Taylor
    Posted October 20, 2013 at 5:17 am | Permalink

    I was born in 1946, and you are spot on thank you please keep up the good work.

    Oh by the way Christopher Booker has a very good bit about power generation in The Sunday Telegragh today!!!!

    • Hope
      Posted October 20, 2013 at 9:31 am | Permalink

      Milburn was a minister in the Labour government that has led the UK to have a£120 billion deficit each year. I think we have heard and paid for enough of his nonsense. Why Cameron and Clegg keep asking former Labour ministers to write reports for them on policy issues is baffling when they also criticise them. Once again, poor judgment by Cameron. The pensioners allowances equate to about four days of the deficit caused by Milburn and Co. The government should be targeting the big sums ie EU and overseas aid. We read today that 40 percent of overseas aid is spent by third parties and not the government. The EU passed on UK overseas aid to Belarus which our government objects to! And Cameron thinks £13 billion of our hard earned money should be wasted this way and set in law! JR is right generation squabbles should not occur we need a new government to stop spending and wasting our money then taxes could be reduced.

      • Bob
        Posted October 20, 2013 at 12:08 pm | Permalink

        @Hope

        “spending and wasting”

        If the government would agree to stop the squandering they wouldn’t need to confiscate so much from the grafting community.

      • APL
        Posted October 20, 2013 at 12:29 pm | Permalink

        Hope: “Why Cameron and Clegg keep asking former Labour ministers to write reports for them on policy issues is baffling when they also criticise them.”

        We’ll scratch your back while we’re the administration, Just make sure when get kicked out, you remember it’s our turn to have our back scrached.

        All at the public expense of course.

      • uanime5
        Posted October 20, 2013 at 3:22 pm | Permalink

        Milburn was a minister in the Labour government that has led the UK to have a£120 billion deficit each year.

        What percentage of government spending was the deficit under the previous Conservative Governments?

        • Edward2
          Posted October 20, 2013 at 5:56 pm | Permalink

          Have you not yet heard of Google where you live Uni?

          • uanime5
            Posted October 21, 2013 at 8:30 pm | Permalink

            I take it from your reply Edward2 that the evidence indicates that the deficit under was a lower percentage of GDP than under previous Conservative Governments.

          • Edward2
            Posted October 22, 2013 at 7:04 pm | Permalink

            Still looking for someone to answer your questions for you Uni I note.
            You really need to employ a researcher. I don’t think you could afford my rates.

    • lifelogic
      Posted October 20, 2013 at 9:33 am | Permalink

      Indeed on Christopher Booker – Even I am struck by the insanity of the economics he quotes:

      The combined contribution of these two gigantic wind farms, at a capital cost of £7.6 billion and earning subsidies of £620 million a year, will average 750MW – less than that of the single unsubsidised gas-fired power station recently built in Plymouth at a capital cost of £1 billion.

      What drives this collective political insanity? Money for some friend of the powerful one assumes.

      Excellent work from him too on the often appalling tragedies inflicted by social workers and the undercover secretive family courts.

      • Richard1
        Posted October 20, 2013 at 2:41 pm | Permalink

        Good article by Matt Ridley in the Spectator pointing out that the consensus amongst experts is that for up to 3C of warming since preindustrial times, there is a net benefit to global warming. That means a net benefit until the end of C21st. Based on new lower estimates of the climate sensitivity of carbon, we may never get to 3C anyway. These are the sorts of questions Conservatives need go ask – why do we have green subsidies and taxes at all?

      • uanime5
        Posted October 20, 2013 at 3:24 pm | Permalink

        What are the subsidies and operational costs of the gas-fired power station each year? Also how long as the wind farms and gas-fired power station meant to last?

        • lifelogic
          Posted October 20, 2013 at 4:24 pm | Permalink

          Clearly the gas power station can work with suitable maintenance for as long as there is gas, or it can be converted to other fuels. The gas costs far, far, less than the subsidies. Maintaining wind farms at sea is not very cheap for sure.

          • uanime5
            Posted October 21, 2013 at 8:32 pm | Permalink

            Fossil fuels receive several billion pounds in subsidies every year so it doesn’t cost much less in terms of subsidies.

            Also what maintenance do win farms at sea require and how often? I trust you’re not going to claim that the salt water corrodes them as it’s been possible to make non-corrosive metals for years (that’s why ships don’t corrode after a few years).

          • Edward2
            Posted October 22, 2013 at 7:01 pm | Permalink

            Having been in engineering for decades your last paragraph did make me laugh Uni
            There are many articles on the web about wind turbines and ships and oil rigs at sea and their maintenance issues which I suggest you read to bring yourself up to speed.
            The salty sea is the enemy of any metal construction that is why ships have to be continually painted for example.

        • libertarian
          Posted October 20, 2013 at 5:23 pm | Permalink

          Uanime5

          Whilst I’m not in favour of ANY subsidies to business of any kind.

          The average life span of a wind farm turbines is 12 to 15 years the average lifespan of a gas fired power station is 25-30 years. Of course a gas fired power station provides vastly more energy than a wind farm and also provides it on demand and can regulate the flow of energy too

          • Hope
            Posted October 21, 2013 at 1:16 pm | Permalink

            What Uni and other so ailt o mention is what is the CO2 out put to build and we et wind machines that can only work part-time when there is not too much wind and when the is no wind. Additionally, they now need diesel powered generators to back them up when not working. Not only is there huge CO 2 emissions from wind machines. It also at a huge cost and most of the so called green jobs created are for European countries not here. Why let facts get into he way of a good green spin!

          • uanime5
            Posted October 21, 2013 at 8:34 pm | Permalink

            Wind turbines are designed to last 25-30 years, not 12-15 years. Wind turbines from the 1980’s have proven that they last more than 20 years.

          • uanime5
            Posted October 21, 2013 at 8:38 pm | Permalink

            @Hope

            The CO2 emissions to build wind turbines is small and while in operation they produce no CO2, so their CO2 emissions are small compared to other forms of power generation.

            Also they use gas power as a back up, not diesel. So the CO2 emissions from wind and gas power generation will always be lower than CO2 emissions from gas alone.

            Yet again the deniers are propagating their myths because the evidence has shown they’re wrong.

          • Edward2
            Posted October 22, 2013 at 6:54 pm | Permalink

            You need to check your facts again Uni:-
            “they use gas power as a back up, not diesel…yet again the deniers are propagating their myths”

            There is a big Government scheme to generously pay those who own large diesel generators to link into the grid and provide back up capacity in the event of power shortages.
            eg when the wind isn’t blowing or the sun isn’t shining.

    • Anonymous
      Posted October 20, 2013 at 9:02 pm | Permalink

      Baby Boomers ‘making their own luck’ as far as wealth is concerned, perhaps. But I have my doubts about that (later.)

      Without a shadow of a doubt boomers are the ones who squandered the social order, educational system and cultural legacy bequeathed them and who were duped into giving up everything to Europe as easily as babies liberated of their candy.

      Of wealth creation. What ? All those word beating brands sold off into foreign ownership for short-term gain ?

      What ?

      All that inflation and new credit gimmicks that replaced industry and ramped up property prices to gave us the illusion of ever increasing wealth while we were in decline ?

      I am not impressed with the boomer generation to be honest. Our own parents wore the ‘spending the kid’s inheritance’ T shirts as they toured the world and did just that – and then retired abroad without proper funding. Tomorrow we bury my father in-law after having to repatriate his body – unfunded of course – all to the tune of £7000. An exceptional case of selfishness I suppose, but not too uncommon. Perhaps I’m just feeling a bit sore about it all at the moment.

      Boomers are leaving a country far less secure, in every respect, than they found it. Not least in our sense of kindness and decency.

  2. Mike Stallard
    Posted October 20, 2013 at 5:47 am | Permalink

    Well said!

    I think that, as the election approaches and politicians (not just Mr Milburn actually) start handing out goodies and – to their shame – a lot of people start demanding more money be spent on them, that it might be good idea if we remember that every single penny is already accounted for and the we are broke.

    Well over a trillion pounds of debt has been allowed to accumulate and the deficit has not really been addressed.

    Every penny of hand-outs is borrowed and every borrowed penny demands interest. At the moment we are paying about the same amount on interest as we are on public order or defence.

    • peter davies
      Posted October 21, 2013 at 1:42 pm | Permalink

      I think we are spending far more on interest than Defence – £46.5 Bn

      Military Defence is £31.5 Bn
      Eductation £37 Bn

      Pissing money up the wall due to politicians incompetence and the stupidity of the electorate to vote them in after some clever media marketing – you couldn’t make it

  3. lifelogic
    Posted October 20, 2013 at 6:02 am | Permalink

    George Osborne seems to think Britain has lost its ambition I see. Well perhaps they have just lost their ambitious people. Maybe the ambitious decided the UK, with its high energy prices by religious government decree, it 50% of GDP state sector (but still remarkably inefficient services), its over regulation of everything, its daft employments laws, its litigation culture, its high taxes, dis-functional banks and its 40% inheritance tax over £325K (if you do actually make any money) was simply not the place to be.

    The promised £1M threshold was, as we all remember, ratted on by an unapologetic Osborne after they threw away the last election. Perhaps the ambitious decided not to bother or to leave, as the UK was clearly not the best place to try to run a business. Or maybe others decided it was better to work for the state sector and live off the backs of (and often inconvenience) the productive while being remunerated/pensioned at 50% more than they were for less work? Or just decided to live of benefits (with a bit of barter/cash in hand perhaps) as they could not earn any more, after tax, anyway.

    Indeed the battle of the generations is a silly (BBC think) argument, it was just as hard for me to buy my first flat when I started out and my parents could certainly not help. Only to be clobbered shortly after by 15% interest rates due to the Major’s Idiotic ERM experiment.

    They elderly are hit just as hard by the incompetent state as the young, pensions have been robbed by inflation, artificially suppressed annuity rates and new taxes, we also have IHT at 40% to finally rob you of your already 50% taxed wealth. And Cameron now seem again to be ratting again on life time care limits and promises made.

    We need cheap energy, lower taxes, a halved state sector, a level playing field for transport, energy and the rest (not absurd subsidies for white elephant HS2, wind and PV), easier planning, easier employment laws and few regulations all round. This and fewer payments to augment the feckless and a proper government not Miliband/Cameron type of soft Socialism. Alas we are clearly not going to get it. So I shall stay well away I think and reduce my UK interests.

    • lifelogic
      Posted October 20, 2013 at 6:19 am | Permalink

      I see David Willetts MP wrote: The Pinch: How the Baby Boomers Took Their Children’s Future – And Why They Should Give it Back.

      It is worth reading but not really true. The future was taken off them (and indeed the baby boomers and elderly too) by the 50% plus, yet still hugely inefficient state sector, the litigation culture, the benefit culture, the EU and its top down socialism (through top down regulation), the renewable expensive energy religion, the “environmental” road blocking and the rest of the BBC think lunacies.

      If we want to get rich we simply need more people doing useful things and far fewer doing nothing, inconveniencing the useful, litigating, regulating, living of the backs of others or wasting their time trying to work their way round absurd regulations and tax laws.

      Technology has mad massive advances over the past 50 years yet the benefit has been largely stolen by the malignant state sector and wasted hand over fist.

      • lifelogic
        Posted October 20, 2013 at 6:23 am | Permalink

        If only Cameron has not thrown the last election away and was not the pro EU, fake green, socialist he proved to be. Then we would now looking forward to a real Tory government in 2015 rather than Miliband – who will clearly be worse than Cameron – but only very slightly.

        • APL
          Posted October 20, 2013 at 11:03 am | Permalink

          lifelogic: “If only .. ”

          If only we had a Tory party stuffed to the gunnels with patriotic British MPs. Instead we have Cameron, Clarke – who is I understand still minister without portfolio – aka Clarke’s private pension at the public expense.

      • lifelogic
        Posted October 20, 2013 at 6:32 am | Permalink

        David Willetts is a King Edwards school Birmingham and yet another Oxford PPE man. He only need to look at Birmingham to see what a mess the socialists, state sector and lefty Tories have made the of this once great City. The old great power house of the nation.

    • David Price
      Posted October 20, 2013 at 12:48 pm | Permalink

      What is it with these senior politicians that as soon as they leave our shores they turn around and bad mouth this country and it’s inhabitants with bullshit platitudes that have no real basis or are so generalised to be worthless. Cameron then Clegg and now Osbourne.

      Well Mr Osbourne and others, you would do well to keep your mouth shut and actually deliver on radically cutting expenditure and reducing the debt, not just the deficit. Very many people in the private sector have ambition and have demonstrated over a lot of years the ability to deliver on contracts earning the export revenue that pays for your government and its toys.

      It is the politicians and the civil servants who have utterly failed us across the board for the last 23 years. But don’t strive for ambition in government Mr Osbourne unless it is to cut costs of administration and bureacracy to the minimum, to actually get rid of all those qangos, to cut taxes and reduce the burden of government. Just do the job you are supposed to do and get the heck out of the way.

  4. JoeSoap
    Posted October 20, 2013 at 6:33 am | Permalink

    Yes, you are stating old-fashioned Tory values which helped Thatcher win through the eighties.
    Sadly, they don’t apply any more as your party, by and large, is hooked on welfarism, subsidy and printing money, one way or another. Gone are the days when starting your own business would free you from demands other than from your customers; you are now tied into state meddling and bureaucracy. Everything from limits on pensions, to business rates on empty buildings, to and fro on capital allowances and corporation tax rates, to and fro on VAT rates. Employment and health and safety regimes for which employers but not employees are responsible. Maternity, paternity, equal rights, NEST, no possibility to retire an aged employee.
    The age of aspiration is temporarily, at least, suspended.

    • lifelogic
      Posted October 20, 2013 at 9:44 am | Permalink

      Exactly.

    • alan jutson
      Posted October 20, 2013 at 10:26 am | Permalink

      JoeSoap

      Agreed

      Too much interference by too many, who have never run anything but an overdraft in their lives.

      Had my own business for over 30 years (now retired), would advise anyone thinking of starting up a business now, to have a real hard think, before investing any of their hard earned cash to do the same.

    • Tad Davison
      Posted October 20, 2013 at 4:13 pm | Permalink

      …………and Osborne proudly proclaims, ‘Britain is open for business!’

      BUT! There are people amongst us who think each and every businessman is automatically a greedy, avaricious fat-cat requiring even more legislation to keep them in check.

      If anything is likely to (in the words of Mr Balls) ‘Choke off the recovery’, it is the amount of legislation businesses have to comply with.

      Better out, than in, I’d say.

      Tad

  5. Cheshire Girl
    Posted October 20, 2013 at 6:38 am | Permalink

    I was intensely irritated by Alan Milburns remarks. It seems that not a week goes by without some criticism of the older generation (of whom I am one). I am pretty confident that we are being softened up for some of us to lose the Bus Pass, Fuel Allowance and TV Licence. I don’t bother to claim my Bus Pass as there are no busses in my vicinity.
    I do feel very sorry for the young who are struggling to get a decent job, but I would point out that I left school at 15 and went straight into a job, starting at the bottom with a very low wage. The only reason I have a comfortable life now is that I worked hard and managed to save by going without many of the things that are deemed essential nowadays. My Husband did the same. We’ve never been on benefits.
    In my opinion it is not the fault of our generation that things are so bad for young people, but we are an easy target for the politicians (many of whom have a very comfortable living. with lots of’perks’ and a very generous pension at the end of it) to take aim at. When a Labour politician pontificates about wealth and privilege I have only two words in reply. Tony Blair!

    • Mark B
      Posted October 20, 2013 at 12:28 pm | Permalink

      Cheshire Girl said;
      When a Labour politician pontificates about wealth and privilege I have only ‘two words’ in reply. **** *****.

      You do know you shouldn’t use foul language on a public forum. Tut tut !

  6. Gordon
    Posted October 20, 2013 at 6:51 am | Permalink

    Mr. Redwood,
    As always right on the button, it is tragic for this country that you and other similar thinkers in the Conservative are on the back benches and the over educated PR men run the show. It is also a disgraceful waste of talent!
    gORDON

    • APL
      Posted October 20, 2013 at 12:37 pm | Permalink

      Gordon: “it is tragic for this country that you and other similar thinkers in the Conservative are on the back benches”

      Would it really make any difference? We know now that Mr Redwood wants to grow the economy only in order to supply the huge public sector monster, his party and the supposed opposition party have brought into being since the end of the last war.

      He doesn’t want to leave the EU, he just want’s a different relationship with the EU.

      He doesn’t think we have any constitutional documents or laws forming the foundation of legitimate government nor restraints on the power of the government in this country, he just want’s to be part of the biggest mob, his mob happens to be the Tory party.

      Reply Why do you bother to come on to my site if you have such a low view of me and are determined to misrepresent my views so comprehensively?

      • APL
        Posted October 20, 2013 at 4:57 pm | Permalink

        JR: “Why do you bother to come on to my site .. ”

        Oddly Mr Redwood, you are mistaken. I believe you are one of the best we have on offer, if I lived in your constituency, I would most assuredly be one of those who vote for you.

        However, you say things, I disagree with them. Isn’t this representative democracy? Should I not highlight where I disagree with you and attempt to influence your thinking? Or have I got this democracy thing all wrong?

        To the points above:
        1. You have said you want to grow the economy, but when challenged to say where and by how much you wish to cut public sector spending. You fall mute.

        2. I believe that is an accurate representation of your views on the EU.

        3. I am sure we have had an exchange relating to Magna Carta, I think I am correct in recalling that you don’t believe it has any relevance to the governance of the UK today.

        Reply I have frequently written on ways of cutting spending – e.g. Overseas Aid, EU contributions, railway subsidies, HS2 etc
        I have made it repeatedly clear I voted to leave the EEC when we last had a referendum and would vote No in an In /Out referendum today. I do also think it best to negotiate first, to see if we can have a relationship based on trade and political co-operation. I have also always made clear this would have to entail renouncing membership of the current Treaties, as I voted against Nice, Amsterdam and Lisbon as well as disagreeing with transfers of powers under earlier Treaties.
        I have said that Magna Carta has symbolic and historical importance, but it is no longer an unamended law code or king pin of our current complex constitution.

        • Edward2
          Posted October 21, 2013 at 6:48 pm | Permalink

          APL
          I just cannot for the life of me understand how you can read our host’s daily articles and come to these conclusions.
          I agree with Gordon’s original post and find your own views repugnant.

          • APL
            Posted October 23, 2013 at 6:27 am | Permalink

            Edward2: “and find your own views repugnant.”

            Just as well I don’t consider this site a social event.

  7. colliemum
    Posted October 20, 2013 at 7:11 am | Permalink

    While I agree with the points you make in this article – and who could or would not! – it is sadly not simply a question of lower taxes, more incentives for savers and a better climate for innovators and entrepreneurs any longer.
    For too long media have been ‘celebrating’ youth culture, for too long our children have been educated to expect that everything should be handed to them without any effort of their own. The current generational war between the ‘poor’ young and their grandparents is, I believe, something promoted and utilised by politicians and media who cannot rid themselves of the attitude that they need to ‘bribe’ the electorate with ‘gifts’ which always consist in taking from some to give to the bribees.
    But there’s one more aspect which those who think out loud about taking away ‘perks’ like the WFA from “The wealthy” (note that it’s no longer “The Rich”) are never talking about.
    This aspect is that we now support 600,000 ‘economically inactive’, i.e. non-working EU immigrants. This, together with the truly pressing insanity of the CCA and its influence on our energy prices which affect the elderly more than any other group, needs to be addressed with urgency.
    I believe that the war between the generations is being pushed and utilised by certain politicians and takes place in the media rather than in real life.
    Perhaps it might be a good idea for you to point that out as well when you write and speak about this issue.

    • uanime5
      Posted October 20, 2013 at 3:49 pm | Permalink

      If someone is economically inactive they not working and are not looking for work. Also according to the “A01: Summary of labour market statistics” there’s 8.91 million economically inactive people in the UK, not 600,000. Here are the main reasons why they’re not working.

      Students: 2.3 million
      Looking after family / home: 2.2 million
      Temporary sick: 174,000
      Long-term sick: 2.0 million
      Discouraged (don’t believe they’ll find a job): 53,000
      Retired: 1.37 million
      Other: 805,000

      If someone’s classified as unemployed then they’re not in work but are looking for work. At present there’s 2.46 million unemployed people, 36.2% of whom have been looking for a job for over a year.

      As there’s current 29 million people in work this means that the potential workforce is 40.37 million but only 72% of it is in employment.

      • libertarian
        Posted October 20, 2013 at 5:26 pm | Permalink

        Uanime5

        Please explain the arithmetic behind your assertion that the workforce is potentially 40 million, unless you intend sending children to work instead of school.

        • uanime5
          Posted October 21, 2013 at 10:47 pm | Permalink

          I forgot to mention that only those who are between 16 and 65 are classified as unemployed or economically inactive. So the potential workforce of people of working age (16-65) is 40.37 million.

          • Edward2
            Posted October 22, 2013 at 6:48 pm | Permalink

            Sadly you failed to read the original post properly Uni, which was only talking about the 600,000 inactive people from the EU that reside here on benefits:-

            colliemum:- “we now support 600,000 ‘economically inactive’, i.e. non-working EU immigrants”.

            All that work for nothing!

  8. Lindsay McDougall
    Posted October 20, 2013 at 7:46 am | Permalink

    At 67, I am one of the baby boomers. You are absolutely wrong about the amount of money spent on the retired elderly. Since the number of over 65s is set to rise by a third by 2030, and since I don’t want a flood of young immigrants to cope with the problem, we need to start spending less per capita on the over 65s, so that by 2030 the total amount spent on the retired elderly has not risen in real terms. I am sure that you don’t subscribe to the fallacy that, having paid taxes for years, the entitlements of the elderly are absolute. Public sector welfare has never been properly funded. Today’s welfare costs are paid for by today’s taxpayers. That’s a fact.

    Let’s make a start by scrapping all concession fares and pensioner freebies so that we have properly functioning markets. By all means have a one off increase in the State pension to compensate partially. That is subject to income tax.

    Then let’s have a sensible policy on retirement. Raise it to 67 for everyone PDQ and for men by one year in each parliament until it is 70. The retirement age for women should remain at 67 so that couples can enjoy retirement together, taking into account the average age gap. Let us simultaneously get rid of all anti-ageism legislation. Employers should be free to hire whomever they like, subject to immigration control.

    Let’s get the drugs bill under control. It is ridiculous to spend money on prolonging the fag end of life artificially.

    Let’s get the law on assisted suicide up to date. Study Swiss legislation and practice. See what is right and what is wrong with it – and keep the God squad out of the assessment.

    There is one thing we can do for elderly people – deliver zero inflation.

    The young don’t want more public expenditure on them, Mr Milburn. They want low taxes and the ability to borrow.

    • stred
      Posted October 20, 2013 at 11:01 am | Permalink

      Lindsay. HMG has already made a start on keeping pensions under control for the fortunate crumblies. When the new raised pension comes in we will not be included. The original basic pension will be paid, which is among the lowest in Europe. As for raising retirement age, in order to find the extra money to pay rising bills, many of us already work after retirement age. Unfortunately, doing heavy lifting and other DIY jobs tends to knacker the knees, elbows and hands.

      As for allowing a pain free exit, I suspect that the sudden death (could be ed) by the method complaining about pain, saving up the morphine for a week and drinking it in one. Illegal, but difficult to prosecute.

    • Richard Hobbs
      Posted October 20, 2013 at 2:14 pm | Permalink

      Not all old people are living off the earnings of the young. I am 70 years old and am not in good health. I am British, live in Canada, and thus am sparing the UK the great cost of my health care. Even so, my pension is frozen and after only 5 years is £20 per week less than it would be if I lived in the UK – and this despite having paid NI contributions in full. There is no age gap between my wife and self and she, also, is suffering from a freeze on her own part pension. I wish we had concession fares etc!!

    • uanime5
      Posted October 20, 2013 at 3:52 pm | Permalink

      As women live longer than men surely their pension age should be the higher one.

      • Bob
        Posted October 20, 2013 at 4:30 pm | Permalink

        @uanime5
        Are you suggesting that gender discrimination is ok?

      • lifelogic
        Posted October 20, 2013 at 4:33 pm | Permalink

        Well they did used to get lower annuity rates (quite rightly as they get them longer) but the twit Cameron and the EU has stopped all that so men now get ripped off.

        Woman also used also to get lower car insurance rates and he has similarly stopped that so now woman drivers get ripped off. The Economics of the totally bonkers or of Oxford PPE perhaps?

  9. lifelogic
    Posted October 20, 2013 at 7:47 am | Permalink

    In short we need more engineers & sales people, producing and selling quality goods and services of real value, preferably for export. We need far fewer lawyers, bureaucrats, tax advisers, litigation lawyers and politicians. We want more wealth generation not pointless squabbles over its distribution.

    Mind you if these engineers are, as currently, totally misdirected by government grants or absurd government policy. So are thus just build white elephant buildings like the Olympic stadia and the Millenium Dome, HS2, wind farms, silly PV cells on roofs, anti car phased traffic lights, road blocking islands, motorist mugging box junction cameras, software to cope with the absurdly complex tax system and PAYE sytems or coping with the daft employment laws, or over expensive building for MPs or Scottish/Welsh MPs, local government or new court building and the like …………..then this will still impoverish the nation further and distract these people from genuinely productive activity.

  10. Andyvan
    Posted October 20, 2013 at 7:54 am | Permalink

    Want to encourage entrepreneurs? Cut tax, cut regulation, let them get on with making wealth. It’s simple. Those that can, will. That’s if they are not obstructed by those that can only hinder.

    • uanime5
      Posted October 20, 2013 at 3:53 pm | Permalink

      Given that German companies are doing better than UK companies even though they have more regulations it’s clear that regulations aren’t the main reason why UK companies aren’t making wealth.

      • Tad Davison
        Posted October 20, 2013 at 5:30 pm | Permalink

        Go on then, as it’s so clear, you tell us what is the reason, or were you careful to leave that bit out?

        • uanime5
          Posted October 21, 2013 at 11:05 pm | Permalink

          I’d say the main reason as a follows:

          1) Lack of training for employees. Companies simple expect to be able to hire someone who has all the skills they need. As a result companies are relying more and more on an older employees who have skills, rather than training up a new generation of employees. This will cause major problems when their older employees retire and there’s no one to replace them.

          2) Lack of promotion opportunities within companies. When the only chance of promotion a person has involves going to work for another company you can’t expect them to show much loyalty to this company.

          3) Lack of job security. In Germany, France, and Japan a person effectively has a job for life so they have a strong incentive to work as hard as possible to ensure that the company will do as well as possible. In the UK job security is much less so people have fewer reasons to work harder.

          4) Income inequality. In Sweden you can work in almost any job and still have a decent quality of life. Thus all professions can attract educated and motivated employees.

          In the UK many professions, such as cleaning, pay as little as possible so they’re viewed negatively and tend to attract people who can’t do anything else. As a result some professions can have trouble recruiting decent staff.

          In conclusion as long as the UK companies that try to do everything as cheaply as possible, don’t develop their employees, and make no effort to retain talented employees the UK will continue to decline.

          • Edward2
            Posted October 22, 2013 at 6:43 pm | Permalink

            Uni,
            If you owned your own business and placed an advert for a job and got several hundred good applicants would you increase pay for that position?
            Additionally after that result to your advert, would you decide it was better to take on an unskilled person and spend months training that person up to a standard your customers expect?

            Perhaps several million new arrivals into the UK, keen to get jobs, at a time of higher than average unemployment, has had an effect on the job market.

      • libertarian
        Posted October 20, 2013 at 5:31 pm | Permalink

        Uanime5

        Back to your beloved Germany. You do know that in Germany that the mittlestrand ( SME’s) are allowed to reinvest their profits in their businesses before they pay corporation tax, where as in the UK all is taxed. You do realise that in Germany that the overall rate of taxation is lower.

        Also please show us which companies are doing better than UK companies. How are German IT firms doing? What about the German medical devices business or how about German mobile phone component companies. Watched any good German films lately? Watch German TV a lot do you?

        • uanime5
          Posted October 21, 2013 at 11:09 pm | Permalink

          In the UK companies can simply keep the money in the company and not declare it as profits, thus paying no taxes or dividends.

          As Germany collects more in taxation as a percentage of GDP this indicates that their overall rate of taxation is higher. This tax law is also much more complex than UK tax laws.

          Given that German’s GDP has surpassed it’s 2008 level, while the UK’s GDP is still 4% lower (France is only 1% lower), it seem that German companies are doing very well, which is why their economy is recovering.

          • Edward2
            Posted October 22, 2013 at 6:34 pm | Permalink

            “In the UK companies can simply keep the money in the company and not declare it as profits, thus paying no taxes or dividends”.
            Total Nonsense Uni
            You plainly have no idea how company accounts work in the UK if you think this statement of yours is correct.
            Profits are calculated at the end of each financial year to strict criteria and each company has to pass scrutiny by HRMC using an accountant to audit their accounts.
            Profits whether retained in the company or distributed by means of bonus or dividends are all taxed according to rules for Corporation Tax.

            In a democracy such as ours you are perfectly entitled to your political opinions just as much as the next person, but your regular use of incorrect facts (such as this) to support your arguments is very poor.

          • a-tracy
            Posted October 25, 2013 at 9:24 am | Permalink

            “In the UK companies can simply keep the money in the company and not declare it as profits, thus paying no taxes or dividends”.

            How? You’ve obviously not set up or run one business in the UK. Perhaps you should, your’s would be the best staffed with the best workers, creating wealth for the UK, I have asked this before. Why don’t you?

      • Edward2
        Posted October 20, 2013 at 6:09 pm | Permalink

        Indeed Uni, the main reasons are a fresh start in 1945 with lots of new factories with new equipment paid for by the allied nations added to Unions who do not see their main aim to bring about a socialist revolution but to improve their member’s standards of living by working together with management added to a Euro currency which is currently overvalued in their favour by about 20%.
        But even the German economy is slowing down under the weight of the regulations continually pouring out of the EU

        • Tad Davison
          Posted October 20, 2013 at 9:11 pm | Permalink

          Lol, I was trying to put down a bit of bait to get a qualified response, but I think you effectively killed it anyway!

          Tad

          • Edward2
            Posted October 21, 2013 at 6:54 pm | Permalink

            Sorry to spike your guns Tad !
            However, I don’t think Uni actually comes back on to this site and bothers to read any responses and rarely replies to any difficult questions.
            I find Uni’s repetitious prose and arguments, combined with the duff statistics used, a sign of a politically obsessed campaigner with more zeal than vision.

        • uanime5
          Posted October 21, 2013 at 11:15 pm | Permalink

          Germany has long since replaced the factories built in 1945 (which were only built in West Germany). So this is unlikely to be the main reason for Germany’s success.

          As unions make up half the board of directors in all companies with boards of directors it’s no surprise that they’re able to work well with the management. Perhaps the UK should adopt a similar system to ensure employees are better represented in company decisions.

          Given that the UK can control their currency we can overvalue it by more than 20%. So this can’t be the main advantage Germany has.

          • Edward2
            Posted October 22, 2013 at 2:33 pm | Permalink

            Uni
            How can the UK control its currency value when the pound floats in a world currency market ?
            The Euro also floats but at a value averaged by all EU members so Germany as the strongest economy ends up with a big advantage.

          • Edward2
            Posted October 22, 2013 at 2:56 pm | Permalink

            Uni
            I see you are still persisting with your fantasy that union reps sit on the main board and have decision making powers in Germany.
            They do not. They only sit on lower boards in an advisory capacity.
            On your other point, yes of course, many factories built in 1945 have been replaced in Germany as in the UK, but I find it amazing that you think a 30 year head start after 1945 for Germany has had no effect on their success today.

  11. Richard1
    Posted October 20, 2013 at 7:56 am | Permalink

    Excellent points. Its odd how these silly redistributive theories catch on also on the right, I think even David Willets has advanced it? It is of course correct to get rid of universal benefits, but the quid pro quo for that should be lower tax rates. Lower tax rates will generate more economic growth and therefore higher tax receipts, its a virtuous circle. But it doesn’t suit the narrative of the Left.

    • lifelogic
      Posted October 20, 2013 at 9:40 am | Permalink

      “But it doesn’t suit the narrative of the Left”

      More perhaps that it does not suit the financial and power base interests of the state sector nor their pointless job (the creation of) schemes for “workers” nor the politicians desire to play Father Christmas with others money to buy votes.

      • Richard1
        Posted October 20, 2013 at 2:43 pm | Permalink

        That is the ‘Left’ these days

    • uanime5
      Posted October 20, 2013 at 3:56 pm | Permalink

      Your plan might work on planet right wing fantasy but it won’t work in real life. The unemployed and people who pay little in taxes because they don’t earn much will suffer because of your benefit cuts but won’t gain any benefits from your tax cuts. Fawning to the wealthy won’t deliver economic growth.

      • libertarian
        Posted October 20, 2013 at 5:33 pm | Permalink

        Uanime5

        You do realise that the lowest earners in society pay nearly 37% of ALL they earn ( whether through their own labour or benefits) in tax don’t you?

        • uanime5
          Posted October 21, 2013 at 11:16 pm | Permalink

          How exactly are you calculating this the amount they pay in taxes? How much do they get in benefits? Also for comparison how much do other sections of society pay in taxes and get in benefits?

      • Edward2
        Posted October 20, 2013 at 6:14 pm | Permalink

        Who mentioned benefit cuts Uni?
        Plainly those who pay no tax will not benefit from tax cuts, but is that a reason for not reducing tax levels for those at the lower levels?
        Your dream is just higher and higher taxes until we all end up poor, working for the State.

        • uanime5
          Posted October 21, 2013 at 11:19 pm | Permalink

          Richard1 mentioned benefit cuts in exchange for tax cuts. I pointed out the flaws in this.

          Those who pay the least in taxes and claim the most in benefits are those at the lower levels, so they will benefit the least.

          • Edward2
            Posted October 22, 2013 at 2:59 pm | Permalink

            No he did not Uni
            Richard spoke about ending Universal benefits.
            So you therefore feel it is right that millionaires get the same benefits which could be better targeted towards the poorer citizens who really need them.
            How strange.

      • Richard1
        Posted October 20, 2013 at 6:53 pm | Permalink

        Your posts on this and related subjects savour of the Marxist pamphlets and textbooks so prevalent on university campuses in the 1980s. Have we unmasked you? My plans work very well in countries such as Hong Kong, Singapore, and closer to home in Switzerland and over a long period and despite the best efforts of Obama and Co to change it, the US. You are in denial of the overwhelming evidence that business formation and innovation, which is the only sustainable basis for economic growth, is best fostered in an environment of low taxes, small government and light regulation.

        • uanime5
          Posted October 21, 2013 at 11:26 pm | Permalink

          Hong Kong and Singapore have a lower cost of living relative to income and lower levels of unemployment than the UK, so what works for them won’t work in the UK because their economies are different.

          Switzerland has a more generous benefit system than the UK.

          Obama has done the opposite of what you’re calling for (higher taxes and more benefits) and the result has been high levels of economy growth. So the US shows that what you’re proposing won’t work.

          The only person in denial about the economy is you Richard1. The UK’s main competitors are high tax, have large government, and heavy regulations because these are the best factors to have growth in mature economies. All copying the economies of third world countries will do is turn the UK into a third world country.

          • Richard1
            Posted October 22, 2013 at 2:46 pm | Permalink

            There are a number of errors in your post. Describing Hong Kong and Singapore a ‘Third World’ is absurd. Due to policies of low taxes and encouragement of entrepreneurship they have raised themselves from third world status with a fraction of the GDP / head of western countries 50 years ago to comparability today.

            Switzerland proves exactly the case I am making. With tax/GDP c. 10% of GDP less than the UK’s and lower rates they can afford higher benefits – the point tax-cutters like me make is the lower the rates, the more the receipts, the more you can spend.

            Despite Obama, as John Redwood has pointed out on this site before, the US has made actual cash cuts in public spending, unlike the UK, (and it has much lower public spending than the UK anyway). The result has been better growth.

            As ever, the actual facts support the free-market, free-trade, low tax view. Leftists such as yourself are reduced to describing Hong Kong and Singapore as ‘3rd World’ and Switzerland as socialist. Readers will notice the absurdity of your argument.

          • Edward2
            Posted October 22, 2013 at 3:06 pm | Permalink

            You have plainly never been to Hong Kong nor Singapore Uni, if you think they have a low cost of living compared to Europe.
            They have some of the most expensive real estate in the world .
            Their economies are different to Europe in that they have better growth, lower unemployment levels and a rising standard of living for their citizens.
            Worth copying the best bits I would have thought.
            Economic growth in the USA has been founded on cheap energy created by fracking for gas and new oil finds far more than Obama’s policies elsewhere

  12. Acorn
    Posted October 20, 2013 at 8:42 am | Permalink

    JR, as it’s Sunday, good will to all men and stuff like that, please, just this once, I promise I won’t ask again, ever. Allow this link …

    Reply I have read some of this link and do not think it makes the case you suggest. If you want to put an argument in favour of a state being able to borrow as much as it likes with no external or internal constraint, inflation problem, external sales pressures on its bonds, rising interest rates and all the other usual observable effects, then please do so in your own words with your own examples and evidence.

  13. Brian Tomkinson
    Posted October 20, 2013 at 8:49 am | Permalink

    I hope that you have conveyed your views to your colleague Willetts, after all he started this nonsense with his book published in 2010. Just why this man was ever called “two brains” is beyond me but perhaps it was meant as a comparison with those of other members of the government. Divide and rule is an unedifying tactic but helps politicians deflect attention from their own numerous shortcomings.

  14. alan jutson
    Posted October 20, 2013 at 9:16 am | Permalink

    Fiscal drag on Inheritance Tax
    Quantititive easing and devaling of our money.
    Care home costs.
    Low annuity rates.
    Low interest rates.
    High tax rates.

    Not much left to pass down afer being mugged by the Government.

    Actions speak louder than words

    • Bob
      Posted October 20, 2013 at 12:12 pm | Permalink

      @AJ

      “Actions speak louder than words”

      Not in David Cameron’s world.

  15. William
    Posted October 20, 2013 at 9:41 am | Permalink

    QE is a disaster that distorts a market economy,robbing savers and subsidising borrowers,whilst guaranteeing inflation and a devalued currency. Base rate should be 3 percent,a level that would oblige the state to put its borrowing binge back in the box.

    • lifelogic
      Posted October 20, 2013 at 10:14 am | Permalink

      With the banks now charging large margins above bank base rates, starting at about 2.5% to 10%+ (even on well secured loans to very solid borrowers) base rates will not have to rise very much to cause very big problems for some.

      New borrowing is well over 3.5% for most new loans already.

      You have to cut out the middle men the huge margin rip off banks to get any real return and you can take real security that way too.

    • lifelogic
      Posted October 20, 2013 at 1:03 pm | Permalink

      Indeed it leads to millions of people making basically the wrong financial decisions with a net negative effect on the economy and jobs.

  16. Bazman
    Posted October 20, 2013 at 9:50 am | Permalink

    Blaming the baby boomers is clearly wrong as many had it more difficult than a great number do today, but today there is more wealth and most expectation. Quite rightly too. Blaming the poor, the working poor as well as pensioners who are the largest benefit recipients will and pitting all these groups against each other not wash either.
    Redistribution does not mean taxation of the rich in many cases but collecting taxes which are in effect tolls for infrastructure and services used to create this wealth.Tax avoidance has soared under David Cameron, damning have figures revealed.
    The money owed to the Treasury – dubbed by officials as the “tax gap” – has grown to an eye-watering £35billion, HM Revenue and Customs has admitted.
    It is made up of avoidance schemes, illegal tax dodging and mistaken underpayments.
    The government defines it as “the difference between the amount of tax that should, in theory, be collected by HMRC, against what is actually collected”.
    The shock size of the gap means the government lost out on £3billion MORE in owed taxes in 2011/12 than it did in 2009/10 – before the Coalition took office promising to crack down on tax avoidance.
    These taxes if collected could be used for education and training for the low paid to get better job. It’s all very well saying some are fatalistic about their position in life, but many are fighting with one hand behind their back as the country slips into financial apartheid of those with money and connections and those with none.

    Reply If the “tax gap” is tax evasion then of course the authorities need to take action to tackle this. I suspect much of it is “tax avoidance”. There Parliament needs to change the law to make it illegal to avoid tax in ways people currently do. Parliament on the whole does not do this as the tax avoidance methods e.g. pension saving, tax free National Savings, ISAs etc are popular. It is also of course far from a fact that the tax gap is a stated amount – that is a guess which might be wildly wrong.

    • alan jutson
      Posted October 20, 2013 at 11:03 am | Permalink

      Reply – reply

      Always amazes me that people quote figures for tax evasion.

      The fact is no one knows how much.

      The size of the alternative economy would be a start, but how big is that ?

    • lifelogic
      Posted October 20, 2013 at 1:06 pm | Permalink

      When I look at peoples tax accounts in the UK I often find they have actually been over taxed by HMRC. You need to keep a good eye on them.

      • BobE
        Posted October 20, 2013 at 4:55 pm | Permalink

        Everybody is dealing in cash these days. I suspect that avoids many of the taxes. If they ask for cash I pay in cash its not illegal. Ive noticed a big increase in it this last 18 months.

        • Bazman
          Posted October 21, 2013 at 6:28 pm | Permalink

          Everybody is not dealing in cash. Tradesman are afraid of not being paid for work and most will take anything, except a punch in the face.

    • Richard1
      Posted October 20, 2013 at 6:58 pm | Permalink

      If tax avoidance has sawed under the coalition – which might be true -it is because the coalition has failed to simplify the tax system. Nor can the LibDems be blamed for this. George Osborne and David Cameron have added to the various tax loopholes and complexities. Whilst having a Conservative government should be expected to be better for tax simplification and lowering of the tax burden, the coalition to date has failed on this count.

  17. David Hope
    Posted October 20, 2013 at 9:59 am | Permalink

    It seems to be that the conflict is as much between those asset rich and those who aren’t. Our modern financial and banking system (along with other factors) seems to have allowed them to leverage significant wealth off existing risk free which isn’t capitalist. Housing is the most obvious example but it’s a problem throughout sectors. But there is no chance of sorting this so long as we have a fiat money system with supply controlled by wise men!

    The other issue is the cost of pensions and looking after the elderly. The sum is huge and will be the cause of much resentment if not addressed rapidly. Living longer has meant people might work from 18 to 60 and then be paid for from 60 to 90. This cannot work mathematically.

  18. con
    Posted October 20, 2013 at 10:41 am | Permalink

    Well said John.
    Why on earth did the coalition appoint an ex labour minister to report on social mobility?
    Labour thinks the answer to every ill is more state spending. Where is there some spare cash? The older generation. Let’s go for them.
    I was not very amused by Millburn’s claim that older people have not suffered as much from ‘austerity’ and younger people, who have taken a big hit.
    Oh yes? That may be true for people on a state pension, but for anyone trying to buy an annuity or looking for interest on savings it has been a nightmare.
    Does Millburn actually realise that 5 years ago it was fairly easy to get 4% – 5% interest on savings. Now 1.5% is about the best rate available – a reduction in savings income of some 70%!!!!
    Meanwhile the ‘hard done by’ younger people have had their mortgages cut from around 7.5% to 3.5%, a reduction of some 53%!!!! on a very large outgoing.
    I don’t think I need to mention annuities, so on top of a drastic reduction in savings income annuities are at an all time low.
    The thing Milliburn ignores is that whereas younger people still have the opportunity to improve their lot over time, for older people, this is their lot. Any prudent planning has gone out of the window and basically cannot be improved.
    When I hear Miliband on energy and now Millburn on raiding older people, I despair at what lies ahead.

    • alan jutson
      Posted October 21, 2013 at 8:43 am | Permalink

      con

      I agree with the points you raise.

  19. APL
    Posted October 20, 2013 at 10:51 am | Permalink

    JR: “Let’s avoid a battle of the generations”

    It is unavoidable, a result of successive governments of promising more – in this case pensions for ‘public ‘service’ which since there is no public sector pension fund, has to be funded from general taxation.

    Given that the birth rate is falling, that means the burden of supporting larger number of older people; pensions, medical care, winter fuel allowance – concessions for television licence, free bus passes yada yada yada – will fall disproportionately on a contracting and younger workforce.

    Sooner or later, these people will realize it is an extremely bad deal for them.

    • OLG
      Posted October 20, 2013 at 5:07 pm | Permalink

      Good point, although unfair to blame just public sector pensions. The entire government old age pension system is ‘pay-as-you-go’, funded from contemporary tax revenues only. As Friedman and others have pointed out, this amounts to a chain letter/pyramid scheme. Problems must arise if those obliged to pay into such schemes doubt they will see commensurate returns when their turn comes to benefit. Still, the media have done a good job of concealing this and there is always the possibility of some new technology to generate really good growth in years to come.

      Reply Some public sector schemes are funded.

      • APL
        Posted October 20, 2013 at 10:09 pm | Permalink

        OLG: “although unfair to blame just public sector pensions.”

        True. Yes there is more, retirement in the public sector at 45 or 50, golden goodbyes – and in some instances the retiree shimmies sideways into another Public sector job.

        JR: “Some public sector schemes are funded. ”

        In aggregate over the whole Public Sector, the funding is woefully insufficient. And any funds that have actuarial expectation of 5,6 or 7% return to fund their pension obligations – are … possibly ( illegally ) optimistic.

        The last time we had a financial crisis, the talk in these parts was, the council tax would have to rise .. because the local local authority pension fund had fallen into deficit.

  20. oldtimer
    Posted October 20, 2013 at 10:55 am | Permalink

    You make good points. The Milburn view, if actioned, would cause great anger and is wholly unjustified. I am sure it would be punished in the ballot box.

    The problem is compounded by politicians tinkering with the tax system in a bid to win votes. Stuff like bus passes should be consolidated in the taxable pension, not left dangling outside the tax regime. Then it would be taxed on those pensioner incomes that fall into the taxable bracket. It is a simple solution, apparently beyond the with of those in charge.

    I echo the sentiments of others who have already pointed out that the UK is grossly overtaxed, that the state takes too large a share of economic output, and that risk taking is hardly worth the effort these days.

    It is significant that the only way ministers can attract foreign capital into keeping the lights on is by offering colossal subsidies to foreign investors. It is a measure of the bankruptcy of thinking and the incompetence of successive governments that matters have come to this pass. No one in this country will touch it with a barge pole, even if they possessed the where with all to do so.

    My wife and I are both 80. I can well imagine members of our family leaving the country in the future – a certainty if Miliband becomes PM.

  21. Demetrius
    Posted October 20, 2013 at 11:36 am | Permalink

    As some who left paying for a TV license legally a few years ago a while back I tried to replace the Senior Citizen/OAP/Elders of The Tribe captions with RIP, standing for Retired Idle Parasite. For some odd reason it never caught on.

  22. Neil craig
    Posted October 20, 2013 at 11:42 am | Permalink

    100% agree with this post.
    The whole concept of the boomer generation being uniquely blessed depends on the assumption that economic growth has ended. OK it has under Britain’s & the EU’s parasitic elite but the rest of the world is growing at 6% and so could we.

  23. Mike Wilson
    Posted October 20, 2013 at 12:51 pm | Permalink

    Please allow me to generalise – as one must. On the whole I think the whole basis of this piece is wrong.

    The Baby Boomers’ wealth is based on DEBT!

    In 1997 the total amount of personal debt owed by the British public – on credit card debt, bank loans and mortgages was 650 billion. By 2007 this figure had more than doubled to 1.43 trillion. Much of this borrowed money found its way into the housing market and caused prices to go up by a factor of 2.5 to 5 (depending on where you live).

    Most baby boomers who are ‘wealthy’ have their wealth tied up in their houses. When they retire they downsize, or move abroad, give some money to their kids and, in the meantime, extend their mortgages from time to time to pay for weddings, cars, holidays etc.

    Of course some people have done well by working hard and building businesses they have been able to sell and so on. But, to generalise, the vast majority of baby boomer wealth comes from the price of their properties.

    The price of their properties is, of course, a mirage until the day they come to actually sell. At which point, almost invariably, one or more people below them in a property chain take on additional debt so the property can be bought. (If you pause to do a little bit of thinking for a moment, you will realise that (apart from properties bought for cash) the price of a property consists of the amount paid for the first property in a chain (largely bought with debt) + the additional debt taken on by other people in the chain.

    If you look back over the last 50 years – someone who bought a house in say Twickenham in 1960 for 20k is now sitting on a property ‘worth’ more than a million pounds. And the majority of that increase in price is due to the increased debt taken on by people entering the property market in the intervening 50 years. The rest of the increase is due to inflation.

    In real terms we are not wealthier. It just seems that way as the next generation borrows a fortune to give us for our houses.

    Reply Many baby boomers own their homes without mortgage debt now, and that is an asset which can be partially realised if they move to smaller or cheaper locations.

    • Edward2
      Posted October 20, 2013 at 6:32 pm | Permalink

      Two minor points Mike
      One type of debt which is a false statistic is the total figure for credit cards.
      All the purchases we pay for by use of our credit cards is counted as a debt, yet most people pay it off at the due date.
      If you look at the universal use of cards for spending now compared to 20 or 30 years ago the growth is huge, in fact trying to pay by cash is now becoming unusual.
      Secondly property debt.
      Not all property is purchased by debt finance.
      A home owned by a family member was bought by a cash purchaser and two of our family who then inherited a share were able to buy a modest property each, from their proceeds, with no mortgage.
      Therefore the trickle down effect which is said to be a fantasy by some on this site, has helped our family improve their lives as well as giving other family members some money to start small businesses and improve themselves.
      The alternative to this property owning democracy is a small number of landlords owning most of the property and renting to us poor peasants.
      Isn’t this where we came in?

      • Mike Wilson
        Posted October 20, 2013 at 10:46 pm | Permalink

        ‘The alternative to this property owning democracy is a small number of landlords owning most of the property and renting to us poor peasants.
        Isn’t this where we came in?’

        Why is that the alternative?

        Why not an alternative where banks are not allowed to create money out of thin air and lend ever increasing amounts of it secured against property so that the young borrow and pass the borrowed money on to the old?

        • Edward2
          Posted October 21, 2013 at 7:29 am | Permalink

          So making it illegal for banks to lend to aspirant home owners is your solution to expensive housing Mike.
          Perhaps building more homes to satisfy demand from our rapidly growing population might be a bit more positive.

      • Mike Wilson
        Posted October 20, 2013 at 10:54 pm | Permalink

        ‘A home owned by a family member was bought by a cash purchaser and two of our family who then inherited a share were able to buy a modest property each, from their proceeds, with no mortgage.’

        I did say one has to generalise. Most properties – bought by young people – are bought with a mortgage.

        Of course some are cash purchases. You get nothing if you leave your money in the bank (the government has seen to that) or invest in the stock market (globalisation has seen to that).

        I wouldn’t mind betting the person who bought your relative’s property for cash got the cash from property in one form or another.

        • Edward2
          Posted October 21, 2013 at 7:33 am | Permalink

          Whilst my one example doesn’t equal the whole market, the buyers I mentioned had sold a business they had built up successfully.
          There are other ways of making money besides property.

    • Mike Wilson
      Posted October 20, 2013 at 10:51 pm | Permalink

      Mr. Redwood – do you deliberately miss the point? Of course many of us have paid off our mortgages. That is the trick! We borrowed money and worked all our lives to pay off our mortgages. Then we sell and someone else borrows MORE money to buy the same house that we bought 30 years ago. It’s the same house but the banks have a mortgage on it nearly all the time.

      Let’s forget interest for a minute and think of this simply. I borrow say 50k and buy a house. I pay the mortgage off and, 25 years later sell the house for the same price I paid for it. I have borrowed 50k, paid it back and now own something worth 50k that I PAID 50k for. If I sell it now to someone younger and they pay me 50k for it, I have now got 50k but no house.

      The ONLY way baby boomers have acquired ‘wealth’ is a combination of inflation and the fact that the banks have lent more and more money into the property market.

      To generalise: YOUR EQUITY IS SOMEONE ELSE’S DEBT.

      Reply That’s how free enterprise works. No debts, less wealth and income. Too many debts, bankruptcy.

      • Edward2
        Posted October 21, 2013 at 7:43 am | Permalink

        You could make the same argument and replace the word property with words like classic cars or fine art or antiques or a business.
        Your post is fixated on banks lending to buy property but really it is about the abstract concept of value as well as supply and demand which applies to all assets in market place.

  24. Mark B
    Posted October 20, 2013 at 1:19 pm | Permalink

    Reading a little bit about Mr. Milburn from his Wiki page, one gets the impression that he does not quite like the elderly ;o).

    Socialism is all about envy. It is about creating envy. From this envy they create a sense of injustice and, from this perceived injustice they create a cause which they, and only they, have the solution.

    They created the situation where our fuel bills are set to be rising higher and higher thanks in part to the CCA. They then have the temerity of blaming the energy companies for naked profiteering, which is not ‘entirely true.’ From this they propose a solution. They will cap or tax those nasty energy companies. And the people, sheep as they are, will fall for it.

    So too is this claim that the old have robbed the young of their ‘inheritance’, a scam to create a false injustice. The political class, especially the Socialists’, will feel moved to act. They will take away many benefits that the old need. Will try to make them sell their homes and move into expensive ‘care’ (sic) homes.

    To Socialists’, the ends ALWAYS ‘justifies’ the means. But first one needs to create the ‘justification’. Stalin and the Marxist apologists ‘justified’ in their minds, the murder of millions because the means of progressing the Marxist cause was deemed more important. They use this process as a way of sanitizing and legitimizing their thoughts and actions. Thoughts and actions that to many normal sane people would be abhorrent.

    Form what is being said, one concludes that the ground is being prepared. But remember. They always go after those that have the weakest voice and can be easily demonized eg Bankers’. For them continue their slow march for ever greater control over our lives, they must have a fresh supply of hate figures in order to keep the people looking the other way. And one by one, they will pick us off. Its how they have worked in the past, and its worked well. Why change a habit.

    From Each According to His Ability, To Each According to His “Need”

  25. ian wragg
    Posted October 20, 2013 at 1:57 pm | Permalink

    John, I get thoroughly fed up with people blaming us 65 plus for the countries ills.
    Since 1997 and up to today it is the politicians like yourself who have taken taxation into the stratosphere. Allowed unlimited immigration and given power away to a foreign entity.
    I see we have 600,000 non active EU nationals kicking about. Pray do tell how they are financing themselves. Are they using their savings which they remitted from overseas. No, I think not. We are being mugged by the metropolitan elite in the name of inclusion and diversity. What a load of tripe.
    I spent 6 years of my life on underwater patrol in and around the Barents Sea so today’s youngsters could have freedom. All we did is replace communism with the EUSSR. No change then.
    Voters have had enough of the LIBLABCON and the writing is on the wall. Get out whilst you can.

  26. Iain Gill
    Posted October 20, 2013 at 2:53 pm | Permalink

    Re “will come to inherit the wealth their parents have built up” yea if you’re a trust fund using person, the rest of us will have the council sell the parents house to pay for care that those that have wasted their wealth will get for free. Once again encouraging completely the wrong behaviours with this social manipulation.

  27. Trevor Butler
    Posted October 20, 2013 at 3:05 pm | Permalink

    We looked at our children – The eldest and her husband are busy buying a house in Bournemouth ‘cos the hubby is on a salary we could never aspire to – Our middle and youngest are studying toward degrees that we could never have afforded (we grew up in the colonies) and my wife and I sigh with relief that life is so much better for them than it was for us in so many ways except for all this soft socialist madness that has subverted Westminster in the last thirty years. At least when we were in our late teens and early twenties the battle lines were clear but now we have a political elite who, basically, hold the same line with minor differences based on failed political models that only have any credence in their minds because they were taught them at Oxford.
    In 1979 I listened to punk bands and dreamed of the anarchist revolution – nowadays I still, occasionally, listen to them and dream of a truly conservative party that will sweep away thirty years of utter rubbish and restore this country to something worth fighting for – Fat hope – Meantime my wife and I will start provisioning for our retirement living in a caravan in the garden of our daughter’s new home in Bournemouth – at least we’ll be able to take a stroll on the beach – but then the council there have probably got a rule against caravans in gardens!

    • Mike Wilson
      Posted October 20, 2013 at 10:56 pm | Permalink

      You need to move to somewhere like Slough. There many families have people living in sheds in their gardens and the council does nothing about it. So I hear.

      • alan jutson
        Posted October 21, 2013 at 8:54 am | Permalink

        Mike

        Yes the Heat survey suggested more than 6,000 people were living in the conditions you describe.

        I also heard (no facts or proof) that a calculation was also conducted at the sewerage treatment works.
        Given that it is known quite accurately how much human waste is produced per day.
        That records are kept for years as to the amount of waste treated, it is possible to calculate the population in the area served by that treatment works.

        Probably far more accurate than a Census.

        The problem the Council have is their obligation to house the homeless, thus perhaps the reason nothing much is done.

        If Trevor wants to live in a caravan, I suggest he puts it on the drive, not the back garden.

  28. Antisthenes
    Posted October 20, 2013 at 3:57 pm | Permalink

    Mr Redwood you are pretty much a lone voice in the arena where power rests and decisions that effect us all are being made. You and like minded people there are quite a few inside and outside the arena but they are very much in the minority know what needs to be done for the common good. Day after day you write articles full of common sense ideas as to how our current prosperity and social well being can be maintained and enhanced. However you are fighting a battle that you cannot win the majority of the peoples of the UK and West have decided that they want governments that have policies and practices that are social democratic in nature. To them social democracy offers what they want with the least effort what they will in the end get however is lots of socialism and no democracy and will end up a great dealer poorer economically and socially.

  29. uanime5
    Posted October 20, 2013 at 4:00 pm | Permalink

    I have never bought into the theory that the Baby bulgers are a lucky generation who have sucked up too much of the country’s wealth. The amount of a country’s wealth is not limited or static. Many of the baby boomers made their own luck.

    Unless the amount of money the UK has is constantly increasing the wealth is limited.

    Many of the baby boomers benefited from free university education, university grants (not loans), employers who were more willing to train them, and house prices that weren’t more than 10 times their salary. So they had many advantages that their children do not.

    The baby bulgers with wealth are fairly generous to their children. They are already giving them money for deposits on homes, assisting their family budgets and giving money to grandchildren where they have a surplus. Those who don’t have a surplus are often working hard for no reward as child minders and family assistants to their children.

    Something this country wouldn’t need if houses prices and child care costs weren’t so high compared to wages.

    We should be more active in debating how to create conditions in which the next generations can be more successful. They too must add to the stock of the nation’s wealth, and earn the higher incomes they naturally seek.

    Well unless the Government is willing to create more high paying jobs there’s no prospect of this happening. At present there’s 2 million more people than there are jobs available, so unless 2 million jobs magically appear a large number of people won’t earn any income.

    That is why on this site I try to spend more time describing the policies that would liberate enterprise, attract more capital, create more jobs and drive forward higher productivity.

    Well Osborne has reduced taxes on the wealthy and cut corporation tax, yet neither has managed to reduce employment levels or raise wages in real terms. So we can rule out both of these as a way to improve the UK.

    Too many are fatalistic about low wages and no wages. They think people have to stay trapped by them all their lives.

    They often do. In low paid professions the only routes to better paying jobs is management, which requires a very different skill set (making it difficult to get into and unattractive to people who don’t like managing other). So if you’re a cleaner and lack the skills needed to manage a cleaning firm you effectively have no promotion prospects and no chance of getting a better wage without changing your job.

    The longer someone is unemployed the less chance they have of getting another job. Especially if you live in an area with very few jobs.

    They think it unrealistic to suggest people can help themselves to a better life by working hard, undertaking training, venturing in a business of their own and many other ways.

    These are all unrealistic because of the cost involved. In many cases the Government punishes people for doing this such as a loss of benefits if you don’t work the correct number of hours or if you spend too many hours in education each week.

    To do that requires lower tax rates and less government interference with those who are energetic and hard working, not more.

    Osborne tried reducing taxes and it didn’t help the economy. Also if you want to encourage people to work (especially in dangerous jobs) you need to give them good employment rights, which requires more Government interferences not less.

    • Edward2
      Posted October 20, 2013 at 6:50 pm | Permalink

      Uni I love your phrases:-

      “unless the Government is willing to create more high paying jobs…… ”
      Err no its the private sector that does this.

      “if you’re a cleaner and lack the skills…..”
      You have not heard of training, personal development, or going out and gaining FE college qualifications ?

      “These things…. ( working hard, undertaking training, or creating a job of their own) are all unrealistic because of the costs involved…..”
      Complete and utter nonsense. Working hard costs nothing, training is available often for little or nothing and becoming self employed is easy with grants from Councils and bodies like the Princes Trust.

      “Osborne tried reducing taxes and it didn’t help the economy”
      Tax revenues are better since some tax rates reduced and the economy is growing again.

      Sometimes I think you just argue for the sake of it because your statements are such rubbish when read more than once.

      • uanime5
        Posted October 21, 2013 at 11:41 pm | Permalink

        Err no its the private sector that does this.

        Given how long it took for 1 million jobs to be creates in the private sector (after 600,000 jobs were cut in the public sector) it’s clear that these jobs are unlikely to be created any time soon.

        You have not heard of training, personal development, or going out and gaining FE college qualifications ?

        All of which cost money with no guarantee of a better job at the end, which is why people have so few opportunities to advance.

        Working hard costs nothing, training is available often for little or nothing and becoming self employed is easy with grants from Councils and bodies like the Princes Trust.

        Working hard won’t give you better career prospects unless you’re employer is willing to pay you more for the extra work.

        Training costs hundreds of pounds, which makes it unaffordable for those working in low paid jobs.

        Grants are far more difficult to acquire than you make out, so it’s difficult to become self-employed. Especially if you work in an industry where few people are self-employed.

        Tax revenues are better since some tax rates reduced and the economy is growing again.

        Given that tax revenues didn’t increase for several years after these tax cuts and mainly increased in areas that didn’t benefit from these cuts it’s clear that they had little to no effect.

        • Edward2
          Posted October 22, 2013 at 3:18 pm | Permalink

          Uni
          “Given how long it took for 1 million jobs to be creates in the private sector (after 600,000 jobs were cut in the public sector) it’s clear that these jobs are unlikely to be created any time soon”.
          First you regularly said it wouldn’t happen and now you just complain about the quality of these million new jobs and the time it took!
          Three years and over a million new jobs, not bad I would say.
          “All of which (ie training) cost money with no guarantee of a better job at the end, which is why people have so few opportunities to advance
          and “Training costs hundreds of pounds, which makes it unaffordable for those working in low paid jobs”..
          Rubbish, most training is done in the workplace free of charge for staff to progress or is often paid for by your company when they send you on different courses.
          “Grants are far more difficult to acquire than you make out, so it’s difficult to become self-employed. Especially if you work in an industry where few people are self-employed”
          Rubbish there are many of ways self employment can be encouraged through easily available grant help and it costs very little to start out on your own using any skills you have.
          Given that tax revenues didn’t increase for several years after these tax cuts and mainly increased in areas that didn’t benefit from these cuts it’s clear that they had little to no effect.
          Given that tax revenues didn’t increase for several years after these tax cuts and mainly increased in areas that didn’t benefit from these cuts it’s clear that they had little to no effect.
          “Given that tax revenues didn’t increase for several years after these tax cuts and mainly increased in areas that didn’t benefit from these cuts it’s clear that they had little to no effect”
          Rubbish again. Income tax revenues went up after top rate were cut as did capital gains tax revenues after reductions in rates.

  30. Martin
    Posted October 21, 2013 at 5:44 am | Permalink

    I think you are missing the real problem with the elderly – pensions apartheid.

    Many private private sector workers have poor money purchase scheme pensions. Their pensions while small are just enough to lift them above benefits thresholds. These pensioners then have to use the bulk of their occupational pension to pay 100% council tax. Any savings these pensioners have to supplement their poor pensions are also attacked by the council tax “benefit” system.

    • alan jutson
      Posted October 21, 2013 at 9:01 am | Permalink

      Martin

      Agreed.

      This is the problem, when someone draws a line under which you must go, to enable you to get help, or over which you get nothing.

      The solution is universal benefits for all, or a taper system where there is a gradual reduction or cut off for Benefits.

      We need to try and encourage self provision and self help where possible, not discourage it.

  31. REPay
    Posted October 21, 2013 at 12:37 pm | Permalink

    I have a great deal of sympathy with young people. They are inheriting a bloated deficit to finance and a huge state machine to support, thanks to the incompetence of the way that public finances were trashed under Gordon Brown/Ed Balls and their incontinent spending. The best way to deal with this is to grow the private sector and shrink the state sector.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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