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How the Tories can win over the young

    In advance of the Queen’s Speech, the stark generational divide emerging from the general election will be sending shivers down the spine of Conservative MPs, with Labour being more popular than the Tories in every age group up to 47. If it wasn’t for Theresa May’s enormous lead among the over 60s, we would now be looking at a Jeremy Corbyn premiership.

    In response, many have argued that an end to austerity is now inevitable. Indeed, many of the pledges in the Conservative manifesto that advocated restraining public spending proved incredibly unpopular.

    But is it realistic to bring an end to fiscal consolidation? The Conservative Party’s manifesto commitments were already very modest in respect to austerity. The plans sought to achieve a budget surplus only by 2025-26, which would have meant that the UK Government had been running a budget deficit for a quarter of a century. This would be the longest period that the state has spent more than it has taken in since the Second World War, meaning that matching Labour commitments on public spending – or even loosening the purse strings compared to previous plans – would be irresponsible.

    Yet it cannot be business as usual. And there is certainly scope to reconsider some policies and to adopt language so that more of the younger generations can be persuaded to vote Conservative.

    It may seem extraordinary, but public policies over the past decade have led to the average pensioner having a higher disposable income (after housing costs) than the working age population. Now is the time to scrutinise the intergenerational impact of legislation through the introduction of an Office of Intergenerational Responsibility – as proposed by Michael Johnson. There are areas where resources could be freed up for the benefit of all generations. For example, the abolition of national insurance contribution relief on employer contributions could save £8 billion a year, while a flat rate of income tax relief on pensions could save more than £10 billion a year.

    A radical strategy on housing is also needed to offer young families the opportunity to get onto the housing ladder. The Housing White Paper earlier this year was a good start, but many more radical measures are needed – perhaps a review of the greenbelt and construction of new garden cities. Nimbyism is on the decline, so pushing through these plans may not be as controversial as they once were.

    The Conservatives will also need to come up with credible alternatives to Labour’s irresponsible spending commitments. Labour pledged an additional £5.3bn of funds for better access to childcare and early years funding, including more money for SureStart. Proposals such as these could explain why Jeremy Corbyn polled so well among the 30-39 age group – many of whom will have young children. Fifty five per cent of 30-39 year olds backed Labour at this election against just 29 per cent who voted for the Conservatives.

    The Tories were right to question how such a pledge would be funded. But simply criticising Labour’s economic illiteracy is clearly not enough. Advocating an effective strategy to tackle the costs of childcare – without pledging unaffordable commitments – could have been an effective electoral strategy.

    To some extent, the Conservative Party Manifesto did do this with energy costs (not related to its ill-advised energy cap) by advocating an independent review of costs, which would have inevitably looked at the issue of the growing burden of environmental levies. Much more could have been made of this, along with the potential gains for households in terms of the reduced cost of living.

    There are also certain narratives that the Conservatives need to get across clearly. Labour’s plans would have increased borrowing by at least £150bn more than was planned by the Conservatives over the course of a parliament, according to the Institute for Fiscal Studies. The impact of Labour’s spending plans would be more severe than this, of course. For example, this gap in deficits between Labour and Conservative Party plans would likely extend beyond five years, adding hundreds of billions of pounds more in extra debt.

    This incurred debt is, effectively, a way of passing on the overspending of today’s generation onto future generations. Indeed, this a point that was effectively made by Theresa May in her first Prime Minister’s Questions, where she said

    He [Jeremy Corbyn] uses the language of austerity; I call it living with our means. He talks about austerity, but actually it is about not saddling our children and grandchildren with significant debts to come”.

    The Conservatives did argue that Corbyn’s plans would destroy job creation in the UK, but the intergenerational unfairness of greater debts did not get an adequate airing in the Conservative Party campaign – perhaps to Theresa May’s detriment.

    Moreover, the Conservative Party failed to make an effective defence of its policy on tuition fees in response to Corbyn’s plans. In fact, Jeremy Corbyn’s proposal to remove tuition fees is an elitist policy. According to the Department for Education, non-graduates earn, on average, £9,500 less per year than undergraduates and £15,500 per year less than postgraduates. The economic benefits to an individual of attending university are therefore clear to see.

    Yet Corbyn’s proposal to remove tuition fees for those attending university and ask the taxpayer to pay instead is, in effect, a subsidy from the less wealthy to the more wealthy. And it is notable that the impact on the taxpayer is significant. The money Labour planned to spend on repealing university tuition fees is equivalent to nearly 2.8 percentage points on the basic rate of income tax.

    Had the Conservative Party attacked Corbyn’s policy on the grounds of elitism – as well as highlighting the progressive payback nature of tuition fees – this could have been an effective message.

    The Conservatives have managed to attract a very strong vote showing with the over-50s. There is no reason to suppose that offering the young a better deal means attacking these voters. It is now time for the Conservatives to use this Queen’s Speech to set out policies that are aimed at all the generations, which promote socially fair outcomes and economic self-sufficiency.  

     

    This piece was originally published in the Telegraph.

    Daniel joined the Centre for Policy Studies as Head of Economic Research in November 2015. He was promoted to Deputy Director in March 2017. Prior to joining the CPS, he worked in research roles for a number of parliamentarians.

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