Sound familiar? It should do. It is now, and it is us.

On the one hand, we have a property-owning class with a particular interest in restricting housing supply at the expense of those who want to get on the property ladder. On the other, we prioritise pensioners at the expense of all other welfare recipients: between 2010 and 2020 the value of the state pension increased by around 8%, whereas unemployment benefits have fallen by 6%. Real disposable incomes are set to fall by 7.1% over the next two years – but not for pensioners, who are, as ever, protected by the triple lock. Economic pain for thee, but not for me.

These conflicts overlap heavily with what feels like the main divide in society: of the old vs the young (although the “young” increasingly stretches up to 50). We are engaged in intergenerational economic warfare. Younger people are forced into a worse quality of life than their parents’ generation. They are expected to live with less space, and spend more for the privilege. They are expected to work for less, and travel further to do so. They are expected to wait longer to buy a property, and rent in an increasingly unstable market while they save up. They are expected to pay ever-more tax, to fund a generation who are actively hostile to their interests.

This two nation country is the result of 12 wasted years of Conservative government. Instead of fixing the roof while the sun was shining, as George Osborne told us he would, the Conservative Party has built “a political economy that relies on the votes of the anti-growth coalition of home-owning pensioners”: a voter base that relies on increasingly tetchy boomers who are happy to pull the ladder up after them. Fundamentally, the Conservatives have presided over the intensification of a two-nation country.

It is a particularly baffling state of affairs given most of our most recent Conservative prime ministers have described themselves as one-nation Conservatives — Cameron, May and Johnson have all laid claim to that mantle. Sunak has been cagier, but he did win the support of the One Nation group of MPs.

Even Ed Miliband tried to appropriate the ideology! He saw one nation as “A vision of a Britain where patriotism, loyalty, dedication to the common cause courses through the veins of all and nobody feels left out. It was a vision of Britain coming together to overcome the challenges we faced.”

In his Autumn Statement, Jeremy Hunt (another self-described one-nation Conservative) told us that “You do not need to choose either a strong economy or good public services”. And in a sense he’s right – we do not need to choose either of them, because we have chosen to have neither.

Suggested reading

A boomer Budget from Jeremy Hunt

By John Oxley

This is not some abstract policy debate. Presiding over a two-nation Britain is dangerous for the Conservative Party and for society. As Disraeli also said: “The Tory party, unless it is a national party, is nothing. It is not a confederacy of nobles, it is not a democratic multitude; it is a party formed from all the numerous classes in the realm.”

CCHQ should be petrified of that fact that a Tory voter under 50 is almost as rare as an affordable property in London. A recent YouGov survey found that just 14% of 18-24s and 13% of 25-49s would vote Conservative, compared to 59% for Labour among both groups. Recent polling by Ben Ansell finds that just 15% of all private renters would vote Tory, and among under 50s just 14% of undergraduates and 10% of postgrads would go blue. Demography is not destiny for any political party, but these are worrying numbers.

A two-nation system is bad for society. It is not for nothing that Disraeli warned against it: a perpetuation of the unfair status quo would, he feared, lead to social instability. Improving the lot of the people was not only morally right, it was also a clever act of self-preservation on behalf of the Tory elite.

The real kicker is that it does not have to be like this. We do not have to worship at the altar of the NIMBYs. As far back as 2010, the Conservatives were level-pegging with Labour in terms of winning the support of 18-24-year-olds. Across Europe, young voters often back parties of the Right. There is no iron law that says the Conservatives cannot win the youth vote. It’s a demographic they need desperately to win over.

Suggested reading

Britain's squalid housing crisis

By Mary Harrington

To do so does not mean they need to look to the past. As Stanley Baldwin noted in 1934, “The responsibility – and it is a great responsibility – that rests with a leader is to try and adapt the policy according to the deep-laid foundations of the Party principles to meet whatever may come in this world.” The Tories they need to recognise that the status quo is not working. And if they want, as they profess, to be the party of one-nation principles, they need to change, and fast.

The key thing is to address intergeneration unfairness. This would mean stronger protection for renters and higher standards demanded of landlords. It does not mean rent freezes, which have consistently been shown to crash supply and reduce quality, but it does mean that extortionate fees, demands for up to 12 months’ rent in advance, and onerous deposits should be ended. Of course, the housing market will not be fixed until the planning system is fixed. There is a plethora of ways to do this, but a move to zoning, alongside design codes and allowing councils to benefit more from changes in land value due to planning permission decisions all seem like good places to start. Areas with increased house building should be rewarded.

A one-nation platform would also mean re-evaluating some of the punitive elements of our current system. The sky-high interest rate on student loans, the five-week wait for your first universal credit payment, and the two-child limit on child benefit should all go. Nobody in receipt of welfare should be living in absolute poverty – as a country, we are better than that. We currently spend more on pensions than we do on education (which somewhat reflects this government’s priorities) and it is not unreasonable to look at means testing pensions, which come in at around 10% of total spending and 5% of GDP.

Levelling up would also be key, recognising how much pride people feel in the local. This would mean investing both in physical and cultural infrastructure. Ratcheting up council tax for funding is not the answer, given the inherent unfairness in the model. A proportional property tax, of around 0.5% of the current value of a property (double for empty second properties), would see 77% of households pay less tax, but increase the overall tax take. There should also be some element of redistribution between councils, in recognition of the fact that some places have a greater need than others. We should all be in this together.

One-nation Conservatism is often seen as being on the Left of the party – a home for bitter remainers, wets, or secret social democrats. That is not true. It is simply a recognition of the core principle of conservatism: a nation cannot survive if it is at war with itself. The Conservative Party has forgotten this important insight, and sadly Sunak and Hunt are unlikely to remember it anytime soon – this is boomer Britain, after all.

-+=+-

Last Saturday night, in a town just outside London, fifty or so pensioners got together to share a few drinks, nibble on buffet food and enjoy some good company. They played bingo, held a pub quiz and talked of times gone by.

Having travelled from across the UK, they spoke in a variety of accents – from lilting Welsh to chirpy East London cockney, from singsong Brummie to Scottish burr. Once skilled and semi-skilled manual workers, many of those who came had spent decades working in steel mills, manufacturing, printing and other traditional industries.

These were ordinary folk, then. Their shared experience, though, and the story behind their close affinity and fellowship, was anything but ordinary. The hall in which they gathered was festooned with large demonstration banners and large posters, along with photographs of them, in various forms of fancy dress, parading outside Parliament, HM Treasury and other government buildings.

For those who met at the Leverstock Green Cricket Club in Hemel Hempstead last Saturday night were key members of the Pensions Action Group (PAG). And between them, they masterminded one of the most focused, audacious – and highly effective – single-issue grass roots campaigns in modern British political history.

I was delighted to join them and privileged, earlier in my journalistic career, to have played a small role in their astonishing success. This was an evening that reminded me of the importance of democracy, the efficacy of collective action and the ability of individuals and the media, if they try really hard, to hold politicians to account. An otherwise enjoyable evening, though, also raised concerns in my mind, giving me considerable pause for thought.

During the early 2000s, numerous UK company-based ‘occupational’ pension schemes started to get into serious final difficulties. The reasons were many and varied – including rising life expectancies, volatile stock markets and a tax rise in the late-1990s, introduced by then Chancellor Gordon Brown. By placing additional levies on reinvested dividends, Brown’s disastrous ‘pensions stealth tax’ cost company pension schemes many billions of pounds annually, losses which were magnified when compounded over many years.

Once the first few ‘final salary’ occupational schemes began to close – a phenomenon I reported in detail on both Channel Four News and in The Telegraph – dozens more followed. These failures were an enormous shock. Final salary schemes were seen by UK workers as the ‘gold standard’ of pension provision, linked as they were both to wages on retirement and length of service. For decades, employees had assumed such pensions were safe – seeing as they were backed by years of employee and employer contributions. Successive governments, moreover, wanting to encourage workers to save for their retirement, regularly published leaflets stating that, whatever happened to any particular firm, final salary pensions were “guaranteed”.

As these schemes began to fold, thousands of workers, having been advised they would receive a lump sum on retirement, then a healthy monthly pension for life over and above the basic state pension, faced the prospect of getting nothing. This was obviously devastating. As I reported on such occupational pension closures on television and in print, I received hundreds of letters and emails from distraught scheme members.

Under the law as it stood, as individual members of final salary schemes retired, their entitlement would be calculated and an annuity purchased, guaranteeing that income for the rest of their life. But when sponsoring companies started to go bankrupt, pension scheme members who had yet to retire – even if they had given 20, 30 or 40 years of service, making monthly contributions throughout – could end up with nothing.

Previously, as companies had collapsed or been sold, final salary schemes had generally been healthy enough to meet ongoing and future obligations from accumulated assets. Alternatively, new company owners would take on the pension scheme. But as life expectancies got longer, and the world became more competitive as a new millennium ushered in an age of globalisation, the finances of many UK pension schemes became hopelessly stretched. At the same time, lawyers used loopholes to help investors taking over flagging firms to renege on pension liabilities owed to those yet to retire – even if they were just a few years, or even months or weeks away from doing so and had made decades of contributions.

The PAG emerged from the ashes of this tragedy and injustice. This was a collection of traumatised employees, working for companies across the country, who had suddenly lost their entire future occupational pension, which they’d paid for from years of foregone wages. Rather than accepting what seemed inevitable, these individuals – none of whom had the remotest experience of politics or the media – formed a devastatingly effective campaigning unit.

At the heart of the group was Pete Humphreys, who had worked for shelf manufacturer Dexion for decades and was very close to retirement when its pension scheme went bust. It was Pete’s utter determination and commitment to restoring the pension of himself and his fellow workers, combined with the irrepressible sense of humour of his wife Jacquie, that set the tone.

As such, PAG’s relentless campaigning combined humour with a steely resolve and lashings of media savvy. The group used a long ‘Stripped of our Pensions’ banner, held by up to a dozen naked campaigners, their modesty covered only by the banner itself. It was an image that secured acres of newspaper coverage – so much so that PAG repeated the stunt at every Conservative and Labour party conference for years. Other demonstrations saw the ‘pensions theft’ victims dress up as gangsters, St George slaying his dragon, or Laurel and Hardy. The cause was desperate – not least as PAG members were using their diminishing savings to finance their demonstrating antics, which took them to many parts of the country. Some of those affected died without receiving any pension. A few became so distraught they committed suicide. But the media image was one of stoical determination, backed by remorseless logic and tempered with an eye-catching sense of black comedy.

While building a media presence, the PAG also sought and secured expert help – largely from volunteers. Chief among those was Ros Altmann, an experienced investment manager and pensions professional who was shocked by their plight. Altmann used her contacts and skill to help secure PAG legal opinions and a galaxy of helpful consultancy reports. When combined with the group’s growing media clout, such evidence meant the Humphreys and the growing ranks of the PAG couldn’t be dismissed by officialdom.

As a direct result of the PAG’s campaigning, the government set up the Pension Protection Fund in 2005. Funded by industry levies, it was designed to pay 90% of workers’ pensions if their occupational schemes went bust. Today, hundreds of thousands of present and future retirees are benefiting from, or stand to benefit, from the PPF.

Crucially, though, those who lost pension rights before the PPF was established – around 125,000, including much of the PAG – remained uncovered. There was much further protesting and legal and political grappling, including ever more ingenious protests, which eventually led to the government establishing the Financial Assistance Scheme (FAS) specifically for such retirees, initially setting aside £2bn of public money.

Before the FAS started working properly, though, paying out pension due, there were more battles to come. As entitled but still pension-less retirees died, there was much disgraceful foot-dragging by ministers and officials. A Parliamentary Ombudsman’s report found the ‘gross injustice’ highlighted by the PAG had resulted from ‘government maladministration’ and repeated instances of bad regulation.

PAG took its case to the European Court of Justice, which said ministers had acted in a manner that was ‘unlawful and inadequate’. And when a High Court Judge upheld the Parliamentary Ombudsman’s verdict, against which the government has astonishingly appealed, Chancellor Gordon Brown, in a surreal twist, ‘rejected’ that verdict too. At that point, PAG’s demonstrations, and their broader plight, became a major national news story, ultimately forcing the government to submit.

Last week’s PAG gathering in Hemel Hempstead was the tenth anniversary of the weekend when the Humphreys were telephoned by then Pensions Minister Mike O’Brien, who told them the government had finally agreed to fund and administer the FAS properly. PAG members talk warmly of O’Brien. He is one of few government figures who comes out of this sorry saga with any credit.

It was an uplifting gathering, as I said – attended also by Altmann, whose stellar work eventually saw her brought into government, and also Jeff Prestridge, the doyenne Mail on Sunday personal finance journalist, who also took up the PAG’s cause. There was much talk of self-help, determination, making your own luck and ‘beating the system’. I also reflected that this whole episode highlighted the overwhelming necessity, when capitalism throws up manifestly unfair outcomes, of appropriate government intervention.

Delighted to have met up with the PAG gang, though, reliving journalistic adventures past, I have nagging concerns on two fronts. The first is the fast diminishing will and ability of the contemporary media to commit the resources needed, both financial and intellectual, to sustain campaigns that tackle serious injustices – particularly when it comes to financial fraud.

Covering a story like ‘pension theft’ in depth, helping to ‘shift the dial’, was a legal and political minefield. It’s the kind of journalism that requires resilience, an eye on the long-term and the capacity within an organisation to get beyond the demands of daily news. Tackling complex yet hugely important stories relies on financial and editorial backing for the long-haul ­– which I was lucky (some of the time) to have, but which now seems painfully thin on the ground.

The second issue that troubles me is the more specific lack of pension provision. Three in ten Britons aged 55-64 have no pension savings, or savings that are entirely inadequate, according to a 2016 report for Scottish Widows. That rises to almost half of 30-40 year-olds. The UK has made great progress in tackling pensioner poverty over recent decades. But vast swathes of those currently in their 40s and 50s are heading towards retirement with no pension savings. Laboring under enormous mortgage debts due to bloated house prices, or unable to get on the property ladder and paying high rents, they find it almost impossible to put adequate money. As such, we could soon see a return in the UK to widespread pensioner poverty – which ever more people relying only on a basic state pension which, by international standards, remains rather low.

The workers who combined so heroically to form the PAG were able to fight for their pensions because, having made substantial contributions over many years, they had something to fight for. Increasingly few of their successors can claim the same.

I think there’s a much better answer… but we’ll get to that.

It really isn’t clear if the advance of robotics and Artificial Intelligence will actually destroy more jobs than it creates. If that happens, it will undercut the goal of ‘full employment’ that has been central to the developed economies for more than a century. Full employment doesn’t mean everyone has a job, but it means most people who want one can get one. There’s nothing more important to governments – other than defending the nation from external aggressors – than keeping unemployment down.

While we really don’t know if clever machines will imperil the full employment idea, there are smart voices out there suggesting that, this time, it may really be in danger[2. For example, this PBS programme.].

The latest tech revolution really could lead to a crisis in labour markets. While machines and other tools can’t do everything we can they have always been able to do one or two things much better than we do. Think about the calculator. The chisel. Or the wheel.

The 21^st-century contrast with previous ‘industrial revolutions’ lies chiefly in the pace of change. It was John Maynard Keynes, doyen of 20^th-century economists, who summed it up like this. If we can economise in our use of labour faster than we can find new jobs, it’s over – the jobs market goes into a tailspin. Capital progressively takes its place as a factor of production. And, whether we like it or not, we all get more and more free time[3.  Keynes’ seminal 1930 essay, Economic Possibilities for our Children, is available here.].

Basic Income as the cure-all?

The ‘right’ and ‘left’ versions of Basic Income can be summed up like this. The right would take pretty much all the money we spend on social benefits and divvy it between everyone; so the cost to the economy would be minimal. The left would give everyone something like an old age pension (what Americans call social security) from the age of 18 or 21 – and keep up many of the social benefit payments we make now, except (presumably) unemployment; so the cost would be a lot. Both, however, add up to a ‘lifelong pension’ idea. In several countries there have been experiments running – partly to see how these pension-type payments affect people’s interest in getting actual jobs. Too local, too small-scale and poorly-designed – they haven’t yet told us much, however[4.  “Why Finland’s Basic Income Experiment isn’t Working,” by Antti Jauhiainen and Joona-Hermanni Makinen, New York Times, 20 July, 2017.].

Regardless of incentive effects, there’s nonetheless a core problem with Basic Income. That’s aside from the fact that it either strips money away from all sorts of particularly deserving groups (like the disabled and children and people needing housing help) to spread it out equally or, to avoid that downside, it costs a fortune since it becomes an additional benefit and for everyone. The core problem lies precisely in its indiscriminate application to young and old alike.

Let’s imagine an economy in which jobs are eroding, and ‘unemployment’ (if that’s still the term we use) isn’t the 5-10% we’re used to in the more successful developed economies like the UK and the US, but 35%. If everyone has a Basic Income ‘pension’ of $1,000 a month (let’s assume the ‘left’ version), the cost to the economy is $12,000 a year times the adult population – and 65% of these payments are going to people who don’t actually need them. More important, they go to young and old alike. The 22-year-old and the 64-year-old both get the payment, and are equally able to live outside the workforce.

A far better idea lies in Retirement Age Management. Somewhat bizarrely, every developed economy has for more than 20 years been striving – often at some political cost – to raise the retirement age. In particular, the state pension age, which sets the pace. There have of course been good reasons for these changes – a recognition that people now live much longer than they did when state retirement programmes were initiated; a concern for the cost of these efforts; and a desire for equity between men and women. (Uniquely, women have historically benefited disproportionately from retirement payments in many countries. In the UK, for example, females enjoyed a right to retire five years before men (now being phased out)).

Yet these worthy considerations have been rapidly overtaken by events. They assumed steady-state full employment stretching into the indefinite future. If that assumption is flawed, following through on these delayed retirements will prove a costly mistake. Because, of course, extending the retirement age has the effect of increasing the labour force. It requires that there be more jobs, or it will simply add to the total number that is unemployed[5.  In the U.S. the ‘full’ retirement age is in process of shifting from 66 to 67. In the UK, it will be 67 by 2027; women, who used to retire at 60, are now ‘catching up’ with men].

The flexible tool

By contrast, Retirement Age Management offers a flexible tool by which governments can use the state pension age to adjust the size of the labour force – and, in the process, the unemployment statistics. Since, broadly speaking, the cost to the economy of state retirement pensions is broadly comparable with the cost of unemployment benefits, there are big advantages in focusing these benefits on citizens toward the end of their working lives – and freeing up jobs for younger people. Even in an economy with significantly fewer jobs, it means that young people can plan to get them and pursue careers. It means that older workers can see earlier retirement as an extra plus. And it avoids the waste in paying Universal Income to people who have no need of it.

These are dramatic benefits. If we do face a drop in the availability of jobs, Retirement Age Management could rapidly be used to adjust the labour market to maintain ‘full employment’, maintain the career opportunities of younger people, and offer earlier retirement as a benefit to older workers (rather than the disaster of unemployment).

So in our current situation, governments might be wise to freeze planned increases in the retirement/pension age. Perhaps they should begin to cut it. In the UK, for example, there could be a big electoral advantage to the party that decided to roll back the increase in women’s retirement age to 60 again – and declare a policy objective of bringing men’s down to 60 too. In the US, the push up to 67 should be abandoned, and consideration given, by stages, to bringing down the “full” social security age to 62 (when currently pensions are available under some circumstances).

The costs involved are less problematic in economies where unemployment benefit is standard and long-term (not the case in the United States). But if we lose the ‘full employment’ norm it will become urgent for every economy to take responsibility for the expanded number of the idle – what Keynes in that famous essay called “the new leisured class”. We don’t know if it will happen, but let’s get prepared.