Summary
Paul Johnson, director of the Institute of Fiscal Studies, asks if the time has come for the government to break pledges made to pensioners. He charts how the average income of senior citizens has risen and is now higher than that of the rest of the population. "We are in a position we never intended," he says. "One generation has lucked out and generations coming after are not only doing much worse, but paying for the older generation." He asks whether the government can and should sustain the "triple lock" which makes the state pension rise much faster than other benefits. And he argues that the inequality between generations is now entrenching inequality within generations. Producer: Helen Grady
Interviewees: Torsten Bell, the Resolution Foundation Angus Hanton, the Intergenerational Foundation Baroness Ros Altmann, former pensions minister John Kay, economist Joanne Segars, Pensions and Lifetime Savings Association Baroness Onora O'Neill, philosopher Frances O'Grady, Trades Union Congress Ben Page, Ipsos MORI.
Transcript
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| 0:00.0 | Thanks for downloading analysis from the BBC. |
| 0:03.0 | Governments have a bond of trust with the people, |
| 0:05.0 | and that means they should honour their promises. |
| 0:08.0 | But are there exceptions? |
| 0:10.0 | Paul Johnson, director of the Institute of Fiscal Studies, asks if the time has come for the state to break a promise with the people. |
| 0:17.0 | Politics is difficult. Very rarely is there one course of action which will satisfy everyone. The government, we as a society, have to make |
| 0:27.1 | trade-offs and it helps if we do so in as honest and open a manner as possible. In this program I want to ask a big question. |
| 0:36.6 | What happens when the cost of keeping a public promise becomes too great? In particular, I want to look at the consequences of the promises we've made to one |
| 0:46.2 | generation of people, the baby boomers, those between their mid-50s and mid-70s, |
| 0:51.8 | broadly the generation which has on average benefited from booming house prices |
| 0:56.4 | and generous pensions. To understand why we even need to ask this question, let's start |
| 1:02.1 | with a few remarkable facts laid out here by |
| 1:04.8 | Torston Bell, director of the Resolution Foundation. We've got an older |
| 1:08.8 | generation who overwhelmingly now own their own homes. Many of them have actually paid off their mortgages, |
| 1:14.0 | and they've seen very big house price rises |
| 1:16.0 | while they've owned their own homes. |
| 1:18.0 | They are then, in some cases, renting out homes |
| 1:20.0 | to a younger generation who overwhelmingly don't own. |
| 1:22.0 | And what about incomes? younger generation who overwhelmingly |
| 1:23.4 | incomes |
| 1:24.8 | we've got a young generation |
| 1:26.6 | that has borne the brunt of the reductions in earnings that took place during the |
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