Photo by Klaus Vedfelt

Callaghan’s island

Britain should fear the departure of its young

Artillery Row

At a meeting of the Cabinet at Chequers in 1974, Jim Callaghan, then serving as Harold Wilson’s foreign secretary, joked, “Sometimes when I go to bed at night, I think that if I were a young man I would emigrate.”

Britain had started the year under a flailing Conservative administration; increasing unease with Heath’s European policy saw Enoch Powell, then an MP, resign from the party. Unable to fix Britain’s sclerotic, overregulated economy and — having been behind in every poll but one for the last three years — the Conservatives lost power before the year was out. 

The country’s problems did not end with the government’s inability to govern. Britain entered 1974 in recession. Amidst stagnant growth, the Oil Embargo saw rising oil prices weaponised as a foreign policy tool, an energy crisis caused by miners strikes resulted in the three-day week, inflation rates topped 17 per cent in a 34-year high and taxes reached an incredible level. The top rate was raised to 83 per cent, but an investment income surcharge raised the overall top rate on investment income to 98 per cent. 

Callaghan was right to be worried about the prospects of Britain’s young — and we should be equally worried about their prospects now. Today, Britain’s young are facing something akin to helotization.

Let’s consider the average UK working age person. The Resolution Foundation found recently that after 15 years of wage stagnation, the poor sod was £11,000 worse off than they should be. After that decade and a half of flatlined living standards, their real income is now predicted to drop 5 per cent by the end of 2023. 

Workers’ income tax burden will have to increase by £15bn a year

They face the biggest fall in living standards on record. The OBR predicts they’ll still be 0.4 per cent below pre-pandemic levels by the end of 2028. That will coincide nicely with the highest levels of public spending since the 1970s, funded by the biggest tax burden since World War Two. 

That is without factoring the pensions conundrum. The effects of an increasing dependency ratio means that workers’ income tax burden will have to increase by £15bn a year, according to the Resolution Foundation. Pensions will weigh increasingly on a workforce already shrinking — and predicted to shrink even more as the youngest boomers begin to retire. That is in addition to supporting the Triple Lock which, far beyond simply entrenching intergenerational inequality, is now more comparable to a direct transfer of wealth from the poor to the rich. 

The fall in living standards does not take into account the single biggest living expense: housing. The average house price is now around nine times the average earnings. The last time it was this high was in 1876. Whilst wages have been flatlining, house prices have risen 20 per cent in the last five years. In 2011, 43 per cent of the 25-to-34 age group were homeowners. Last year it stood at just 24 per cent. As I’ve written before in these august pages, this is having disastrous effects:

As a result of these huge increases home ownership rates are dropping, driven largely by a squeezing of young people out of the market. Since nearly half a million social homes have been lost since 2000, these young people are part of an increasingly large cohort who privately rent — but rents are soaring. Now more than 1.6m people “are living in dangerously low-quality homes, plagued with cold, damp and mould — and without functioning bathrooms or kitchens”.

Despite the extraordinary level of tax they are paying to support extraordinary levels of public spending, the average worker will find themselves relatively short of state support. As Duncan Robinson notes in The Economist:

On average someone born in 1956 will pay about £940,000 in tax throughout their life. But they are forecast to receive state benefits amounting to about £1.2m, or £291,000 net. Someone born in 1996 will enjoy less than half of that figure: a fresh-faced 27-year-old today will receive barely more than someone born in 1931, about a decade before the term “welfare state” was first popularised.

Edward Luce writes in The Retreat of Western Liberalism: “when people lose faith in the future, they fail to invest in the present”. Faced with a future that guarantees little but an increasingly small share of less and less, young people are putting off having families later and later. Sam Dumitriu notes, “If trends continue (and there’s no sign they’re stopping), the average age of a woman giving birth for the first time will be 30 before the end of the decade.” Given that 30 is the age at which female fertility begins to decline, this carries huge potential problems. Fertility suffers a rapid drop at 35 which, when the average age gap between first and second babies is three years and eight months, is dangerously close to when families should be having a second child. 

One of the go-to policy solutions to solve this problem will be increasing immigration because, as The Economist proclaims, Britain “cannot fix its population-growth slowdown without them”. This, inevitably, will complete the most vicious circle. A continued high level of immigration will perpetuate an economic structure that relies on cheap labour rather than capital or human investment, acting as a break on productivity and on wage growth — particularly for the poorest — whilst further driving housing demand. Thus the whirligig of time brings in his revenges.

The helots were a subjugated people, a servile class essential to the functioning of the Spartan state. Although assigned to individual Spartans, their masters could neither free them or sell them; their main task was food production, which allowed the Spartans to become an almost entirely militarised society. According to Strabo, “The Lacedaemonians held the Helots as state-slave in a way, having assigned to them certain settlements to live in and special services to perform.” The helots were tied to the land, however. Britain’s young are not.

Not only is it easier to travel, the world is both bigger and richer

Faced with a future of working for an ever increasingly unfair share of less and less, there is little appeal in staying to shoulder an ever increasing — and increasingly one-sided — burden.

 The Economist reports that conditions for emigration are ripening, with opportunities in richer countries with a more even tax system for younger workers looking attractive, particularly to young and potentially mobile workers. This is already a problem in healthcare, with 50 per cent of the doctors who stopped practising in 2021 intending to go abroad, and one in three doctors trained here going on to leave. “Britain has become a temperate Philippines,” it proclaims, “churning out health-care workers who head elsewhere.”

The appeal of working abroad, meanwhile, is stronger now than in the 1970s. Not only is it easier to travel, the world is both bigger and richer than it was. “Then”, as Ross Clark writes, “anyone wanting to further their careers by emigrating was pretty well limited to the US, Canada, Australia and New Zealand. Now they might look to fast-growing economies in Singapore, India, Eastern Europe, South America.”

The lower friction extends the pool of potential emigres; we often think of brain drains only affecting well-paid, high-flying graduates. According to the Daily Express, however, “Nine police officers a day apply for jobs in Australia” as well. Unless we put serious effort into rebalancing intergenerational dispossession, Britain’s young — of all kinds — will continue to be attracted by emigration.

The grievances of younger generations aren’t driven by a desire to shed their responsibilities entirely, but because the rewards meted out to them are so meagre. As David Willets writes in The Pinch, “there is no revolution against bourgeoisie values. What is happening is that we are finding it harder to achieve them.” The deeply unfair intergenerational distribution of rights and responsibilities has left most of Britain’s younger generation unable to follow the path their parents trod towards solid, secure lives.

Conservatives should be wary of the problem facing Britain’s young. In order to be electable with the pre-retired, they will need to redress intergenerational disparity, giving young people a reason to stay by enabling home ownership and redressing their outsize tax burden — at the expense, if necessary, of more happier generations.

I am perfectly aware that ending the triple lock and means-testing state pensions are not going to happen this close to an election. Nor are they likely to at all, so long as the bloc in receipt of them keeps returning Tory candidates. The path of least resistance for Tories, then, is to increase the rights of younger voters; that means reducing childcare costs and increasing home ownership as a minimum. 

Callaghan’s joke did not end there. After a brief sigh, he added, “But when I wake up in the morning, I ask myself whether there is any place else I would prefer to go.” Britain’s young, like Callaghan, don’t want bright futures abroad; they want bright futures here. They don’t want to own homes abroad; they want to own homes here. They want to pay taxes here, too, but less of them. They want to share this country’s burden, but equally. They do not want to leave Britain, “a crown of glory that cannot fade away, a kingdom that cannot be moved”, to her fate. Responsibilities beget rights, however; we cannot leave them to their fate either.

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