Can the COVID recovery tackle intergenerational injustice?

This blog was written by CfEY’s newest recruit, Baz Ramaiah

The COVID-crisis has badly damaged the long-term life prospects of young people and the government must act to help them. In this blog I suggest a way forward through two simple policies that can increase access to education and housing for young people while reducing inequality between generations.

What’s the Problem?

Low Pay

“Youth is wasted on the young”, or so the saying goes. But young people face substantial challenges to making the most of their youth. At the end of 2019, people aged 18-25 were much more likely to be stuck in low-paid work than older generations were when they were the same age.

Then 2020 happened. Young people have been on the sharp end of the economic crisis brought on by COVID. They are more likely than older generations to have lost work or pay: 1 in 10 young people have lost their job and a third have been furloughed or otherwise had their pay reduced. What’s more, early career unemployment leads to lower wages over the course of a lifetime. Research by the Resolution Foundation shows that this risk of lifelong lower pay can be mitigated through enrolment in education – but only if you can afford to study.

Low-quality Housing

TV has tricked us about young peoples’ living arrangements. We expect them to be sprawled out in spacious Friends-style flatshares. But this is pretty far from the facts.

Young people, even if they are in work, are more likely than older generations to live in overcrowded, low-quality housing. They’re also more likely to endure a long commute to work and typically spend a higher proportion of their pay on rent.

While the young may seek to escape these housing problems by buying a home, they can only do so through low deposit mortgages. But all low deposit mortgages have been withdrawn by brokers and their issuing taken off the table while economic uncertainty persists. This suspension puts a stop to young peoples’ hopes of getting on the property ladder anytime soon.

These problems – of education and housing – make life difficult for young people and increase inequality between generations. This ‘intergenerational injustice’ isn’t just a problem for the young. Research suggests that increasing inequality in a society leads to higher rates of crime, physical and mental health issues, and lower levels of trust in institutions.

The Way Forward

To stop this increasing inequality, young people need access to education to improve their lifelong pay and housing to increase their standard of living. Two readily actionable policies can support this.

Learn from home, for free

Educational support for vulnerable young people during and after COVID-19 is crucial, as described in our CFEY report on the subject. The good news is that young peoples’ interest in education increases during recessions and participation in education can negate the impact of unemployment on wages. But the low-paid and unemployed often lack the money required to enroll in education.

Thankfully, there are already thousands of free online courses offered by universities and training providers. The problem is that these courses, even when offered by prestigious institutions, are scattered across the internet and difficult to find on Google without knowing the right search terms.

With this problem in mind, the Department for Education should set up a website where free online courses can be listed and searched through based on subject, provider, course outcome and other criteria. This is surprisingly simple – the underlying technology for this platform lies in the DfE’s Teacher Vacancy website, which could be cloned and re-formatted at pace for this new purpose.

Many free online courses issue certificates after completion or have other means of recording engagement, removing the need to set up a formal accreditation system. Resources could instead be pushed towards marketing the new website towards young people.

Once an appetite for this flexible online learning is demonstrated, the government could consider the creation of a national online FE college, modeled on Oak National Academy.

Get a home

Regulatory policy could be used to reduce intergenerational inequality by allowing more young people to access decent housing.

The Financial Conduct Authority has shown its willingness to rethink mortgage regulation in response to COVID, expressing concern at the 33% drop in mortgage-issuing over the course of 2020. The FCA should go further by requiring brokers to issue a fixed proportion of their mortgages as low deposit offers to young people. This would address the high cost of deposits that are the main barrier young people face to getting a mortgage. This policy would provide an economic boost, increase young peoples’ access to higher-quality housing and reduce economic inequality between generations.

Final Thoughts

To stop intergenerational inequality in its tracks, the government needs to increase the access of young people to free education and decent housing. With such opportunities young people, and the nation as a whole, can make the most of what youth has to offer.