by George Freeman
There are two numbers that should strike fear into the heart of policymakers. First, a recent report from the Resolution Foundation that shows 53 per cent of millennials think they will be worse off than the previous generation. Second, a majority of voters under 40 when polled now view capitalism as more of a threat to their life chances than socialism.
As David Willetts described in his brilliant book The Pinch: How The Baby Boomers Took Their Children’s Future, the millennial generation, thanks in no small part to the effects of quantitative easing (QE) which have driven house price inflation, have seen a massive transfer of wealth from the young to the old, pricing them out of the chance to build up any asset base, and condemning them to burn the majority (in Greater London) of their net income on rent.
As a One Nation Tory MP for a low-income constituency, quite apart from being a father of two children soon to leave home, this is not an acceptable status quo.
The prevailing view in Whitehall is that we should sort out Brexit first and then return to domestic policy once the deal is settled. I could not disagree more.
We need to recast Brexit as a moment of much bolder, inspiring domestic renewal to tackle the burning injustices that in many areas drove it. If we don’t, we will fail to deliver for the voters we serve.
There are huge structural issues we need to face: the national debt, the stubborn structural deficit, the funding of our Armed Forces, the provision of modern health and social care and others.
But now is the moment to recognise that the intergenerational asset gap is the major domestic policy challenge of our time. Bigger than Brexit and with consequences that could be even more profound. Unaddressed, we risk an entire generation under forty rejecting not just Conservatism, but capitalism too.
That’s why I believe we need to think seriously, and fast, about a New Deal for a New Generation.
How? First, we need to renew popular support for a 21st century model of capitalism that works for everyone. That means unleashing a renaissance of positive, compassionate, generous, inspiring enterprise to shake up failing markets, dramatically expand the shareholder base, and give millennials a real stake in their future.
If we simply offer Corbyn-lite they'll vote for the real thing. Rather, we must offer practical but bold reforms. Reforms such as scrapping the indefensible 6 per cent compound interest rate on student loans. Or tax relief for those paying over 50 per cent of their income on rent? Or a commitment to restore the National Insurance Fund for the millennial generation and pay for social care instead from a fairer and more equitable tax on the property values inflated by QE?
Second, we need to rethink and redouble the boldness of our housing policy. The new dividing line in British politics is between those who have been lucky enough to own assets – principally a house – through the boom years and those who now see little prospect of ever being able to.
Many millennials are now spending everything they have on renting properties from baby boomers who’ve benefited from a generational boom in house prices, as the IFS has recently demonstrated. This is a breach of a basic social contract. We should always put the interests of hard-working grafters over lazy asset wealth accruing from the state.
The time for timidity on housing is over. For the last 20 years, long before becoming a Member of Parliament, I have argued that our planning model is fundamentally broken. I believe we must embrace bolder reforms to tackle the real need where it exists.
Why not take compulsory purchase powers with proper compensation for landowners, to build a new town in every home county, instead of allowing lazy dumping of housing estates in our towns and villages? Even better, build them on railway lines and use the profits to fund the infrastructure we need. Allow our big city mayors to each raise a £1bn infrastructure bond, backed by local assets.
We also need tax breaks for companies and councils who provide houses for their employees. That's why I've been calling for a new model of incentives in planning and across the public sector, so councils keep and reinvest a portion of their savings to boost infrastructure.
Let's also look at new measures to stop companies landbanking to speculate and drive up their own profits.
Third, given the deepening disillusionment of millennials with traditional party politics, we need to embrace major party reform to address the growing disaffection with old-fashioned machine politics.
That’s why I and a team of non-party entrepreneurs launched the first Big Tent Ideas Festival and the new Capital Ideas Foundation last year to energise the intellectual and cultural fightback for a “Beyond Brexit” policy reform programme.
The Big Tent 2018 is returning this September bigger and better than ever, and the Capital Ideas Foundation being endowed by entrepreneurial reformers to commission major research into the key areas of policy renewal, including housing, tuition fees, opening up cosy utility markets to new entrants, new technology that empowers consumers and gives millennial voters a stake in the capitalist system.
To be in office at such a moment is a privilege, not a right. Instead of continuing the EU Referendum campaign, we should be discussing how to make Brexit a moment of inspiring one nation renewal, and not a hard UKIP-style Brexit that risks prolonged austerity.
In all our party’s defining periods – whether on free trade in 1830, the Poor Law reform in 1832, Disraeli’s mass enfranchisement in the 1860s or Thatcher’s reforms in the 1980s – Conservatism has never been about blindly defending a failing status quo, but always championing the generational disruptors who see the future and reshape our politics and economy towards it.
Let us demonstrate that we remain as hungry to reform our country as we did when we entered office eight years ago, and as visionary and impatient as the PM's landmark speech on burning injustice when she entered Number 10.
There is a new generation out there looking for a fresh vision and bold cultural lead. We are in power not just in office. Now is the moment to act in their interests. To restore what has always been a sacred covenant at the heart of Conservatism: to leave our inheritance better for the next generation. Let us not be the generation who fail that test.
George Freeman is the Conservative MP for Mid Norfolk