“It has been long in narrative but short in significant investment,” says Roger Marsh, chair of NP11, a group of 11 northern local enterprise partnerships. “There is a chance now to show that their words have true meaning.”
While entrenching support in the North with huge investment will be vital in the next election, future votes will hinge on persuading young Britons to take the leap from Labour. On this front, the Prime Minister is facing inequality almost as deep-rooted as those seen between regions.
The generational divide
Britons born in the 1980s will be the first generation not to have higher income in their 30s than those born a decade earlier, while just 40pc will own a house, compared to 55pc of 70s-born adults, according to the IFS. The young have been trapped in rental properties by a housing market inflated by policymakers, are burdened with a pile of student debt and face a more insecure jobs market.
“Younger generations have given up their education, jobs and livelihoods in order to protect older generations during the pandemic,” says Liz Emerson, co-founder of the Intergenerational Foundation. Deutsche Bank analyst Henry Allen says this “widening generational divide should be a key source of alarm for investors, financial markets and society as a whole”.
“This anger is manifesting itself into political outcomes, with elections around the world increasingly fought along generational lines.”
With Sunak signalling on Thursday that he is closing his battered chequebook as debt surges past 100pc of GDP, someone will have to pay to close gaps. Behind the scenes the Chancellor has pushed for the ending of the triple lock on state pensions introduced by the Coalition in 2010. Treasury documents leaked to The Telegraph on Sunak’s options showed that ending the triple lock would produce savings of around £8bn a year.
Campaigners want the Government to go even further with a major reshaping of the tax burden. “It’s time for tax policy to be balanced more fairly so that the young are not left to foot the bill for the economic carnage,” says Emerson.
Levelling up
The Intergenerational Foundation is calling for a greater emphasis on taxing assets over income, as well as moving more of the tax burden from earned to unearned income. That shift could mean charging national insurance contributions on the estimated £130bn of rental income, for example.
Most controversially of all it also pushes for the scrapping of capital gains tax exemptions on main residences, grabbing a chunk of the hefty rise in house prices seen by property owners over previous decades.
Chris Sanger, head of tax policy of EY, puts forward other potential measures, such as a higher personal tax allowance for younger workers, or changes to pensions which match the reliefs on money going in with the tax paid on the income that eventually comes out.
Whether the Prime Minister will have the political nerve to sanction such measures – even with an 80-seat majority – and enrage his political base remains highly doubtful.
In recent days the Government has tabled legislation to ensure the triple lock is in place next year. But Allen soberly concludes: “A further widening of this intergenerational divide could eventually see an electoral coalition assemble that turns radical policies to remedy this situation into reality.”