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A Quiet Discontent: Students And The Cost Of Living Crisis

Features editor Fred Taylor contrasts the government’s approach to pensions and maintenance loans during the cost of living crisis and argues that the system is rigged against young people.   

The cost of living crisis has gripped the country and dominated news cycles over the past year. From Tory MPs boasting about the availability of 30p meals to Liz Truss’ farcical 6 weeks in office, it seems like we have heard all there is to hear about the crisis and that nothing can make this unpleasant predicament seem any worse. But young people’s side of the story has, as usual, not yet been heard. Ignored by the media and politicians alike, students across the country, and especially in the capital, have had to battle through the “winter of discontent” and the ensuing spring on their hands and knees, risibly ill-equipped to bear the burdens of soaring living costs. All we’ve been able to cling on to is the hope for a brighter future.

Looking further, we can see that beyond this woeful mistreatment of young people lies an entire system which does not consider the interests of the young. Through every strenuous step society has made over the last few years, students have been given nothing more than a passing glance, while older residents have been coddled by the state as much as possible. What we are left with is a country that promises little future for the young.  

Take state pensions, for instance. While the government has been largely inept in providing assistance for a large swathe of its citizens during the cost of living crisis, it did take some decisive action for old-age pensioners. Despite Truss’ usual antics, trolling them as to the existence of the triple lock on the state pensions for a couple of days, state pensions were ultimately raised by 10.1%, the highest rise ever. This cost around 11 billion pounds. A similar raise will be replicated next year- expect perhaps £8 billion or so extra to be paid out to the over 66s.

In principle, there is no issue with retirees getting a pension increase to meet their needs in difficult times. The problem here is that the state pension is not means-tested. A fourth of UK pensioners are millionaires and more than half are worth more than half a million. At a time when public money was hard to come by, the state directed its last few shekels straight into the pockets of the financial elite. Adding insult to injury, given that more affluent citizens tend to live longer, in the long term, they will receive more money from the state pension scheme than lower-income people, who need the money far more. 

Take the example of two individuals earning £30k- one is a young graduate employee and one is a pensioner. The graduate employee will be taxed at £3.4k, will pay £2k in national insurance contributions (NICs) and £245 in student loan repayments. An old-age pensioner earning the same amount in capital gains would pay just £3.1k to the state. If they were working, they would pay £5.6k. In both cases, they would receive a net positive from their interactions with the state due to the state pension. In the former, they would be up £7.4k, in the latter £4.5k, compared to the loss of £5.6k the young person suffers. How is this fair? 

The system is often justified through the idea that, as pensioners have put money into the system for their entire lifetimes, they now have the right to take out money, no matter their personal circumstances.

This confuses the state pension as a right to money instead of a right to not need to work to survive after a certain age. If the pension were a right to money, then pensions would be a lot lower than they are. The average pensioner deposits £138k of NICs into the system but comes out with £213k (adjusted for inflation). If the pension is justified on the basis that pensioners are simply taking out the same money which they deposited throughout their lifetimes, then the pension would have to be incredibly small. Another problem with this argument is that no other tax is justified on this basis. If we look at the tax a millionaire pays, it is clear that they know they will likely never reap any benefit from their contributions to the treasury. The advantage is situated in the hypothetical that they lose their wealth, suffer expensive injuries, or experience a disability… and the advantage, both moral and economic, of forging a collectively better-off society. The millionaire knows that, if all goes well, he will never see the pennies he has given to the state back in his personal piggy bank, but he nevertheless pays the tax. This is the universal rule of taxation endorsed by everyone bar a few loony libertarians, so why should we veer from this sacred principle in the case of pensions? 

Mind you, I’m not advocating for the removal of the state pension or promoting an Orwellian fantasy akin to carting Boxer off to the slaughterhouse once past his prime. Citizens over the age of sixty-six should have the right to survive without needing a source of income. But if they do have streams of income, they should have to pay a similar tax rate on it as the rest of the population. Perhaps there should be a discount in order to not overly discourage them from financial activity, but they should not receive a net benefit. They always have the comfort that, if they ever do lose their sources of income, they have a pension to lay back on. 

We have incredibly low state pensions in the UK- the state income for seniors is almost half the average state pension in France. Many senior citizens need to work well past their retirement age or claim benefits due to low pensions. Yet we somehow spend a copious quantity of money on pensions- 11% of the national budget, 124.3 billion pounds. The average pensioner earns £314 a week before the state pension is added to this, and, as mentioned above, many boast of vast private wealth. The benevolence the state has shown these rich pensioners in trying times is totally unjustified. 

Let’s contrast this generous approach to the approach the government has taken with regard to students. In 2022, the maintenance loan in England rose by only 2.3%, a real terms decrease of 7.2%. Keep in mind that this is a loan, not an outright payment like the pension schemes. The Joseph Rowntree Foundation set the minimum income to live at an acceptable standard at £25.200 for a Londoner for 2023. After tax, that is £1.7k per month. Students in London get 1.58K a month – £125 pounds less than needed to reach the bare minimum- a quantity that can definitely not be saved by buying cheaper baked beans, as one Tory MP suggested

The government also put aside an additional £15 million to increase the student hardship fund. At almost 3 million higher education students in the UK, that’s £5 each. And while you may think that that isn’t much, where you see a fiver, Lee Anderson sees 17 meals.

At the same time, we are being charged 7.1% interest on our student loans- 5.6% more than last year. We are expected to bear the loss but we are not allowed to reap any reward. 

These policy failures have had severe consequences on the livelihoods of students. 42% of UK students are living off £100 or less per month. 77% of those that may have been lucky enough to rely on family income have seen this flow reduced by the cost of living crisis. 40% of students are relying on their savings to get by. 52% of students are having to cut back on food. 11% of students are relying on food banks. 75% can’t afford educational materials in their course. 31% are cutting back on healthcare such as dental appointments. 20% have missed classes because of rising travel costs. 33% are using credit cards for everyday expenses. 

Overall, the number one cost students are cutting back on is socialising, followed by luxury items, clothes, holidays, food, heating and transport. Many students have also reported a need to work high hours just to fund their day-to-day spending, meaning that both their studies and their social life are sacrificed at the altar of government mismanagement. 

Everyone has had it hard over the past year. But so much public money has been spent on ensuring rich pensioners don’t have their streams of income cut off, while so little has been spent on ensuring student wellbeing remains dignified.

Students are forgotten by politicians and our needs are not taken into account when decisions are made. The policies enacted during the cost of living crisis reflect the prevailing attitude amongst the older generations that students don’t deserve any more than the bare basics (or even slightly less than that). We’ve all heard that one grandparent say “you think you have it hard”, going on to cite how they went through hell to earn a living, conveniently leaving out the fact that property cost only three times annual salaries then, compared to seven times today. Or that university was free in their times and came with an ample government grant, instead of a loan which has to be repaid. 

It does not make moral or economic sense to treat young people with such contempt. Morally, young people are going to provide the pensions and healthcare costs of future generations, so ensuring that their university experience is as joyless and hellish as possible makes no sense. Economically, we must remember that, as much as Suella Braverman would like, there is no wall surrounding the border of the UK, meaning that students are free to leave the country once they graduate. British citizens are entitled to work visas in New Zealand, Australia and Ireland, and skilled graduates, especially doctors, can easily get one in the US or Canada. Why would a graduate who has witnessed the lack of interest the government has in young people decide to stay? Maybe out of love for a homeland or personal and family relationships, but if the government were on a mission to fuel skilled young people with as many reasons as possible to leave Great Britain, then they would be right on track.

When, for just a second, it seemed like pensions were not going to be given the triple lock, there was a small outroar within the Conservative and Labour Parties and the media. They immediately feared how their older voters would be able to get along without such a raise. However, when it was recently announced that the student loan repayment threshold would be frozen this year, the uproar amongst MPs was unnoticeable. When the government decided that the threshold would come down to £25k from 2027 onwards and the repayment period would be extended from 30 to 40 years, there was no backlash.

Armed with archaic beliefs on young people’s place in society, it is not an exaggeration to say that politicians have destroyed the university experience of many students who do not have ample wealth to sit back on. Our system relies on keeping the ever-dwindling number of young people- who have a career of work (and taxes) ahead of them- inside the borders of our country for their working career. The inevitable consequence of a continuation of policies which scare the young away and transfers wealth into the pockets of affluent senior citizens will lead to an economic decline for everyone.

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