The long-term problem for "generation rent"

We need to stop relying on home-ownership as the only way to build wealth if we're to have an adequa

It's been a bad few weeks for social care. First the faltering of Southern Cross, then Panorama's revelations about abuse at residential homes. Now, the Equalities and Human Rights Commission reveals shocking levels of neglect among older people cared for at home.

Coming on top of a set of daunting demographic trends, it all means Andrew Dilnot's review of social care funding - due out in early July - could not be more timely. As things stand, Dilnot's proposals don't offer the sustainable solution they claim to. That's because they're based on an assumption of home ownership that's becoming obsolete for many ordinary families.

One of Dilnot's central recommendations is expected to be that individuals should pay for their own social care up to a lifetime cap of around £50,000. After that, the government will step in to insure people against catastrophic costs. Analysis by researchers at the University of Kent estimates average lifetime costs for residential and community-based social care at around £18,650 for men and £41,350 for women. In other words, in most cases, government won't be called on at all. As in the current social care system, under Dilnot, most people will pay for the care they need themselves.

Because few people have ready access to £50,000 in savings, Dilnot's recommendation is predicated on people releasing equity from their homes. On the upside, this means people can stay in their own home into old age while making use of their house as an asset and relieving the government of some expense. As today's asset-rich baby boomer generation nears retirement, that all seems sensible. The question is: how many of the old in future generations will have a home to draw on?

Far fewer than today. One million new households have become renters since 2005. That brings the total number of households in the private rented sector to nearly 3.5m. Although most older people on low-to-middle incomes still their own home, the percentage under 35 who are renting has tripled since 1998.

No-one can predict what will happen to house prices in the long term, but trends like these make it is possible that we are at the beginning of a major shift away from home ownership. In line with other European economies, long-term renting could become far more common. That poses a major problem for a care policy premised on equity-release from a home.

Housing is only one type of asset that people could use to pay for their social care. Other assets, from pensions to savings, could do the same job. Today, few ordinary families have much in the way of these non-physical assets. In 2008, just over a quarter of people on low-to-middle incomes reported having a pension. Less than half made regular monthly savings. For those who did, the average amount saved was less than £200 a month.

As a proud, property-owning democracy, we've come to rely on home-ownership as the way to build wealth. We've backed that up with a tax system that treats housing more favourably than other kinds of assets. But if current trends in the housing market continue, the gap between home owners and long-term renters will affect far more than the housing market. If something isn't done to boost other forms of asset-ownership, it could also bring down the social care financing system that we're about to put in place.


Vidhya Alakeson is Director of Research at the Resolution Foundation

Vidhya Alakeson is deputy chief executive of the Resolution Foundation

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Boris Johnson isn't risking his political life over Heathrow

The anti-Heathrow campaigner was never a committed environmentalist. 

A government announcement on expanding London’s airports is expected today, and while opposition forces have been rallying against the expected outcome - a third runway at Heathrow - the decision could also be a divisive one for the ruling Conservative party. A long consultation period will allow these divisions to fester. 

Reports suggest that up to 60 Conservative MPs are against expansion at the Heathrow site. The Prime Minister’s own constituents are threatening legal action, and the former London mayoral candidate, Zac Goldsmith, has promised to step down as MP for Richmond rather than let the airport develop.

But what of Boris Johnson? The politician long synonymous with Heathrow opposition - including a threat to lie down “in front of those bulldozers” - is expected to call the decision a mistake. But for a man unafraid to dangle from a zipwire, he has become unusually reticent on the subject.

The reticence has partly been imposed upon him. In a letter to her cabinet ministers, Theresa May has granted them freedom from the usual rules of collective responsibility (under which cabinet ministers are required to support government positions). But she has also requested that they refrain from speaking out in the Commons, from “actively” campaigning against her position, and from calling “into question the decision making process itself”.  

Johnson is not about to start cheering for Heathrow. But unlike Goldsmith, he is no committed environmentalist - and he's certainly a committed politician.  

Boris’s objections to the expansion at Heathrow have all too often only extended as far as the lives of his London constituents. These local impacts are not to be belittled – in his role of mayor of London, he rightly pointed to the extreme health risks of increased noise and air pollution. And his charisma and profile have also boosted community campaigns around these issues. 

But when it comes to reducing emissions, Johnson is complacent. He may have come a long way since a 2013 Telegraph article in which he questioned whether global warming was real. Yet his plan to build an alternative “hub” airport in the Thames Estuary would have left the question of cutting UK aviation emissions worryingly un-resolved. This lack of curiosity is alarming considering his current job as foreign secretary. 

And there are reasons to be concerned. According to Cait Hewitt at the Aviation Environment Federation, the UK fails to meet its targets for CO2 reduction. And the recent UN deal on aviation emission mitigation doesn’t even meet the commitments of the UK’s own Climate Change Act, let alone the more stringent demands of the Paris Agreement. “Deciding that we’re going to do something that we know is going to make a problem worse, before we’ve got an answer, is the wrong move”, said Hewitt.

There is a local environmental argument too. Donnachadh McCarthy, a spokesperson from the activist group “Rising Up”, says the pollution could affect Londoners' health: "With 70 per cent of flights taken just by 15 per cent of the UK's population... this is just not acceptable in a civilised democracy.”

The way Johnson tells it, his reason for staying in government is a pragmatic one. “I think I'd be better off staying in parliament to fight the case, frankly," he told LBC Radio in 2015. And he's right that, whatever the government’s position, the new “national policy statement” to authorise the project will likely face a year-long public consultation before a parliamentary vote in late 2017 or early 2018. Even then the application will still face a lengthy planning policy stage and possible judicial review. 

But if the foreign secretary does fight this quietly, in the back rooms of power, it is not just a loss to his constituents. It means the wider inconsistencies of his position can be brushed aside - rather than exposed and explored, and safely brought down to ground. 

India Bourke is an environment writer and editorial assistant at the New Statesman.