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Is Edwina Currie right about the young?

Edwina Currie, the ex-Conservative politician and ex-lover of John Major has an opinion piece in the Saturday Telegraph and the website that suggest the spending habits of the young are responsible for their inability to save for buying a house and save for a pension. (See the original article at http://www.telegraph.co.uk/finance/personalfinance/pensions/12102364/Hey-youngsters-No-pension-No-home-No-wonder.-Look-at-you.html.

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As probably one of the last of the “Baby-Boomers”, (born in 1963) and having a son of 17/18 years old, I can see two sides to this point and I would suggest that blaming the young is just lazy thinking. Talking to my younger clients suggests a degree of financial stress relating to housing, educational costs and travel, without looking at the luxury goods that Ms Currie suggests they are spending money on.

Edwina is of the generation that got free education to graduate and even post-graduate level, higher levels of social mobility, more generous levels of social housing, rent controls, periods of full employment, large employers that expected staff to stay for their whole career and more prevalent final salary pension schemes.

To be a young graduate in London, Birmingham or Cardiff is to be someone paying out a third to a half of their net income in housing costs, a quarter to a third in travel costs, (housing and commuting costs seem to balance out a little), having to pay off student loans on courses that varied widely in quality, before you worry about saving for a house deposit or posh shoes!

For the out of touch political classes, renting a property is not a soft option; the tax system is biased towards owner-occupation, short term leaseholds and the variability of landlord quality make regular moves and the associated costs almost compulsory and simple things like decoration to your own taste becomes impossible or expensive.

To criticise the young for moving jobs on a regular basis to misunderstand the modern job market; many employers will take not moving regularly as a sign that you are past your best and are now cruising to retirement. In any case very few employers have internal career structures, so if you want to get on, you have to seek pastures new.

For the young presented with the current world of work, it does seem that the previous generations have taken the best that was available, benefited from it and taken the ladder up with them as they went.

As Edwina Currie is no longer part of the government, it would be unreasonable to blame her for the country’s ills, but central government, over the last 30 years has failed to make the best of the resources it had to hand and to plan sensibly for the future. Much of the housing crisis is driven by factors that were identified decades ago and were shunted into the long grass as being “too difficult”. An increase in single person households, a larger population and migration into South East England are not surprises and could have been addressed years ago. The current pensions squeeze, where the State Pension has become the majority of welfare spending was flagged as an issue in the early 1960’s and successive governments have avoided the issue until recently. As the old vote in greater numbers, they make an effective pressure group!

The problem for all social groups and ages is that we have to deal with the situation as it is, not as we would like it. If the vast sums spent in Quantitative Easing had been spent on social housing, then I would suggest that some of the pressure on the housing stock would have been reduced, rents stabilised and the people who want to move from rented accommodation to owner-occupation better able to do so.

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Categorized: Mortgages , Pensions , Retirement Planning , Savings and Investments
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