“Education is what survives when what has been learned has been forgotten.”
YouGov conducted an interesting survey last week on the extent to which different sectors can cope with home-working. Not surprisingly, desk-based activities such as IT and professional services featured strongly, while manual, leisure and retailing activities offered little opportunity.
That’s why the furloughing of employees offers real hope to the UK economy: contrast this with the United States, where the unemployment rate is reaching for Great Depression levels already, after just a few weeks of the lockdown.
Education comes out at 39% in the YouGov survey: not good, but offering some insight into the potential. My guess is that if this were broken down into subject headings, financial education would be one of the areas best suited to home working.
So in this commentary we look at intergenerational rebalancing through the lockdown lens: not just the opportunity to learn these essential life skills, but also for parents to explain to their teenage children what resources they can look forward to, as they cross the boundary into adulthood.
In the United Kingdom, it is now just over four months before the oldest recipient of a Child Trust Fund will get access to their account. Between 1 September 2002 and 2 January 2011, the government seeded six million of these individual accounts: so this means that each month approximately 60,000 new adults should get access to their money as they turn 18, as from September, for the next eight years.
Out of that 60,000, about 17,000 were opened by HM Revenue & Customs because their parents had taken no action within one year of birth. Nearly 14,000 (85%) of these accounts remain lost to the young people concerned, and that’s why The Share Foundation has a major campaign running with a simplified search facility, find CTF.sharefound.org, which will continue for the next eight years. Anything you can do to help, by raising awareness among 16 and 17 year-olds, would be appreciated.
However, 44,000 were opened by parents, mainly invested in the stock market; and, notwithstanding recent share price falls, they are worth c. £1,500 on average. Over the next few months CTF account providers will start writing both to parents (as registered contact) and to the young beneficiaries to explain the choice they must make for their account as they reach 18.
So why not use the opportunity of the lockdown to explore the best way forward for any 16/17s in your family? We’ve put together a short online slide display to help you talk it through with them.
Of course, there’s a lot more to money than a savings/investment account. It broadens into the whole spectrum of financial awareness, and our ‘Managing My Money’ course is ideal for that: sixteen audio broadcast episodes, complete with slide displays, in a course developed by the Open University and put into entertaining audio by Share Radio.
Each pair of episodes has a quiz to follow, and by incentivising these at, say, £10 each with a £20 bonus for completing the course, it’s a great way of rewarding children or grandchildren with £100 for something really useful to help them in later life. If your email address is added as a third-party referee, you’ll get regular progress reports. A thoroughly useful use of lockdown time!
Intergenerational rebalancing is not just about Child Trust Funds and financial education: it’s also about having a good think on the whole question of inheritance. My preference would be for ring-fencing the £5 billion per year which is raised through the inheritance levy (IHT), so that it provides a targeted asset-based start-up for the most disadvantaged young people - rather than being consumed in general public expenditure. However, it’s hard enough getting hypothecation accepted in normal times without attempting to achieve such a radical change in policy during the virus emergency.
But that’s no reason not to take a look at one’s own will, and many people are doing just that in this challenging situation. You could help make a move towards intergenerational rebalancing by setting aside an allocation in your will for The Share Foundation’s programme of incentivise learning for looked-after young people: a six-step program called the ‘Stepladder of Achievement’.
We will emerge from the long shadow of the coronavirus, and this whole area of how to cascade wealth down the generations is one which could benefit from thought at all levels: personal, voluntary donations and government policy. In economic structural terms, it is a key part of retaining a vibrant capitalist economy in which all can benefit, because it is the ratchet which ensures that each generation gets the opportunity to achieve their potential, right across society.
My hope is that Gordon Brown’s and Ruth Kelly’s initiative in launching the Child Trust Fund will show the world how it can achieve intergenerational rebalancing within a vibrant capitalist economy, and that governments across the world will see what has been achieved, and seek to emulate it. For we cannot just leave debts to our descendants, which so often results in hyperinflation and war for their resolution. We must find a better way forward, and intergenerational rebalancing is a good place to start.
Gavin Oldham OBE