“Financial gifts from parents are becoming increasingly important as young people find it harder to pay for things.”
Bee Boileau, Institute for Fiscal Studies
Easter is a great time for families, and last Saturday’s Money section in The Times recognised this with a double-page spread headlined ‘Welcome to the £14bn Bank of Mum and Dad’. They reported on the Institute for Fiscal Studies research which draws attention to the deep financial support given to sons and daughters and grandchildren: with more than half of this being used for buying and improving properties. Meanwhile investment firm Saltus points out that it's not just for housing: about 30% of those with investments of more than £250,000 are helping adult children with groceries, 27% with transport and 36% with education.
Unfortunately, less than 10% of the UK population have investments of more than £250,000. While this will include many readers of The Times, it does help to explain why life is so difficult for the majority of young people.
Of course, it's right that parents and grandparents should do what they can for their own descendants. However, where this leads to dependency well into their thirties due to the crippling costs of renting, home ownership and student debt, we have to ask whether governments have got their priorities wrong for young people over the past twenty years.
It's for this reason that we put such an emphasis on hypothecation of inheritance levies, to provide starter capital accounts and life skills.
Another Times article, this time by Harry Wallop and buried deep in last Friday's Business section, caught my eye: ‘Bribes for the young would work wonders for the labour market’.
Instinctively I don't like the word ‘bribes’; but in this case it is a bit of a misnomer. He was, in fact, quoting a proposal from Rory Sutherland, Vice-Chairman of Ogilvy Group, who has proposed a substantial discount on tuition fees for school leavers who do not immediately go to university but instead work for two years. Harry Wallop draws attention to the huge rise in the number of young people going to university over the past thirty years, from less than 20% in the mid-1990s to 53% today — and he questions what proportion of that learning offers real value for later life, quite apart from its impact on immediate economic productivity.
When you then take into consideration that the average student leaves university with a debt burden of £45,800 (which, in fact, only 20% will repay in full), you begin to understand the dysfunctionality of generational economics for young people and, indeed, the psychological deterrent for building savings and investment while that debt is still outstanding.
In many cases, of course, a couple of years in the workplace would be sufficient to wean young people off plans for university and would encourage them to get on with the opportunities of adult life — no doubt that's why Rory Sutherland proposes the discount.
But the concept of incentivised learning is not new — The Share Foundation has been applying it for young people in care for years and has recently scaled it up substantially thanks to a donation of over £400,000 from the British Bankers’ Association. On 3rd August 2020 we put forward new proposals for transforming attitudes among low income households with a combination of starter capital accounts and incentivised learning, and it's a key part of the research currently being undertaken in Cambridge into inter-generational rebalancing — which you can hear more about at the SHARE conference on this coming Friday 14th April.
A new dynamism for the young should, however, be accompanied by a new dynamism for the old. There’s been widespread media discussion of Work & Pensions Secretary Mel Stride’s thoughts about increasing the retirement age to 68. It's a political hot potato which will not rear its head before the coming General Election; events in France show how very unpopular it is to raise the age at which pension can be drawn down (although few people in this country would take issue with the French proposal to raise it from 62 to 64).
But life for senior citizens should be more active for their own benefit: if you don't use it, you'll lose it — body and mind.
For example and bringing encouragement in that respect, I was delighted to see my cousin launching a new initiative in fashion: henriettaroyledesign.co.uk, offering a sense of style and purpose to those in mature years. She demonstrates how fresh ideas and personal initiatives can open so many doors of opportunity.
That's why it would be well worth while balancing just a small proportion of the twenty years of training which we provide for the young with helping people approaching senior citizenship with guidance on how to live life to the full, when they’re ready to say farewell to a conventional nine-to-five work pattern.
As we approach installing the British crown on the head of a septuagenarian in just under a month’s time, it is well worth celebrating old age: but it's also important to focus on giving young adults, especially those from disadvantaged backgrounds, some assets and tools with which to achieve their potential as they progress through their working life.
Gavin Oldham OBE
Share Radio