The Bank of Mum and Dad (or BOMAD to give it a businesslike acronym) is a bit of a misnomer, is it not? It conjures up an image of cigar-smoking fat cats making a quick buck off the backs of the less fortunate, when in reality, it’s just frazzled couples in the midst of mid-life crises cobbling together a few thousand pounds to allow (force) their grown-up children to move on.
Perhaps in London, where multi-million pound properties are par for the course, it is different. Certainly, since research from Legal & General and Cebr revealed parents were expected to be involved in 25 per cent of UK mortgage transactions this year (handing over a total of £6.5 billion – a 30 per cent rise on 2016) there have been expressions of resentment over unearned wealth and rentier capitalism.
No doubt there are some super-wealthy parents, eager for fresh investment and willing to charge their children colossal interest rates. But from where I’m sitting, most seem to regard subsidising their offspring into adulthood as more of a burden than a business opportunity.
Ordinary people from working class backgrounds who grafted in the hopes of a more comfortable life (and isn’t that what social mobility was all about?) now find themselves trapped between the needs of their children and elderly parents, with their own retirement receding into the distance. The last thing they want to do is to risk renewed penury in an effort to give their kids the same life chances they had: to live independently; to raise a family; to get a foot on the first rung of the property ladder. But with home ownership perceived as the Holy Grail, and a whole generation priced out of the market, they feel they have little choice .
This is not to suggest children born into families with accumulated wealth are not at an unfair advantage; of course, they are. Nor that their parents haven’t benefited at the expense of others. Today, 63 per cent of all the nation’s housing wealth is owned by the over-55s, while the over-85s hold more housing wealth than everyone under the age of 35 (which is why the Bank of Grandma and Grandad is also crucial). Private landlords too have profited from the boom, making £177bn from house price increases between 2010 and 2015.
Though an unstable job market means they do not necessarily have it “easy”, the children of homeowners have access to financial streams unavailable to their less affluent peers. As a result, they are more likely to become homeowners themselves, while their peers stay at home or rent (often at inflated prices). Another report, which drew on data from Cambridge and Anglia Ruskin Universities, found just 10 per cent of households without any formal education qualifications over two back-to-back generations felt they could give their children financial help.
In areas of deprivation, a dearth of social housing and a failure to crack down on unscrupulous landlords has led to overcrowding and slum conditions. Those with no roof over their heads huddle in city doorways. Some – like 28-year-old Matthew Bloomer, who slept rough in Glasgow – die there. Inter-generational inequality increases. And there is nothing fair about any of it.
As a society, we are reaping what we have sown: the death of heavy industry, poor housing policies, the erosion of trade union rights and the concomitant rise in exploitative working practices, and the emergence of what economist Guy Standing has christened the Precariat – a social class whose lives are defined by insecurity and whose fluctuating income means they can’t secure a traditional mortgage.
We cannot fix this simply by targeting existing homeowners (although raising inheritance tax would help limit the amount of unearned wealth that passed down the generations). Nor can we blame them for trying to compensate for flaws in the system. Arguably using their savings to give the next generation a leg-up is preferable to spending it on cruises while branding millennials lazy.
What we need is radical new policies that will create more opportunities for young people from across the social spectrum. With 910,000 people in the UK now said to be on zero hours contracts, the Westminster government could follow New Zealand’s lead and ban them (but it won’t).
Standing has another idea to make the lives of young people more secure: the introduction of Universal Basic Income – a guaranteed minimum sum which would be paid to everyone regardless of their employment status. However, while a couple of Scottish councils had voiced an interest in running pilot schemes, the concept has had a negative response from both the Conservative and Labour parties.
Conceding the housing market in England was “broken”, the UK government recently set out a series of reforms in a White Paper. They include forcing local authorities to draw up realistic housing plans and offering incentives for pensioners to downsize.
The White Paper also commits to slashing the maximum time developers can sit on a site with planning permission without building anything, from three years to two.
But there is no suggestion the government will go so far as to release Green Belt land, leading critics to dismiss the whole thing as a damp squib. A 2015 report by the Adam Smith Institute suggested a million new homes could be built on just 3.7 per cent of the Green Belt within walking distance of a railway station.
In Scotland too, there has been equivocation. The SNP has invested £1.7bn in affordable housing, with more than 30,000 affordable homes built over the last parliament. But it missed out on a 2011 manifesto target to build 6,000 new socially rented houses a year. It has also failed to sign up to Inside Housing’s Cathy at 50 campaign to halve rough sleeping by 2020 and end it by 2022, and to a pledge for a new national homelessness strategy.
The UK and Scottish governments are aware of the scale of the crisis. It won’t be solved by tinkering round the edges. If we want the Bank of Mum and Dad to shut its doors – and all young people to have equal access to affordable accommodation – they must be prepared to commit to bold and politically risky action. Because, as Shelter says, those who lack a decent home need help tomorrow – not in 10 years’ time.