To create more millennial homeowners, government should forget ‘Generation X’

Good luck. Image: Getty.

Do you remember when a Freddo bar cost 10 pence? Brexit was in the same league of minority pursuits as Warhammer, you could get a maintenance grant to help with living costs at university, and a young family could save for a typical mortgage deposit in three years. For the young, it all just about worked.

Today a Freddo bar costs three times that amount. A maintenance grant is now a loan. It takes sixteen years longer for the same family to save enough money to secure a mortgage for the same house. Politics seems to move in a direction opposite to the life trajectories that began during and after the 1980s.

While most goods and services have become quicker and more accessible, the time it takes to save, and then pay, for the same products – a house, an education, a chocolate bar – has slowed and been made more difficult with less assistance from the state. Often they are rented instead.

Your granny’s pension shouldn’t be reduced to fund free university tuition. Neither should government adorn people with baubles because they were born after England won the world cup. Yet government can take a more supportive role in young people’s deposit saving; shortening the time it takes to save for a deposit without deforming the structure of the housing market.

Currently there is a black hole in young people’s deposit savings. Recent research from Localis finds that, of those who do not own their home, only 30 per cent of 25-49 year olds and 21 per cent of 18-24s are saving towards a deposit each month. Whether driven by stagnant wage growth, increased consumption or both, these figures show the vast majority of people are building no financial capacity with which to get a mortgage in the future.

Meagre deposit savings is just one issue holding back young people from buying a home. So do stringent lending criteria and unaffordable house prices.


Yet deposit saving is an issue government can immediately address in the upcoming Budget. The pension auto-enrolment scheme could be tweaked to allow employees aged between 18 and 40 to choose for their contributions, their employer’s and the state’s to be directed towards saving for a mortgage deposit instead.

Following the pension scheme’s initial success – over 6.7m people have been automatically enrolled – the number of young people saving for a deposit would increase significantly. And so would the rate at which they accumulate savings: in the Localis report. we calculate a person on a salary of £30,000 would save the median deposit paid by first-time buyers (£22,000) within 10 years of using the scheme. Supporting young people in this way would do much more to lower the rungs of the housing ladder than cuts in stamp duty reported to be announced next month.

In accepting there is a saving problem that ought to be addressed, government can also set the necessary parameters for its response. A recent Council of Mortgage Lenders report found there is only a “slim chance” someone over the age of forty, who does not already, will own their home. Given the tendency of banks to discriminate against lending to people one or two decades from retirement, the sad reality is government can only do so much for them. Deposit saving is a race against time. This is why auto-enrolment for deposit saving should be capped by age.

In a sense, when it comes to supporting home-ownership, the renters of Generation X should be forgotten. Policy effort and resource would be better spent making the private rental sector safer and more comfortable.

The politics are not pleasant, nor the consequences – but to maintain a home-owning democracy, government must choose to support one generation above the other.

Jack Airey is head of research at the think tank Localis.

 
 
 
 

Was the decline in Liverpool’s historic population really that unusual?

A view of Liverpool from Birkenhead. Image: Getty.

It is often reported that Liverpool’s population halved after the 1930s. But is this true? Or is it a myth?

Often, it’s simply assumed that it’s true. The end. Indeed, proud Londoner Lord Adonis – a leading proponent of the Liverpool-bypassing High Speed 2 railway, current chair of the National Infrastructure Commission, and generally a very influential person – stood on the stairs in Liverpool Town Hall in 2011 and said:

“The population of Liverpool has nearly halved in the last 50 years.”

This raises two questions. Firstly, did the population of the City of Liverpool really nearly halve in the 50 year period to 2011? That’s easy to check using this University of Portsmouth website – so I did just that (even though I knew he was wrong anyway). In 2011, the population of the City of Liverpool was 466,415. Fifty years earlier, in 1961, it was 737,637, which equates to a 37 per cent drop. Oops!

In fact, the City of Liverpool’s peak population was recorded in the 1931 Census as 846,302. Its lowest subsequent figure was recorded in the 2001 Census as 439,428 – which represents a 48 per cent decline from the peak population, over a 70 year period.

Compare this to the population figures for the similarly sized City of Manchester. Its peak population also recorded in the 1931 Census as 748,729, and its lowest subsequent figure was also recorded in the 2001 Census, as 392,830. This also represents a 48 per cent decline from the peak population, over the same 70 year period.

So, as can be seen here, Liverpool is not a special case at all. Which makes me wonder why it is often singled out or portrayed as exceptional in this regard, in the media and, indeed, by some badly briefed politicians. Even London has a similar story to tell, and it is told rather well in this recent article by a Londoner, for the Museum of London. (Editor’s note: It’s one of mine.)

This leads me onto the second question: where have all those people gone: London? The Moon? Mars?

Well, it turns out that the answer is bit boring and obvious actually: after World War 2, lots of people moved to the suburbs. You know: cars, commuter trains, slum clearance, the Blitz, all that stuff. In other words, Liverpool is just like many other places: after the war, this country experienced a depopulation bonanza.


So what form did this movement to the suburbs take, as far as Liverpool was concerned? Well, people moved and were moved to the suburbs of Greater Liverpool, in what are now the outer boroughs of the city region: Halton, Knowsley, St Helens, Sefton, Wirral. Others moved further, to Cheshire West & Chester, West Lancashire, Warrington, even nearby North Wales, as previously discussed here.

In common with many cities, indeed, Liverpool City Council actually built and owned large several ‘New Town’ council estates, to which they moved tens of thousands of people to from Liverpool’s inner districts: Winsford in Cheshire West (where comedian John Bishop grew up), Runcorn in Halton (where comedian John Bishop also grew up), Skelmersdale in West Lancashire, Kirkby in Knowsley. There is nothing unique or sinister here about Liverpool (apart from comedian John Bishop). This was common practice across the country – Indeed, it was central government policy – and resulted in about 160,000 people being ‘removed’ from the Liverpool local authority area.

Many other people also moved to the nearby suburbs of Greater Liverpool to private housing – another trend reflected across the country. It’s worth acknowledging, however, that cities across the world are subject to a level of ‘churn’ in population, whereby many people move out and many people move in, over time, too.

So how did those prominent images of derelict streets in the inner-city part of the City of Liverpool local authority area come about? For that, you have to blame the last Labour government’s over-zealous ‘Housing Market Renewal Initiative’ (HMRI) disaster – and the over enthusiastic participation of the then-Lib Dem controlled city council. On the promise of ‘free’ money from central government, the latter removed hundreds of people from their homes with a view to demolishing the Victorian terraces, and building new replacements. Many of these houses, in truth, were already fully modernised, owner-occupied houses within viable and longstanding communities, as can be seen here in Voelas Street, one of the famous Welsh Streets of Liverpool:

Voelas Street before HMRI implementation. Image: WelshStreets.co.uk.

The same picture after HMRI implementation Image: WelshStreets.co.uk. 

Nonetheless: the council bought the houses and ‘tinned them up’ ready for demolition. Then the coalition Conservative/Lib Dem government, elected in 2010, pulled the plug on the scheme. 

Fast forward to 2017 and many of the condemned houses have been renovated, in a process which is still ongoing. These are over-subscribed when they come to market, suggesting that the idea was never appropriate for Liverpool on that scale. 

At any rate, it turns out that the Liverpool metropolitan population is pretty much the same as it was at its peak in 1931 (depending where the local borough boundaries are arbitrarily drawn). It just begs the question: why are well educated and supposedly clever people misrepresenting the Liverpool metropolis, in particular, in this way so often? Surely they aren’t stupid are they?


And why are some people so determined to always isolate the City of Liverpool from its hinterland, while London is always described in terms of its whole urban area? It just confuses and undermines what would otherwise often be worthwhile comparisons and discussions. Or, to put it another way: “never, ever, compare apples with larger urban zones”.

In a recent Channel 4 documentary, for example, the well-known and respected journalist Michael Burke directly compared the forecast population growths, by 2039, of the City of Liverpool single local authority area against that of the combined 33 local authority areas of Greater London: 42,722 versus 2.187,708. I mean, what bizarre point is such an inappropriate comparison even trying to make? It is like comparing the projected growth of a normal sized-person’s head with the projected growth of the whole of an obese person, over a protracted period.

Having said all that, there is an important sensible conversation to be had as to why the populations of the Greater Liverpool metropolis and others haven’t grown as fast as maybe should have been the case, whilst, in recent times, the Greater London population has been burgeoning. But constantly pitching it as some sort of rare local apocalypse helps no one.

Dave Mail has declared himself CityMetric’s Liverpool City Region correspondent. He will be updating us on the brave new world of Liverpool City Region, mostly monthly, in ‘E-mail from Liverpool City Region’ and he is on twitter @davemail2017.