Sorry, minister, but grandparents aren't going to solve the housing crisis for you

Houses of the sort you will never, ever own. Image: Getty.

It’s a rare thing for me to find myself any form of a trendsetter, but on one measure, it seems, I was way ahead of the pack. The main reason that I found myself, some years ago, with the almost impossibly unlikely ability to buy a flat in London is because I inherited some money from my grandfather. 

In this, it turns out, I was anticipating the May government’s housing policy, a decade or more before it came into existence. Here’s housing minister Gavin Barwell, as quoted in today’s Telegraph:

“I have got a nice home, I have got three kids and my mother has just disinherited my brother and I in order that she can pass her assets on to her five grandchildren. They will be OK.”
Asked if others should think about transferring wealth down generations like this, he said: “Yes, absolutely. Generally in life we all like to think that our children are going to be better off than us. In terms of life expectancy and new technology, they are going to be. But at the moment as things stand they are less likely to own their own home and we need to do something about that.” 

The story is headlined: “Inheritance should skip a generation, says minister”.

Other media outlets have reported Barwell’s comments as if he thinks this is an actual solution to the actually existing housing crisis. That may be a little unfair: there’s nothing in those quotes to suggest that Barwell thinks this is a magic bullet.

But even so, this is such a ludicrous idea that I think it’s still worth ripping the idea to shreds, setting fire to what’s left and then stamping the resulting ashes into the ground. So:

Not everyone has rich grandparents

This shouldn’t need stating but apparently it does. Not all old people own homes, and even when they do they’re not all of sufficient value to sort out the next generation but one. (Apropos of nothing, today’s stories remind me of The Onion‘s take on John McCain’s plan to drag the US out of the 2008 economic crisis: “Everyone marry a beer heiress”.) 

Any housing policy that’s dependent on inheritance will serve mainly to entrench inequality: rich families will stay rich, poor families will stay poor. Except that it’s not clear that rich families will stay rich either because...

This only works for small families

The Barwell Plan worked out well for me in large part because my grandfather’s family was small (two daughters, two grandsons). If he’d had four kids and I’d been one of, say, 12 cousins, I’d be a lot less sorted and smug about it today.

While we’re at it:


Pensioner wealth could get swallowed by care costs

Okay, today’s pensioners are the richest we’ve ever had: research by retirement adviser Age Partnership suggests that England’s over 55s now own property worth more (£1.5trn) than the that entire GDP of Italy (£1.4trn). Sure, many individual pensioners are poor; but as a cohort, they’re loaded.

However: not all of this is going to be available to their kids when they snuff it. Some old people are going to end up needing residential care, and residential care is bloody expensive. 

In other words, even if you are one the only grandchild of some rich grandparents, and you stand to inherit some money – you probably shouldn’t bet your house on it.

One slightly distressing side effect of all this:

It risks incentivising kids to want their grandparents dead

I mean, I don’t want to get all dark here, but we’re going to create a situation in which people will face a direct choice between

a) making sure that granny has everything she wants to be comfortable and cared for, and

b) not doing that but having some hope of maybe owning a house one day.

(“I mean, can’t we at least go for the cheaper care home? Will she even notice the difference. She’s not really with it these days anyway. What? What are you looking at me like that for? What?”)

Barwell’s plan assumes that the parents are fine

And there’s a growing chance that they’re not: we’re moving into a world where plenty of parents are sitting on enormous mortgages, or don’t own a home at all. 

So skipping a generation and leaving all the money to the kids probably isn’t going to help. I mean, just look at discord this sowed when Peggy Woolley disinherited Tony in The Archers.

 

I said at the top of this thing that I thought people had been a little unfair to Barwell, a man who – as far as I can tell – had said nothing to suggest that he thinks this is really a solution to the housing crisis. 

The fact he is talking about this at all, though, is a sign of one way in which he is getting things terribly wrong: 

It’s misdiagnosing the problem

By talking about the important of passing housing wealth down, Barwell is treating the housing crisis as a matter of tenure. In his mind, the key to the problem seems to be that young people are being shut out of home ownership. (His attack on Labour leader Jeremy Corbyn for wanting to build new council housing – a move he describes as anti-aspirational – suggests much the same.)

But falling ownership isn’t the disease, but a symptom. The big problems here are that housing costs are too high, and homelessness is on the rise – and that’s because we aren’t building enough bloody houses.

Changing how we pass existing homes around isn’t going to solve anything. We need more of them. Get to it, minister.

Jonn Elledge is the editor of CityMetric. He is on Twitter, far too much, as @jonnelledge.

Want more of this stuff? Follow CityMetric on Twitter or Facebook.

 
 
 
 

To see how a city embraces remote work, just look to Helsinki

A deeply rooted culture of trust is crucial to the success of remote work. (Sean Gallup/Getty Images)

When I speak to Anssi Salminen, an account manager who lives an hour outside Helsinki, he’s working from a wooden platform on the edge of a Finnish lake. With a blanket laid out and his laptop set up, the sun low in the sky, Anssi’s remote work arrangement seems blissful. 

“I spend around half of my time working somewhere else other than the office,” he says. “I can work from home, or on the go, and I also travel to the Netherlands once a month and work from there.

“The emphasis in my work has always been that it doesn’t matter when or where I work, as long as I get things done.”

For many people around the world, the shift to remote work was sudden, sparked by the coronavirus pandemic. Finland, however, is finding the transition much less significant. Before Covid-19, the Nordic nation already displayed impressive levels of remote working, with 14.1% of its workforce reporting usually working from home. Only the Netherlands has a comparable percentage of remote workers, while the UK lagged behind at 4.7%, and the US’s remote workforce lingered at around 3.6%

Anssi works for one of many Helsinki-based companies that offers its employees flexible policies around when and where they work. That arrangement is in part due to the Finnish capital’s thriving start-up scene. In spite of being a relatively small city by global standards it is home to over 500 technology start-ups. These companies are leading the way when it comes to keeping employees connected wherever they choose to work.

“Our company has a completely location-free working policy,” says Kasper Pöyry, the CEO of Helsinki-headquartered software company Gapps. “All meetings are made available for online participants and facilitated accordingly. Some employees have worked extensively from abroad on a working holiday, whilst others prefer the comfort and social aspects of the well-stocked office. Whatever works for our employees is what works for the company.”

Like Gapps, many Helsinki-based firms are deeply preoccupied with providing the necessary technology to attract talent in a vast and sparsely populated country. Finland has only 15 inhabitants per square kilometre, and companies understand that in order to compose teams of specialised expertise, they may have to seek talent outside of the city. Local governments take a similarly proactive stance toward technological access, and Helsinki offers free, unrestricted, high-speed Wi-Fi from city-wide hotspots, while the country as a whole boasts some of the best coverage in Europe. 

But encouraging remote work isn’t just about optimising the potential of Finland’s workforce – companies in Helsinki also recognise that flexibility has clear benefits for both staff and employees. 

“The idea of a good work-life balance is ingrained in Finnish culture,” says Johannes Anttila, a consultant at organisational think tank Demos Helsinki. “It goes back to our rich history of social dialogue between labour unions and employers, but also to an interest in delineating the rules of working life and pushing towards people being able to enjoy their private life. Helsinki has been named the best city in the world for work-life balance, and I think that this underlies a lot of the mentality around remote work.” 

For Peter Seenan, the extent to which Helsinki residents value their free time and prioritise a work-life balance prompted his move to the city ten years ago. He now works for Finnair, and points to Finland’s summer cottages as an example of how important taking time to switch off is for people in the country. These rural residences, where city residents regularly uproot to enjoy the Nordic countryside, are so embedded in Finnish life that the country boasts around 1.8 million of them for its 5.5 million residents

“Flexible and remote work are very important to me because it means that I don’t feel like I’m getting stuck in a routine that I can’t control easily,” he says. “When I’m working outside of the office I’ll go down to my local sauna and go ice swimming during the working day, typically at lunchtime or mid-morning, and I’ll feel rejuvenated afterwards… In winter time especially, flexibility is important because it makes it easier to go outside during daylight hours. It’s certainly beneficial for my physical and mental health, and as a result my productivity improves.”

The relaxed attitude to working location seems to pay off – Finland is regularly named the happiest country in the world, scoring highly on measures such as how often its residents exercise and how much leisure time they enjoy. With large swathes of unspoiled countryside and a national obsession with the outdoors, sustainability is at the forefront of its inhabitants’ minds, leading to high levels of support for measures to limit commuting. In January, Finland passed a new Working Hours Act, the goal of which was to help better coordinate employee’s work and leisure time. Central to this is cementing in law that employees can independently decide how, when, and where they work.

Yet enacting the new ruling is not as simple as just sending employees home with their laptops. For Kirsimarja Blomqvist, a professor of knowledge management at LUT University, perhaps the most fundamental feature that remote work relies upon is a deeply rooted culture of trust, which Helsinki’s residents speak of with pride. The anecdotal evidence is backed up by data which suggests that Finland boasts one of the highest levels of trust and social cohesion in Europe, and equality and transparency have always been key cornerstones of political thought in the country.

“Trust is part of a national culture in Finland – it’s important and people value it highly,” she explains. “There’s good job independence, and people are valued in terms of what they do, not how many hours they work for. Organisations tend to be non-hierarchical, and there is a rich history of cooperation between trade unions, employers, and employees to set up innovative working practices and make workers feel trusted and valued. 

“It’s now important that we ensure that this trust can continue to be built over technology, when workers might have been more used to building it face-to-face.”

As companies begin to look hopefully toward a post-Covid future, the complexities of remote work are apparent. Yet amid issues of privacy, presenteeism, and social isolation, the Helsinki model demonstrates the potential benefits of a distanced working world. The adjustment to remote work, if continued after the crisis, offers a chance to improve companies’ geographical diversity and for employers to demonstrate trust in their workforce. On these issues, Blomqvist believes other cities and employers can learn a lot from Helsinki.

“People are now beginning to return to their workplaces, but even as they do they are starting to consider the crisis as a jumping point to an even more remote future,” she says. “The coronavirus pandemic has been an eye-opener, and people are now interested in learning from Finland’s good practices… We are able to see the opportunity, and the rapid transition to remote work will allow other countries to do the same.”