As the Liberal Democrat conference gets under way in Brighton, Nick Clegg used an interview on the BBC to announce a plan to allow parents to borrow against their pension funds to allow their children to get the deposit needed to get them on to the housing ladder. Clegg claimed that this was the politics of not allowing the big hole in the public finances to re-open after the current struggle to fill it.
It’s an idea that, for that moment of pre-intellectual awareness before the thinking process starts, might have a certain appeal. A moment’s thought reveals that it is quite possibly among the stupidest ideas to have emerged from a coalition that, time and again, appears to have eschewed evidence-based policy making.
It’s worth reflecting for a moment that two of the salient features of British economic life in 2012 are an ongoing pensions crisis and an ongoing housing crisis. People are not saving enough for their old age – only about a third of those in work have any form of occupational pension – and we are being told that state provision is not affordable; and the cost of housing has, in recent decades, soared at a rate that far outstrips the increase in income. In real terms, housing has never been more expensive.
So, Clegg appears to be advocating that older people, with not long to go until retirement, should effectively gamble their savings in order to provide a subsidy which will in effect boost house prices even further. If this was not bad enough, in an illustration of how desperately out-of-touch Clegg and his party are, an unnamed (possibly for his own safety) Liberal Democrat source has apparently told the media that £40,000 represents a decent-sized pension pot – enough to buy an annual pension of £2000.
The same Liberal Democrat spokesman has apparently said that the scheme will work because many people take a lump sum out of their pension at retirement, and that’s where the cash could come from. Perhaps that’s true; but it’s not really an option for many people, especially for those who are retiring now and finding that, thanks to the 2008 crash, their pension funds are rather less than they had thought. And it is hardly a prudent or responsible attitude at a time when life expectancy is increasing but so are the costs of old age, and when a Government in which Liberal Democrats play at least a minor role is cutting support for the vulnerable and privatising the NHS. Is it intelligent or prudent policy effectively to strong-arm parents into reducing their pension funds when the financial uncertainties of old age are so great?
Moreover, it will do nothing to tackle the fundamentals of why housing costs are soaring – which are much more deep-rooted than anything that Clegg and his party seem willing to discuss. It does nothing to discourage the dangerous fiction that high house prices are a sign of prosperity; that houses are seen as an asset against which to borrow or secure our old age; or to remove the risk of bubbles from housing markets. In fact, it encourages the attitudes that have turned the provision of the most basic commodity of life – a roof over one’s head – into a matter of speculation, which in turn have fed the deep instabilities in the housing market. It makes the fundamentals worse, not better.
And our same hapless and anonymous Liberal Democrat spokesman is apparently claiming that this could help 12,500 households. In other words it’s barely scratching the surface.
This is not rational policy-making. It’s wrong in principle and it doesn’t address the problem in any event. It’s what happens when you ask a spin doctor to come up with a pre-conference soundbite.
Perhaps the most objectionable aspect of this policy is that it is a form of evasion – an admission that there is a housing problem but one that refuses to move beyond the belief that the market can solve it all. It can’t. I believe it is impossible to understand Britain’s housing crisis outside the context of the decline in the provision of social housing – and all the main Westminster political parties must take the blame for that. It is almost blindingly obvious that the state has to take a lead in the provision of good quality, low-cost housing for rent – and a testimony to the way in which neoliberalism has blighted our national politics that not one of Westminster’s neoliberal triumverate of parties is capable of recognising this.
By the same token, the withdrawal of the state from the provision of a decent and secure old age is another policy where ideology has trumped evidence. The intellectual convolutions of neoliberals determined to deny a role for the state are, as ever, astonishing to behold; but all of a piece with the flight from evidence-based and considered policy-making which is perhaps the single most striking characteristic of this coalition Government.
In other words: it’s stupid, frivolous, irresponsible and unworkable. And curiously typical of the contribution that Clegg and his party have brought to Government.