“Ice cram sales and forest fires are correlated because both occur more often in the summer heat,” wrote Nate Silver in the popular book The Signal and the Noise. “But there is no causation; you don’t light a patch of the Montana brush on fire when you buy a pint of Haagen-Dazs.”
Watching Theresa May announce her University Review made me think someone might need to explain this little story to those inside Number 10.
The Conservatives need to get a grip on who it is they’re talking to and why – because if they think “young people” and “tuition fees” is a politically potent correlation, they’ll be disappointed.
The much feted “youthquake” didn’t happen – the 18-24 age group saw a modest 2.5 per cent increase in turnout. This group didn’t deny May her majority. It was the 25-45s, who in the last 20 years have seen their home ownership levels more than halve. According to the Institute for Fiscal Studies, only 27 per cent of young people own a home today, compared to 65 per cent in 1995.
If the Conservatives want to woo young people, stop talking about tuition fees and help them get on the housing ladder.
The adage doing the rounds in Westminster last year was “it’s hard to believe in capitalism if you can’t get any capital”. If, like me, you think the home-owning democracy is an inheritance worth preserving, we need to address this.
According to Localis polling conducted by YouGov last year, 58 per cent of 25-49 year olds who don’t own a home outright or via a mortgage aren’t saving a single penny toward a housing deposit. Nothing.
The English Housing Survey shows that those renting spend a greater proportion of their income on housing each month (37 per cent) than owner-occupiers (17 per cent). The cost of living is increasing while wages stutter.
If we want young people to be able to buy their own home, we need to help them build up capital. And the sneaky truth is, with pension auto-enrolment, young people are doing just that.
If it chooses so, the government can open up the pension auto-enrolment scheme and transform the way we save for a housing deposit. The auto-enrolment of employees aged 18-40 to pension schemes by employers should now include the option to make contributions towards a Lifetime Isa (Lisa).
Just like a pension, employers should be expected to make contributions equal to three per cent of the employee’s qualifying salary and, as with the Lisa, the government should continue to match twenty five per cent of employee contributions.
This would revolutionise the way by which deposits are saved for. Far more people would be building their financial capacity to buy a home. Their employer would contribute. And viable deposit sums would be reached much more quickly: Localis calculations show that, for someone on a salary of £30,000, after 15 years total savings would be £32,600 by this scheme.
According to Halifax, the average first-time buyer deposit in the UK is £33,000. The state, your employer, and you individually would be working together to help build up your deposit.
The argument against is that this money should be reserved for a pension in later life. But housing is one of the most valuable pensionable asset classes. To deny people this seems churlish, particularly as such a move does not preclude some saving for a pension over the next 30 to 40 years of their career.
Sajid Javid is making a go of things, but much of what he can do focuses on increasing supply and corralling a recalcitrant developer market. He needs support. Helping young people get on the housing ladder needs leadership from the top of government – and this means the Prime Minister putting the weight of her office behind it.
Giving a generation of young people access to the capital they have built up but didn’t know they could use would be a bold political move. Since Margaret Thatcher, Conservatives have been looking for the new Right to Buy. This could be it.