Nick Clegg has used the Liberal Democrats’ conference in Brighton to float an idea without the approval of his comrades in Coalition. Parents and grandparents, the Deputy Prime Minister suggests, should be free to use their pensions to help their children get on the housing ladder. The Daily Mail – who long ago used Clegg as a vehicle for possibly the most stupid tabloid headline ever: “Nick Clegg in Nazi slur on Britain” – explains it thus: “The ‘pension for property’ plan aims to let those approaching retirement borrow against the lump sum payment in their pension to underwrite the mortgages of young people who cannot afford to buy a home.”
Clegg’s aides say that there are 250,000 households in Britain where someone has a pension pot worth around £40,000, the minimum sum that would be needed to take advantage of the scheme. But the average pension pot is in fact £26,000. In other words, this is a scheme that would apply only to the wealthy. As the Lib Dems themselves admitted, only around 12,500 families would benefit.
So here are the two main problems with this proposal. First, what about those of us who don’t have massively rich parents? The political class is stuffed with, and led by, sub-aristocrats from Berkshire, heirs to wallpaper fortunes, and people from Chalfont St Giles. A chief consequence of this seems to be the presumption that the rest of us fall into these categories too. Alas, we do not. The average median income in Britain is £419 a week – and falling. Gordon Brown’s economic thinking decimated many pensions too. Calling on the Bank of Mum and Dad, or Nan and Grandad, is not an option for most of us.
Second, the real issue – the problem which no amount of bluster from the Treasury seems capable of remedying – is the disgusting state of property prices and lack of affordable homes in our country. I’ve called this property apartheid in the past. The monstrous inflation in house prices over the past 20 years has been a highly effective class war – against the poor, who don’t own homes.
Seen in that context, letting rich kids borrow against their wealthy parents’ pensions is an insulting, distracting, and probably ineffective solution to an appalling social problem.