The runners and riders are anticipating a leadership challenge to unseat Labour’s first Prime Minister in 20 years. Few could have imagined such a response so soon after a recent general election landslide victory.
People watch on. Some are engaged while many question whether the need to create chaos among our political leadership while we navigate acute economic instability. Our European neighbours are presumably mystified as the opportunity for five years of stable government with a strong public mandate eludes us.
And yet, with the potential for a six weeks’ by-election as Andy Burnham, the Mayor of Manchester seeks to gain access via a by-election to the House of Commons, the precondition for a leadership challenge, promising another three months of internecine war, as pretenders for Sir Keir Starmer’s crown enter into a ‘battle of ideas’ – the risk of chaos is high.
This is a tightrope. It is important – if very difficult – for them not to attack the record of the current government. Labour, after all, rode to power on a promise of stability. On the economy, a Streeting government would stick with the present government’s fiscal rules for instance; Al Carns has said voters expect stability; Rayner has said she will not change the present fiscal rules.
Furthermore, candidates won’t have a great deal of room in which to wriggle. Britain’s national debt is already 94% of GDP. There’s a risk that the contest results in eye-catching headlines and ‘bold’ proposals which scare skittish bond markets, raising mortgages for millions and the cost of government borrowing.
This would leave a successful challenger, if any, with nothing in the coffers to fund hopeful promises. But candidates could call for reform – while building upon the success of the incumbent administration.
Later life lending is an issue that might fit the bill. The foundations for the later life lending debate are now being put in place thanks to the far-sighted leadership of Nikhil Rathi, the FCA’s chief executive.
However, there is a need to be bold to deliver on this vision. No amount of changes at the top of government (the excellent Lucy Rigby has predictably been elevated to higher office and is now Chief Secretary of the Treasury) will change the fundamental macroeconomic problems that the UK faces; we are on the verge of a retirement income crisis.
As life expectancy increases, generous pension provision weakens in the private sector, and the cost of care rises, the number of people reaching retirement without adequate funding to maintain their standard of living is set to increase.
Policymakers, whoever they turn out to be, need to focus on removing barriers to accessing housing wealth through the use of later life lending because, financial security in later life may require a broader mix of assets, not pensions alone.
As Calum Cooper of The Society of Pension Professionals puts it, “individuals may need to draw on a range of assets and savings vehicles to achieve the standard of living they expect in later life, rather than being solely reliant on pensions.”
One of the problems is that there’s a lack of knowledge amongst consumers. Using housing wealth to fund later life is not currently part of the mainstream retirement conversation and many do not see it as a conventional, vanilla option.
For instance, when consumers interact with government services such as MoneyHelper or Pension Wise as they approach retirement, there is a lack of actionable advice around housing wealth.
The regulatory environment has created advice silos, and stymied innovation in this market as a result. We need better rounded conversations which consider all options from mainstream to life-time mortgages.
Wealth advisers tend not to be qualified to advise on later life lending, and do not always include housing wealth as part of core retirement planning.
The FCA’s market study has begun the process – but whoever is in charge next needs to demonstrate the political will to realign regulation and government advice to support more people to access housing wealth in later life.
More pressing for any government will be the need to release the trillions of pounds tied up in bricks and mortar. Failure to unlock this important stimulus for growth swiftly, estimated by Fairer Finance to provide £21bn a year in GVA by 2040, in today’s money, or 0.7% of GDP runs an existential risk. Bequeathing another Government this wealth if voters penalise those who inflict more uncertainty upon them.
