Lord Willetts is President of the Resolution Foundation. He is a former Minister for Universities and Science.
The Conservative Party needs to attract more younger voters. This does not mean very young voters – though there were moments when Margaret Thatcher at her boldest and David Cameron at his most liberal were able to do this. But it does mean recruiting people as they settle down with a decent job, a house, and a mortgage. If we don’t do this, then we really risk becoming the Party of only the older generation and risk dying out with it.
There is bad news and good news. First, the bad news. The Conservative Party now has a structural problem amongst young people. It is not explained by their being predominantly Remainers or increasingly university graduates. Even after allowing for those factors, there is still a substantial generational gap. Indeed, age has replaced class as the most important single determinant of voting behaviour.
The good news is that the problem is not that young people are all Marxists or woke warriors ( though some of the culture wars we get involved in may seem rather eccentric to them.) They are alienated from us for very practical reasons which Conservatives ought to be able to understand.
Their living standards aren’t going up and they can’t afford to buy a house. The pay of a 30 year old is no higher now than it was a decade ago. A third of them are still living with their parents, so unable to form an independent family of their own. And most of the rest are trapped in the private rented sector paying over 25 per cent of their income in rent so with much less discretionary spending power than the older generation.
Moreover, a decent pension of the sort the Baby Boomers enjoy is a distant dream. So the problem is one Conservatives should be able to tackle. We are supposed to be be the party of the Property-Owning Democracy. It is one of the great Conservative slogans, but we are failing to deliver it for the younger generation. No wonder they are turning away from the Party.
One way to improve their circumstances simply to make conditions in the private rented sector a lot better. That is something which Michael Gove is trying to tackle with his typical energy. His White Paper proposes A Fairer Private Rented Sector. It means giving tenants more security of tenure whilst, at the same time, strengthening and speeding up the process for evicting anti-social tenants. It means a new Ombudsman scheme which makes it easier for private tenants to resolve problems without going to court.
Beyond that, we should also aim for much more private business investment in large-scale property for rent. That means reforming planning rules so it is easier to build for rent. Public agencies with large numbers of employees, many of whom may be renting, could take out bulk contracts for rental places in such schemes helping to get them going.
But those kind of measures are only half the story. Sometimes, we Boomers try to under-play the problems facing the younger generation by saying their values have changed and they don’t have the same desire to own as young people before them. But the evidence is that most of them do want to own: it is just too expensive for them.
A particular barrier is the need for a ten per cent deposit. Quite a few of them could afford a mortgage even after interest rate hikes. Indeed, a mortgage might be cheaper than the rents they are paying now. But so much of their income is going in rent that they haven’t got money left over to save for a deposit. (Many Boomers bought with less, but then the regulatory regime was much easier. Then we were borrowers, now we are savers – and we are much keener on strict regulation of how money is lent.) It makes the bank of mum and dad more important, and property ownership becomes hereditary. Using your earnings to buy is very difficult.
That is why the Resolution Foundation’s Intergenerational Commission, which I chaired, proposed a £10,000 capital grant for every young person on reaching the age of 30. It could be used towards that first deposit, or for a small range of other approved purposes, such as education and training, setting up a business, or putting money into a pension.
That would cost about £7 billion a year and could be financed out of extensions of capital taxation. Think of it as the equivalent of council house sales at a discount, or indeed shares in privatised companies on favourable terms. They were previous attempts to give a boost to property ownership and we were willing to fund them. We need something similar again now.