Social mobility? Forget it

“The board of the government’s Social Mobility Commission has stood down in protest at the lack of progress towards a “fairer Britain”.

Ex-Labour minister Alan Milburn, who chairs the commission, said he had “little hope” the current government could make the “necessary progress”.
Tory former cabinet minister Baroness Shephard is among three others to quit.

In a resignation letter first reported by the Observer, Mr Milburn said ministers were preoccupied with Brexit.

He said that meant the government “does not have the necessary bandwidth to ensure the rhetoric of healing social division is matched with the reality”.
Mr Milburn added: “It seems unable to commit to the future of the commission as an independent body or to give due priority to the social mobility challenge facing our nation.”

He took up his role with the commission, which monitors progress towards improving social mobility in the UK, and promotes social mobility in England, in July 2012.

‘Unable to commit’

The resignations come as Theresa May, who entered Downing Street in July 2016 promising to tackle the “burning injustices” that hold back poorer people, faces questions over the future of senior minister Damian Green – who is effectively her second in command – and is under pressure as Brexit talks continue.

In his resignation letter addressed to Mrs May, Mr Milburn said he was standing down with “much sadness” and was “deeply proud of the work the commission has done”.

He said: “All the main political parties now espouse a Britain that is less elitist and more equal, while growing numbers of employers, universities, colleges, schools and councils have developed a shared determination to create a level playing field of opportunity in our country.”

Mr Milburn added: “Individual ministers such as the secretary of state for education have shown a deep commitment to the issue.

“But it has become obvious that the government as a whole is unable to commit the same level of support…

“I do not doubt your personal belief in social justice, but I see little evidence of that being translated into meaningful action.”

“David Cameron admits ‘we didn’t solve’ problem of funding social care for Britain’s ageing population”

Owl says: LOTS and LOTS of things Dave didn’t solve …..

“David Cameron has expressed regret he was unable to do more to deal with the “huge” challenge funding social care for Britain’s ageing population.

The former prime minister – who has since become president of Alzheimer’s Research UK – said a way had to be found to meet the “catastrophic” costs of caring for people with dementia.

“There is a huge social care funding challenge we have to answer, and I accept that we’ve made some steps forward, but we didn’t solve that problem,” Mr Cameron told the Financial Times.

“Everyone knows it’s a difficult conundrum. Lots of effort has been made to try and solve it but we haven’t got there yet.”

In office Mr Cameron sought to introduce a £72,000 cap on the costs an individual would have to pay towards care home charges with the state picking up any further bills.

Ministers had hoped insurance companies would develop products that would enable people to insure themselves against their care costs up to the £72,000 limit.

However the plans were put on hold in July 2015 after insurers proved reluctant to enter the market.

“The disappointment I had was I was hoping that a combination of the cap on care costs would help to deliver an insurer’s model, where a market would grow up where everyone could insure themselves against the cost of long-term care. And we just haven’t cracked that yet,” Mr Cameron said.

“I’m not in politics any more but we’ve got to find an answer. (Given) the catastrophic cost of care that people face from dementia, and I saw this with constituents, we’ve got to find a better answer there.”

Middle-aged renters – must start saving £6,000 a year for their rent in retirement

Scottish Widows is the sort of unassuming pensions company that rarely likes to publicly criticise government policy. But an analysis it published this week is a stark warning about the ticking time bomb that will explode in 10 to 20 years’ time. And it’s not pension incomes that are the worry – it’s the fact that so many of tomorrow’s pensioners who never got on to the property ladder in the 2000s and 2010s will have to find huge amounts of money to pay ever-escalating rents to private landlords.

Scottish Widows skirts around the issue by suggesting that non-homeowners currently in their 50s should start saving an extra £6,000 a year now to be able to afford their rent in retirement. As if people on low incomes are going to find that sort of money. The reason they are renting is that they were never able to find the savings for a deposit on a house in the first place, or didn’t earn enough to qualify for a mortgage.

The reality is that these people are likely to retire with little more than the state pension plus a small bit of private pension. Maybe they will be picking up about £200 a week once they are 67. Given that the average rent in England and Wales is £845 a month – and in London it’s about £1,250 a month – then the whole lot will be gobbled up by the landlord. So the taxpayer will have no alternative but to step in and pay most of the rent, and we are then on the hook for payments going on for maybe 20 or 30 years. All so that the buy-to-let landlord with multiple properties can enjoy a lavish retirement themselves.

This is the lunacy of promoting buy to let as a long term form of tenure for millions of people. Even in developed countries where renting is common, such as Germany, most people are living in a home they own by the time they reach retirement. Renting all the way through retirement, funded by the taxpayer, to a landlord who has the power to evict without reason and at short notice, is the worst possible situation. And it’s one we are hurtling towards.

Make no mistake about the dramatic change in the retirement landscape that is coming. Scottish Widows projects that one in eight retirees will be renting by 2032 – treble today’s figure. After that it will continue rising. It says there is a £43bn gap between the income and savings people have now and what the rent bill will be in retirement. That’s more than one-third of the entire NHS budget for a year – to be squandered on rent.

Dan Wilson Craw of campaign group Generation Rent says: “The common perception is that retirees either own their home outright or have a council tenancy, so the government will be in for a nasty shock as more of us retire and continue to rent from a private landlord. Many renters relying on pensions will qualify for housing benefit which will put greater strain on the public finances.”

Aviva, the UK’s biggest pensions company, also publishes figures on Saturday on the colossal financial issues facing non-homeowners currently in their 50s. While those who have bought their homes feel pinched – and expect to use the equity in their home to pay for a better retirement – the outlook for non-homeowners is so grim that 20% believe their only hope is having a lottery win. Most non-homeowning workers aged above 50 say they have no money left after basic costs to put aside extra money for a pension.

There was some good news on pensions this week: the Resolution Foundation said that auto-enrolment schemes will mean tomorrow’s pensioners will enjoy a roughly similar income (about £300 a week) to today’s pensioners. But they didn’t account for the large number that will now have to pay rent out of that money.

The solution? Build more houses, of course. But even 300,000 a year won’t solve this problem if they are snapped up by landlords. That only leaves us with rent control and much higher taxes on buy to let.”

Another new-build developer scam

Estate rent charges apply in Cranbrook:

Thousands of homeowners on private estates are facing unregulated and uncapped maintenance fees, amid allegations that developers have created a cash cow from charging for communal areas not maintained by the council.

Management contracts for “unadopted” private estates are frequently sold off to speculators and property management companies in the same way as freeholds and ground rents – leaving homeowners with spiralling fees and nowhere to turn.

If a new-build estate is “unadopted” it means communal areas such as roads, grass verges, pavements and playgrounds are retained by the developer. The developer then usually sub-contracts day-to-day management.

These companies then pass on the costs to homeowners (both freeholders and leaseholders) via a deed of transfer which obliges the homeowner, under the Law of Property Act 1925, to pay for maintenance of this land. This is often referred to as an “estate charge” or “service charge”. These are on top of full council tax – even though the council doesn’t maintain their street.

Critics say the system is open to abuse because management companies have no obligation to keep costs down or provide evidence the services they charge for are being carried out. Buyers may find the bills spiral as soon as a management contract is sold on.

Lynn Myers bought her two-bed leasehold house in Penrith, Cumbria, from developers Persimmon in September 2016. The sales agent told her the estate would be managed by Carleton Meadows Management Company with an estate charge of £100 a year per household for grass cutting.

When Gateway Property Management took over in July 2017 it tripled the fee to £308 a year – that’s £17,000 from the 55 residents. Myers alleges that the fee includes more than £3,000 “postage”.

“I am on a lower-end income and ploughed my late husband’s insurance money into this property,” says Myers. “I worry that I will be unable to afford this on top of full council tax etc, and also I will be unable to sell. I have been mis-led by Persimmon and the government.”

Persimmon says the initial costs had been miscalculated and that it was working with Gateway to resolve the issue.

Meanwhile, 40 miles away across the Lake District, residents in Church Meadows in Great Broughton are in a similar situation. Richard Elsworth moved into his Persimmon-built freehold property in May 2013. The estate’s 58 residents each pay Gateway a service charge of £125.53 a year, amounting to £7,281 to maintain about 600 square metres of grass.

But Gateway’s charges don’t stop there. When Elsworth’s neighbours sold their home, they were charged £360 for a “management pack” for the buyer, plus £144 for a deed of covenant.

“The only part of the pack that is relevant to the sale is a financial statement so that the service charge information is available to the prospective buyer. As the properties are freehold, Gateway has no responsibility whatsoever for the conveyancing process, other than to receive a deed of covenant from the conveyancing solicitors,” says Elsworth.

Gateway claims it provided an “often exhaustive” amount of information to purchasers’ solicitors when a sale takes place. It said it was common practice for managing agents to charge fees for sales packs and additional legal documentation. It says: “The information we are asked to provide varies from development to development and this is reflected in the amount we charge ranging from £150-£300 plus VAT.

“It is best-practice for the information to be prepared by professionally qualified staff because purchasers are reliant on information being accurate to enable the sale to proceed as smoothly as possible. Typically, a sales pack contains in excess of 25 pages and is tailored to the development.”

Privates estates were debated in parliament earlier this month. Kelly Tolhurst, Conservative MP for Rochester and Strood in Kent, told MPs how homeowners in Hoo bought from Taylor Wimpey and Bellway but are now in dispute with their property management company, SDL Bigwood.

Tolhurst went on to criticise Hyde Housing Association, and London and Quadrant. The latter tried to charge residents at Lodge Hill, Chattenden, for street lamps and street cleaning undertaken by Medway Council.

The Homeowners’ Rights Network (Hornets) is the campaign group fighting for a fairer deal for homeowners on private estates. Its main issue is a lack of a cap on charges and that homeowners don’t have a choice of provider. And, if homeowners have a dispute, there’s no resolution service in place.

Cathy Priestley, spokesperson for Hornets and a freeholder on a private estate, says the private estate model seems to be the norm for new-build estates. “We can only speculate as to why this has happened. The main benefactors are the plc developers who get to keep the estate land, don’t have to prepare it to adoption standards and don’t have to pay for its maintenance or the commuted sums for adoption,” she says. “All councils have to do, under planning, is to ensure there is a long-term sustainable arrangement to maintain the land (under the Town and Country Planning Act). They seem to readily accept assurances from the developers that the management company will deliver this. They don’t appear to have thought about how this affects homeowners.”

While leasehold owners have some (albeit limited) statutory protection, freeholders have very few options. They can take cases to court, but this can be expensive and time consuming. If they decide to simply not pay, they can ultimately lose their home. “Any arrears will normally be recoverable as a debt claim in the county court.

“However, homeowners should be cautious as the rent charge owner may have a number of options including the ability to take possession of the property,” says Adrian McClinton, associate solicitor at Coffin Mew.”