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Incentivising “right-sizing” in retirement pivotal to addressing housing crisis

Credit: Legal & General

Legal & General

6 min read

Chair of the Affordable Housing Commission Lord Best has said policies are needed to break the “cultural reticence” towards later life downsizing if the UK is to address its housing crisis.

Speaking at a virtual panel hosted by Legal & General, Lord Best, a crossbench member of the House of Lords said government had to incentivise the elder generation to “right size”, so as to free up much needed family-sized social and council housing.

“We just don’t have a culture in the UK of a move in older age, people are very suspicious of moving… there is a fear of moving to an institutional setting,” he said.

“In Europe, the research we conducted seemed to suggest the norm after the age of 55 was ‘now is the time to move, to somewhere where I’ll have services to hand, where I’m going to be able to look after myself into older age, why don’t I take the plunge?’.

“But we don’t have that culture here, squaring the circle, getting it to happen is not easy, so we need to incentivise them, provide an opportunity for downsizing,” he continued.

As an ageing society, the UK is experiencing a sharp increase in the number of people aged 65 or over, with the number of over 85s expected to double in the next 20 years.

The event brought together a panel to discuss how Inclusive Capitalism can ‘build back better’ across Britain’s towns and cities.

Inclusive Capitalism is the linchpin philosophy behind the work of Legal & General, ultimately, it is centred around using money and investment as a force for good in society.

As an ageing society, the UK is experiencing a sharp increase in the number of people aged 65 or over, with the number of over 85s expected to double in the next 20 years.

During the discussion, chair Anne Ashworth asked panellists for their thoughts on how the economic power of this ageing society could drive socially useful growth across all demographics, and what role the concept of Inclusive Capitalism, investing both for healthy returns and societal good, could play in this.

Birmingham Hodge Hill MP and Shadow Mayor for the West Midlands, Liam Byrne said the pandemic had led to the “biggest economic shock since the 1930s”, describing the recovery from it as “just the first circle of hell”.

“We already see unemployment as high as it was in the 1980s… there is a gathering consensus that we need a new social contract that will include a new welfare settlement that goes beyond providing the stuff we already have,” said Mr Byrne.

“It is about retraining, retraining, and retraining again and, crucially, providing a means to help people build and grow settlements.”

This, said Mr Byrne, was where companies like Legal & General could provide much needed “intellectual leadership on how we can mobilise inclusive capital markets”, noting that auto-enrolment had created long-term pension savings that were waiting for ethical investment.

Let’s focus on health span not life span, let’s maximise our independent years, let’s get more life out of our years, not just more years. Investors and policy makers need to join forces to solve this problem.”

Chief Executive of Later Living at Legal & General Phil Bayliss told the panel that Inclusive Capitalism was about “passing the world on better than when we joined it,” noting the company had “money and the will to make the change,”.

“The theme lawmakers will hear from us is that we don’t need government’s money, this isn’t a budget ask, all we need is some policies that clear the roads for us to invest in assets that make a real difference to people’s lives,” said Mr Bayliss.

“And this starts with housing our older population in a thoughtful more productive manner that allows them to thrive, we want to make these moves an aspirational choice.

“Our vision is, let’s focus on health span not life span, let’s maximise our independent years, let’s get more life out of our years, not just more years. Investors and policy makers need to join forces to solve this problem.”

Executive director of the Association of Retirement Community Operators (ARCO) Michael Voges said the present state of affairs left older people with limited choice when they felt their homes had become unmanageable.

“If they feel they need more care and support, the only real option that they have is going to a care home, which will bankrupt them within several years,” said Mr Voges.

“These care homes provide very good services, but they are very expensive, and I don’t think anyone would argue that they are aspirational places to go. So, the question then is, if they have no choices what happens? They stay in their own homes.”

Legal & General has ramped up financing of retirement villages that offer residents a space to live independently for longer, but Mr Bayliss said he wanted to be able to do more.

“We have great retirement communities up and running now and the residents are bowled over by them because they are not what you stereotypically think of when you think of retirement communities – they’re loud, noisy, active,” said Mr Bayliss.

“They’re focused on the residents. So, they can take a class every 30 minutes. It is about people thriving.

“We want to make these available to the many, not just the few and for this I need local authorities knocking on my door and asking me to invest. They don’t. Instead, I knock on their door and they tell me to go away. It is only a minority thinking about their elderly.”

The panellists agreed that providing suitable accommodation for the elderly population would aid in addressing the “desperately short supply” of social housing and family homes.

Mr Byrne said Covid-19 had accelerated the onset of a “fourth industrial revolution”, with automatisation likely removing between 200,000 and 300,000 jobs in Birmingham alone, and impacting 1.2 billion of the world’s 3.5 billion-strong workforce.

He called for a focus on urban regeneration across the whole country.

“We’ve done this before, you just have to look at the cultural movements, the Arts and Crafts movement in Birmingham or Bourneville, these model ideas of diversity, the 15-minute world with a critical mass of community facilities on the doorstep,” he said.

“But there are a couple of things we need to get right, we need to make things affordable, that means homes for social rent.

“We need to provide public subsidies, and importantly we need to rethink our transport systems, which means radically rethinking our transport spines to improve radial links connecting people to the suburbs and not just town centres.”

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