A lot of people ask me how I can be so cavalier in pursuing a political decision I know will have considerable economic fallout. Unlike other leavers I make no pretence about Brexit. I will not sugar coat it and I have little time for those who do. By the same token, however, I am equally unimpressed with remainers who seem to think that remaining in the EU is a safe choice which at least preserves the status quo. It doesn't.
A report in today's Telegraph has it that the number of "silver renters" in England is set to treble to a million, analysis of official data shows, as more people are leaving it too late to buy their first home. According to analysis carried out by campaign group Generation Rent, the number of private renter households in England headed by someone aged 65 or older is set to increase from 370,000 in 2015-16 to 995,000 by 2035-36. The rise will come as the result of more people reaching their forties without having made their first step onto the housing ladder, at which point it becomes increasingly difficult to get a mortgage, the report said.
Meanwhile, other reports indicate that about 15 million people have no pension savings and face a bleak future in retirement. The Financial Lives survey of 13,000 consumers by the FCA, the biggest of its kind, found that 31% of UK adults have no private pension provision and will have to rely entirely on the state in their retirement. The full state pension is £159.55 per week, but that is only available to individuals who have a complete record of national insurance contributions.
Of particular worry is the group of people aged over 50 who are not paying into a pension and have few years left to build one up before they reach their 60s. When the FCA asked why they had made no provision, 32% said it was too late to set one up, 26% said they could not afford it and 12% said they were relying on their partner’s pension.
Auto-enrolment has brought millions of people into pension saving for the first time, but millions of self-employed and part-time workers are not in the scheme. Then turning to another report in The Guardian we see that British workers can expect among the worst pensions in the developed world. This is as councils are set to spend more than 40% of their budgets on adult social care.
When it comes to pensions and mortgages, both of these financial frameworks are geared toward the model of yesteryear where you could reasonably expect that a permanent job was permanent. However, we increasingly find that middle band salary roles are being shunted into contracting. The traditional financial instruments have not kept pace with sweeping changes in society. These are problems to which nobody I know of has a solution.
What I can say with some confidence however is that whatever it is we do, it will have to be radical. We are sitting on a time bomb. Policy-makers continue to use immigration as a sticking plaster but supply of road, rail, health and housing infrastructure is not keeping pace with population growth. Something must be done.
In this it is easy to see why many peg their hopes on Jeremy Corbyn who hopes to borrow £500bn to spend on public services and housing. That, though, does not do anything to arrest the emerging omni-crisis and without a fundamental economic restructuring all it can really do is kick the can down the road and make things worse.
More to the point, anything radical will necessarily require some deeply unpopular choices. And look what happened to Mrs May when the media labelled her social care reforms as the "dementia tax". Ain't no politician ever going there again.
And then look at the shambles in Westminster currently. As this blog continues to point out, this is by no means a new thing. There simply isn't the vision, the talent or the courage to radically rethink our economy. Living standards are only going decline, things are only going to get tougher and as politics travels deeper into its pocket of unreality it becomes ever more estranged from the public.
While we might prefer the relative stability of the status quo and a lot has been said of the uncertainty of Brexit, for that to qualify as an argument we must examine what that certainty entails. What it likely entails is a further degradation of politics, no radical reform and more political resentment, while incrementally, by the millions, people fall into a position of absolute state dependency. Do we expect Deliveroo and Uber drivers to prop all this up?
I take the view that the UK economy is at the fag end of a giant Ponzi scheme, and if there's one certainty about such such schemes it's that they always fail.
So why Brexit? Well, one way or another it forces the issue. We have to make radical reforms simply because we literally cannot afford not to. Already the exchange rate is a deterrent to immigration, we are already seeing movements in the property market and at some point we are likely to see another round of cuts. Then we have to have this out once and for all.
Brits have grown up used to certain entitlements and expectations born of post war socialism. It cannot be a coincidence that collectively we do not bother to save for retirement. Between the state pension and housing benefit (the latter underpinning a rentals floor price), it's enough to get by on. All the while we tell ourselves comforting lies that if only the government would crack down on tax avoidance then we can continue to firehose the NHS with money.
Entitlement is something that runs deep in UK society. I see people hobbling themselves and squandering their potential in order to get higher upon the list for a government hand out. Either directly or indirectly the state subsidises our life decisions. The state has become an all purpose assurance scheme which ultimately promotes irresponsibility. It has a cultural as well as economic cost.
If we want to break the UK out of its cycle of decline then we need to break the psychology of expectation and entitlement. Britain's welfare dependency goes far beyond the usual targets the Daily Mail goes after. One rather suspects that the most subsidised demographic of all is the Daily Mail reader. Collectivity we are unable to admit to our manifest hypocrisy.
I'm not looking forward to a decade of economic turmoil. All things considered, I could really do without it. What I do know, though, is that if we don't bite the bullet we will evolve further into a state of learned helplessness and we will continue award ourselves many more perks, each time torpedoing any attempt at vital reforms. The result is a far bigger crisis that we pass on to the next generation.
Over time the UK can restore trade links with Europe. It would be better not to lose them but if that is the price then I am still willing to pay it. We need a long and serious conversation about what we can still expect of the state in a world of hyper-globalisation, ever more insecure work and ageing populations. Psychologically the UK mindset has not evolved much beyond 1945. We expect the world on a plate and we expect the Easter bunny is going to pay for it. Not for nothing are employers more keen on eastern European labour.
Brexit is going to be a wake up call for Britain and Brits will have to get their heads around the notion that the post-war era is over. Britain is going to have to compete without the many advantages it has previously enjoyed. It is going to have to reinvent and innovate in order to survive and our traditional financial models will have to modernise.
The traditional model of work is dying. Our ossified state structures cannot cope. Our mentality is behind the times. Our politics has expired. It is therefore a matter of practical and moral necessity that we change our ideas. So far as I can see, Brexit is the only thing likely to cut the apron strings and the only catalyst that can bring about meaningful regime change.
Many have said of Brexit that we are taking a step back in time. I couldn't disagree more. It's the EU stuck in a timewarp, clinging on to its WW1 era vision. It is unlikely to modernise. It is unlikely to reform. It will maintain its regulatory iron curtain and quietly suffocate. Eventually Europe will have to undergo its own revolution to shake off the dogma of the last century. In that respect Britain is ahead of the curve.
Nobody knows what Brexit will look like or what will emerge from the turmoil. What we can say though is that it will be a democratic and economic correction to a long stagnant system. Though it will be tough it will at least be an opportunity to break the political deadlock. We are unlikely to resolve anything until we do.
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