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Shared ownership can put a roof over the head of Generation Rent

Date: 22. November 2013
Vidhya Alakeson

With house prices out of reach for many, shared ownership could be the next big thing – but only if it makes some serious change.The gap between renting and owning with a conventional mortgage, even a high loan-to-value mortgage, has become unbridgeable for low and modest income families in some parts of the country, not just London.

Take Cambridge as an example. A couple with one child with a net income of £22,000 would have to spend 85% of their income on monthly mortgage payments if they had a 95% mortgage on a two-bedroom property. While the barriers to ownership are high, the aspiration to own remains strong, and there are good reasons to promote ownership, not least the fact that welfare spending on housing benefit and pensions will rise dramatically if large numbers enter retirement and still have to pay rent. Shared ownership can act as a bridge to home ownership for those on lower incomes, but to meet the needs of millions not a few hundred thousand, the product would need to change and be massively scaled up.

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Are zero hours contracts here to stay?

Date: 5. August 2013
Vidhya Alakeson

It is not surprising that at the end of the longest economic downturn the UK has ever faced to see an increase in the number of people on zero hours contracts. In uncertain times, employers have turned to these contracts to weather a difficult economic climate. By not guaranteeing employees a set number of hours of work, zero hours contracts allow employers to respond flexibly to demand. Local Authorities have found them similarly useful in the face of budget cuts and an uncertain future for many council services. The question for the coming years is whether, as the economy starts to recover, zero hours contracts are here to stay.

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Retirement trends in the UK

Date: 26. February 2013
Giselle Cory

We aren’t saving enough for retirement. This was one of the findings presented in Resolution Foundation’s recent audit of low to middle income households, Squeezed Britain, which showed that a massive 69 per cent of low to middle income households do not have a pension. Across all income groups the proportion failing to save for a pension has fallen over the last decade. This means that working in later life is now more important than ever.

Today, new analysis tells us how we’re doing when it comes to the employment of older workers. It shows that retirement ages - distinct from state pension age (SPA) - are rising. For both men and women, the average age at labour market exit increased by around a year between 2004 and 2010. What remains unclear is whether this is out of choice or necessity.

 

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Tax credit cuts: a false economy

Date: 16. March 2012
Giselle Cory

This blog originally appeared on Public Finance

If the Chancellor wants to help low to middle income households, he would be wise not to sacrifice tax credits, by far the most progressive way to help poor families

Seventy per cent of April’s new cuts to tax credits will fall on households in the bottom half of the income distribution band if the government goes ahead with proposed changes to working tax credits.

The cuts, announced at various points over the last two years and accounting for over £2.4bn in 2012/13 alone, are by far the biggest cuts to tax credits yet.  Of the 2 million people on low to middle incomes currently claiming Working Tax Credits, all will be affected in some way. For some families, individual losses will run to several thousand pounds. Moreover, these cuts will disproportionately impact on households with children, as recently reported on by the IFS.

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What works in encouraging saving?

Date: 23. February 2012
Giselle Cory

This post originally appeared on Left Foot Forward

There are many tricks that can be used to encourage more saving – but we don’t know if any of them work. That is the finding from a new report from the Institute of Fiscal Studies. In looking outside classical economics to understand what drives savings, the authors pinpoint four areas: financial incentives; information, education and training; choice architecture; and social marketing.

If the word “nudge” is going through your head right now, you’d be right: this is the stuff of behavioural economics. Though the lessons from this field of research have been part of policymaking for some time, they have never been more explicitly so than now (see the work of the government’s behavioural insights team).

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