Lock, stock and two missing grandmas

Morning all,

This week, we got a step closer to the end of the triple lock – the State Pension should keep pace with earnings growth, but good riddance to the ratchet! Keep an eye out for fresh analysis from us digging into the long-run savings from this proposed change.

We’ve also officially entered Budget month. If you haven’t already, please do register to join our discussion next week about how the Chancellor can allay cost of living concerns when he steps up to the dispatch box on the 28th. And look out for details of our Budget preview on the 13th.

Keep reading for the latest on artificial lawyers and generational health drift, not to mention the end of grandmothers and the growing impact of the criminally under-discussed benefit cap.

Have a great weekend,

Mike

Deputy Chief Executive
Resolution Foundation

You’ll be hearing from my chat bot. Lawyers are expensive (and arguably not widely beloved). Is it any wonder then, that new research shows that around one-in-six people with a legal problem have turned to an AI chatbot for help? Among the 3,000 people surveyed who’d had a legal problem, young people were the keenest to reach for AI: more than one-in-four (26 per cent) of 18-24-year-olds with a legal problem used a chatbot, falling to one-in-ten (10 per cent) among 55-64-year-olds. Participants’ transcripts show the range: consumer disputes, landlord-tenant rows, employment problems and family law all featured. As the authors note, these are situations which are “common, stressful, and often difficult to navigate without advice, but that largely fall outside the scope of legal aid”. So, this could go one of two ways. Justice may become far more accessible, as long as the advice dispensed is accurate, especially for those without the resources or know-how to fight their corner. Or our public services may get irreparably gummed up with (occasionally spurious) complaints and appeals. Watch this space…

Goodbye Grandma. Ageing parents enquiring why their offspring haven’t produced another generation yet is a well-worn trope. The authors of a new paper, themselves grandparents-in-waiting, arguably fit the bill. They coined the “Rotten Adult Kid” problem: their term for the phenomenon of people deciding when to have children without thinking about the costs of delay to the would-be doting-grandmothers. As women postpone childbearing, these delays compound intergenerationally. In the US, median age at first grandmotherhood shot up from 44 under 1960 birth patterns to 57 in 2024, cutting the average number of healthy years shared with grandchildren by nearly half. While social interaction and free childcare are important, the paper still drew critique over language such as families becoming “extinct” and grandmothers’ “rights”. Our own research on fertility decline points also to a ‘relationship recession’, financial constraints and housing costs as contributing factors in the dearth of grandkids – not simply insufficiently pushy grandparents-in-waiting.

Unlocking care. Burnham’s big, bold plan to end the triple lock ratchet and pour the savings into a National Care Service has, understandably, grabbed the headlines this week. Handily, a new Joseph Roundtree Foundation briefing lays out in grim detail the scale of the problem he’s trying to solve. Residential care costs between £1,000 and £1,400 a week. Even the poorest, lowest-saving couples who receive the most state support still hand over around £9,000 a year in “user charges” and low-income residents pay only slightly less than high income equivalents. Little wonder Dan Neidle has likened the whole thing to an arbitrary tax handed out by lottery. Free personal care won’t fix all of these problems, but any step towards a more compassionate and fairer system is welcome.

Le Rust Belt. We all want to see Britain growing, and here at RF we’ve long advocated for agglomeration (cities are good!), and the opportunities available within service industries to former manufacturing heartlands. This paper (free version) tracks how France’s rust belt, which lost 400,000 manufacturing jobs between 1975 and the late 2010s, was revived by a booming Luxembourg next door. By 2021, over a third of prime-age workers in border towns commuted across, earning 60 to 65 per cent more (!) than comparable French workers. Most strikingly, the workforce did not stick to manufacturing, with 60 per cent of the increase in cross-border employment driven by services. Employment rates rose by 7 percentage points, the population grew 15 per cent, incomes climbed and reliance on benefits fell (rents rose too, by around a third, the usual price of a booming local economy). Far-right and anti-EU voting also fell relative to similar regions: In the authors’ chipper words, former industrial regions “are not inherently rigid nor doomed to fall to anti-globalization backlash, but can and do adjust”. All relevant to the Government’s vision of regional renewal, but perhaps indicative that a ‘new age of industrialisation’ is not the only, or even the most effective, way to boost living standards.

Catch my drift? We’ve long banked on each generation living longer and healthier than the last. But a Substack warns that 50 could be the new 60 thanks to ‘generational health drift’, as younger generations seem to be seeing worsening health. In the US, those born in the 1950s (i.e. people now approaching their early 70s) have seen worsening mortality across most of their lives, and cohorts born twenty years later have also seen deaths rise in their 30s and early-40s. And it’s not just people dying sooner. In the UK, diabetes among 40-somethings almost doubled, from 3.1 per cent among Baby Boomers to 5.9 per cent among Gen X, while Gen Z have the highest childhood obesity rates. Younger generations reaching retirement age in worse health could magnify the fiscal and societal impacts of population ageing. In the words of the meme: not now, additional demographic burden on our overstretched health service!

Chart of the week

I don’t blame you if this one passed you by, but last week the DWP shared the latest data on the benefit cap (which limits how much benefit income people can receive, although working parents and families with a disabled member are exempt). As you might expect, whenever benefit rates have increased – like in April 2024, when LHA was uprated – the number of households hitting the cap rises – because the value of the cap hasn’t changed since 2023. This explains the particularly steep rise in capped households in April of this year, following the welcome removal of the two child limit. That policy change meant that there will be 425,000 fewer children living in poverty by the end of the decade. But the red line in our chart makes clear that the increase in capped households this April was driven by households with children, meaning around 36,000 more households with children have been cut off from the material boost of the ending of the two child limit, and a 37 per cent increase in the number of capped households with children. Before its removal, the two child limit arbitrarily broke the link between a household’s needs and its entitlement. The benefit cap is no different. Families in Scotland can already receive payments from their local council to offset its impact, and any UK government wanting to do more to reduce child poverty should look hard at this capricious cap.