Expenditure on Pensions

[Magdalia]

It’s always puzzled me, how we managed in the 1960s, when IIRC commercial “childcare” was comparatively rare. The traditional “family allowance” which became “child benefit” wasn’t expected to pay for childcare.

Did the large majority of working women rely on grandparents help, or just not work at all until children were at secondary school age?

The participation of women in the workforce was much lower. There were still a lot of "stay at home Mums".

Children of junior school age mostly made their own way to and from school.

Families were less widely dispersed so there would be informal childcare from the extended family. As you say, particularly grandparents.

There was what were called "latchkey children" who came home from school to an empty house.

And, in larger families, older children looked after their younger siblings.

 

[Simon11]

It’s always puzzled me, how we managed in the 1960s, when IIRC commercial “childcare” was comparatively rare. The traditional “family allowance” which became “child benefit” wasn’t expected to pay for childcare.

Did the large majority of working women rely on grandparents help, or just not work at all until children were at secondary school age?

Childcare costs should be considered a small part of having a child and for my partner who is a teacher just the cost of childcare is around 1/3 of her salary after paying tax for just a single child aged under 2. Thankfully the recent increase in government hours will help when we have a second child and we will need to put them in nursery around 1 years old- although we are close to a point when there is no benefit in her working and the UK loses a teacher for several years.

Take this article from Daily Express (https://www.express.co.uk/news/uk/1776789/cost-of-living-over-time-compared-spt)

What money could buy back in...​

All prices inflation-adjusted to 2023 pounds.

Year	Median wage	Average house price	Standard family car	Price of bread
1970	£13,000	£57,000	£11,500 (Ford Cortina)	£1.15
1980	£18,000	£92,000	£12,000 (Ford Escort)	£1.28
1990	£24,000	£115,000	£12,500 (Ford Escort)	£1.15
2000	£30,000	£142,000	£19,500 (Ford Fiesta)	£0.92
2010	£34,500	£230,000	£21,000 (Ford Fiesta)	£1.77
2023	£33,000	£260,000	£23,000 (Ford Fiesta)	£1.39

Doing a few calculations, salary have increased by 254%, while houses have increased by 456%, while car by 200% and bread by 121%. Considering housing costs are huge, that makes a big difference to family budgets when they are just starting to move into family homes [if they can afford it].

As mentioned above, if we could encourage more elderly couples to downtrade their 4-5 bedroom homes, it would make a huge difference for families and bring prices down. Living in a family home, 50% of family homes in the street here are occupied by an elderly couple or even a single person! You could properly double the amount of people living in our street and everyone would still get their own bedroom. I wonder if they should remove stamp duty for people over 60 who are moving to a smaller property to encourage more people to down trade (only issue is that these people have already benefit massively from housing price increases, so why should they save tax on top?). The alternative is a bedroom tax which wouldn't go down well.

As someone around 35, agree that there are a lot of people around my age without children. In fact, all my three best mates do not have children.

 

[eldomtom2]

Nonetheless, if birth rates are to rise, then society would have to decide to remove some or all elements that enable that choice (e.g. the right to abortion).

That seems like a dubious claim seeing as opinion polls often show large numbers of women wanting more children than they actually have.

 

[Bald Rick]

This is another classic example of "people I know" not being representative of the UK population.

You’ve misrepresented what my quote was about.

I wasn’t making a comment about the number of children some choose to have. I was commenting about why they are choosing not to have them.

I accept that the reasons may vary between those born in/outside the U.K. As it happens, some of them were born outside the U.K.

Doing a few calculations, salary have increased by 254%, while houses have increased by 456%, while car by 200% and bread by 121%. Considering housing costs are huge, that makes a big difference to family budgets when they are just starting to move into family homes

This makes the mistake of conflating house prices with housing costs. Whilst they are related, they are not the same.

My mortgage borrowing now is 10x the size of what it was 25 years ago, but costs me only 4.5 x as much.

 

[uglymonkey]

1970 ,£11,500 family car. That doesn't make any sense

 

[birchesgreen]

It’s always puzzled me, how we managed in the 1960s, when IIRC commercial “childcare” was comparatively rare. The traditional “family allowance” which became “child benefit” wasn’t expected to pay for childcare.

Did the large majority of working women rely on grandparents help, or just not work at all until children were at secondary school age?

Well in my case in the mid-70s my mum worked part time and my Nan looked after me in the mornings. There were nurseries around though but not as many i suspect.

1970 ,£11,500 family car. That doesn't make any sense

No, maybe a Rolls Royce

 

[ainsworth74]

1970 ,£11,500 family car. That doesn't make any sense

It's adjusted to 2023 values.

 

[Wynd]

1 earner, and 3x Salary for a mortgage used to be the driver of house prices.

Now, its 2 earners and 4.5x combined salary.

So unles you are both on or above the median, £40k ish, then finding a family home in the market is going to be less than fun.

£80k, x 4.5 = £360k, plus whatever deposit you have to hand, minimum £36k for 90% LTV, call it £400k.

Are 4-5 bed family homes priced at around £400-£500k, yup, pretty much.

Are enough homes being built to meet demand? Not in all areas.

 

[The Ham]

1 earner, and 3x Salary for a mortgage used to be the driver of house prices.

Now, its 2 earners and 4.5x combined salary.

So unles you are both on or above the median, £40k ish, then finding a family home in the market is going to be less than fun.

£80k, x 4.5 = £360k, plus whatever deposit you have to hand, minimum £36k for 90% LTV, call it £400k.

Are 4-5 bed family homes priced at around £400-£500k, yup, pretty much.

Are enough homes being built to meet demand? Not in all areas.

It depends on where you live, £500,000 is only just a 4 bed in Woking (there's currently one for marginally less, but the majority are more) for a 5 bed you're looking at over £600,000.

Conversely go to somewhere like Camborne (Cornwall) and you can get a 5 bed house for £360,000.

 

[Merle Haggard]

1 earner, and 3x Salary for a mortgage used to be the driver of house prices.

I would suggest that interest rates might also be driver. Bald Rick above gave his example above; house prices were lower in real terms in the 1980s and early 1990s but I can tell you from personal experience that a mortgage rate as low as 7% then would have been regarded as a) bliss and b) never likely to happen.

Mortgage rates peaked at around 15% in 1986 from what I remember (I was there) and very recently it's been just over 1%. I suppose I would be regarded as a privileged baby boomer to have bought a £42,000 house with a £32,000 mortgage (just as interest rates roared up) but the repayments I made on that sort of interest rate would have serviced the repayments at 1 1/2% (say) on a much bigger borrowed sum. Isn't that likely to be a factor in the rise in real terms of house prices?



.

 

[Bald Rick]

1 earner, and 3x Salary for a mortgage used to be the driver of house prices.
Now, its 2 earners and 4.5x combined salary.

It’s much more complex than that. Mortgage companies have detailed models for affordability.
My current mortgage was arranged at 6 x my then salary, but that is not how it was calculated.

It depends on where you live, £500,000 is only just a 4 bed in Woking (there's currently one for marginally less, but the majority are more)

£500k barely buys you any sort of house in St Albans proper, but you‘ll get a big semi* just up the road in Luton

(* stop sniggering)

Isn't that likely to be a factor in the rise in real terms of house prices?

It certainly is.

Mortgage rates peaked at around 15% in 1986 from what I remember (I was there) and very recently it's been just over 1%.

Is this the point where I act smug about my sub 1% fixed rate with years left?

 

[telstarbox]

I am in my 30s, and half of my peer group have made a concious decison to be childfree. Lots of varying reasons.

Project that on the long term, and the population is going to be considerably smaller.

Would you say it's the more middle class half going childfree, which is my experience from my 30s peer group?

 

[Merle Haggard]

/snip/

Is this the point where I act smug about my sub 1% fixed rate with years left?

It may well be.

The interest rates shot up to 16% ca 1985 when I had a (big) mortgage and (obviously) no savings. The Government didn't care about people in my position..

Fast forward to 2008. I had no mortgage but savings. Intervention to save mortagees from themselves meant my savings earned only a tiny amount of interest. The Government didn't care about people in my position.

However, the high interest rates meant that, when I bought my forever house in 1985 it was a buyers' market, and I got a bargain from a desperate vendor. Its value is now about 10 times what I paid for it. So perhaps there's grounds for smugness all round..

 

[Yew]

I would suggest that interest rates might also be driver. Bald Rick above gave his example above; house prices were lower in real terms in the 1980s and early 1990s but I can tell you from personal experience that a mortgage rate as low as 7% then would have been regarded as a) bliss and b) never likely to happen.

Mortgage rates peaked at around 15% in 1986 from what I remember (I was there) and very recently it's been just over 1%. I suppose I would be regarded as a privileged baby boomer to have bought a £42,000 house with a £32,000 mortgage (just as interest rates roared up) but the repayments I made on that sort of interest rate would have serviced the repayments at 1 1/2% (say) on a much bigger borrowed sum. Isn't that likely to be a factor in the rise in real terms of house prices?

Perhaps, but many people struggle to get to that level in the first place, given the large deposits needed to be saved whilst renting in the nearest city to your town due to jobs moving.

 

[cb a1]

That seems like a dubious claim seeing as opinion polls often show large numbers of women wanting more children than they actually have.

Fascinating.
Do these opinion polls ask what is stopping them from having more children?

 

[Wynd]

It’s much more complex than that. Mortgage companies have detailed models for affordability.
My current mortgage was arranged at 6 x my then salary, but that is not how it was calculated.

Is this the point where I act smug about my sub 1% fixed rate with years left?

Yes, rates, equity at hand, deposit, credit profile, but as a guideline, the above holds true, its not directed at a specific case.

Discretion is probably a more empathetic policy when a huge number of people will lose their homes in the coming years due to affordbility.

Would you say it's the more middle class half going childfree, which is my experience from my 30s peer group?

I would. Only my expereince, and this is not in any way a brag, far from it, but most of my peer group are firmly MC by lieu of going to university, background, working as professional engineers/lawers/doctors etc etc.

 

[eldomtom2]

Fascinating.
Do these opinion polls ask what is stopping them from having more children?

Generally not the pain of childbirth. Here's a recent UK survey.

 

[Merle Haggard]

Perhaps, but many people struggle to get to that level in the first place, given the large deposits needed to be saved whilst renting in the nearest city to your town due to jobs moving.

I'm not trying to convert this into '4 Yorkshiremen' and I have sympathy with (and have helped someone who has encountered ) the current difficulties, BUT in the 'good old day's of the mid-1970s (when I and my friends were getting mortgages) there were the following criteria which had to be met, bearing in mind that generally it was only building societies that offered mortgages - a) have saved (with the building society you're applying to) for, I think, 5 years with deposits equal to likely repayments b) be a married couple or intending to be c) pretty much only the man's income taken into account , and d) an application would be noted but had to await funds (the only source of money to lend was from savings accounts) and put on. a waiting list. If that became too long, it was scratched and you had to start again. In effect, this rationed the supply of mortgages, which kept house prices down, but many found it difficult or impossible to buy. Remember that 50+ years ago, a bigger proportion of pay went on to absolute essentials so saving was more difficult unless, like me, you forwent such luxuries as a television and certainly a car. I fell down on the criteria being single but managed to persuade the local authority to lend me money to buy my first house (perhaps because otherwise I might become their responsibility). The hurdles, although different, seemed just as high as now.

 

[Wynd]

Iand d) an application would be noted but had to await funds (the only source of money to lend was from savings accounts) and put on. a waiting list. If that became too long, it was scratched and you had to start again. In effect, this rationed the supply of mortgages, which kept house prices down, but many found it difficult or impossible to buy.

Pre Big-Bang when banks were deregulated and credit growth exploded.

You rightly point out, this kept house prices down, as prices could not be driven by bank lending at 10:1 or even 20:1 Loan to Deposit ratios.

If lending rules went back to the old model you outline, the crash in housing would make 2008 look like a picnic.

 

[Merle Haggard]

Pre Big-Bang when banks were deregulated and credit growth exploded.

You rightly point out, this kept house prices down, as prices could not be driven by bank lending at 10:1 or even 20:1 Loan to Deposit ratios.

If lending rules went back to the old model you outline, the crash in housing would make 2008 look like a picnic.

To be clear, I wasn't suggesting they should - my 'good old days' was ironic...

There was quite a fall in house prices in 1985/6 as a result of the steep increase in interest rates.