Friday, 24 October 2014

7 lessons from the Missing Million

Yesterday we published our Missing Million report with the support of Prime and Business in the Community.

What did we find?

Involuntary unemployment is not the exclusive preserve of the young
  • Of the 3.3 million economically inactive people aged 50-64, approximately 1 million people have been made ‘involuntarily workless’
  • There are around 1.2 million people aged over 50 would be willing to work if the right opportunity arose

Older people don’t take jobs from the young
  • A higher proportion of older workers does not “crowd out” the labour market for younger workers. Our analysis shows that, on average, those local authorities that do well with regard to the employment of older workers also do well in terms of employing younger workers.

There is huge economic potential if we maximise labour market participation of older people
  • 26% of people aged 50-64 who are currently out of work would like to work – this rises to 45.8% of all those out of work aged 50-54.
  • 50-64 year olds account for 41% of the total number of people who are economically inactive aged 18-64 (as at Q1 2014).
  • If the skills and abilities of the 50-64 age group were fully utilised and the employment rate matched that of those in their 30s and 40s, UK GDP could be £88.4bn higher in 2014 (equivalent to an uplift of 5.6% of GDP).

Self-employment is an important source of work for older people
  • Self-employment accounts for 19.4% of all workers aged 50-64 and for 40.8% of all workers aged 65 and older.
  • The 50+ age group accounts for 42.9% of all self-employment in the UK and 2 million people.

Companies who don’t do more to support extended working lives could struggle to get the staff they need
  • The size of the UK’s workforce is likely to flat-line, projected to increase by just 4.5% over the next 20 years by comparison to an 18.2% rise over the last two decades.

We need to do more to prevent ill Health
  • Among those in their 50s, long term sickness is the cause of half of all inactivity put down to poor health amongst those aged 50-54 and nearly 40% amongst those aged 55-59.

We need to create more opportunities for older people to work flexibly
  • People over 50 want to see more flexible working options afforded to them, 15% even said they would even take less pay in order to work fewer hours – indicating that there is a large contingent of older workers who would like additional flexibility but who are locked into working long hours.

Ben Franklin presented a few slides at the launch event.

Let's get Britain building

There are perhaps not too many areas where the CBI, the Ready for Ageing Alliance, housebuilders and the Labour, Liberal Democrats and the Conservatives all agree.

But one of them is that we need to build more homes.

ILC-UK’s own analysis has revealed, for example, that just to keep up with demographic change, we need new homes built at the fastest rate since the 1970s.  

Some of these homes will need to be retirement homes. A new study published this month by Knight Frank has highlighted a “chronic shortage” of retirement homes. The organisation, which surveyed people over 55, found that 25% (4.4 million) would buy or rent in a retirement village.

In 2011 Professor Ball said that the UK has capacity to get to 16k units a year for owner-occupied retirement housing. In 2013 Demos argued that around 1 in 4 of the over 60s would consider retirement housing (similar to the Knight Frank percentage).

In the UK, just around 1% of us live in retirement housing. This compares with 17% in the US and 13% in Austria. Even if Knight Frank and others have overestimated demand, it is clear there is likely to be a shortage of new retirement housing.

So why isn’t it happening?. The recession has had a negative impact. There was not enough money around to build and not enough demand as inertia and other barriers prevented older people making the move. Planning remains a barrier.

But perhaps things are about to change? Glenigan have found for example that the number of retirement housing units awaiting planning consent is more than double the number currently being built. This either reflects an imminent increase in new schemes or a slow planning process. Possibly both.

McCarthy and Stone have recently announced plans to reach 3,000 units a year by 2018, having sold 1,667 in the year up to 31 August 2014.

EAC and McCarthy and Stone have provided ILC-UK with new data on the number of retirement housing schemes (1) completed since 2005. These figures reveal a fall up to 2010 and a subsequent increase. The total number of new properties remains a long way off the 2007 figure.

Units (properties) update October 2014

Year completed
McCarthy and Stone

It’s nice to see industry, charities, thinktanks and the three largest (2) political parties all agreeing. But whilst there is a consensus about need, making it happen seems a harder. Whilst the political parties advocate nationally, local MPs and Counsellors find reasons to object to housing. There is always somewhere better to put it (ideally someone else’s constituency).

And whilst the signs might look good, we have only built 200,000 homes in 4 out of the last 14 years. As our analysis showed, 200,000 is just enough to keep up with demographic change rather than address the current shortage. Even if we were to build 200,000, how do we increase the proportion of retirement housing as part of these numbers?

If we are to ensure the supply meets expectations, new housing (retirement and general needs) must be built according to the needs of an ageing society. We need lifetime homes standards, not a nonsense of “optional” age friendly standards for housing. If we don’t build the right homes, there will be limited incentive for older people to choose to rightsize and potentially free up bigger family homes.

Let’s get building. But let’s also build good stuff.

David Sinclair

Thanks to EAC and McCarthy and Stone for providing the new data.

1) UK numbers only include schemes that are staffed by something approximating to a traditional scheme/court manager. They therefore exclude developments that are simply age exclusive by virtue of planning consent. They are captured by year of completion, ie when people start to move in. The numbers includes schemes whose primary tenure is leasehold / freehold and the Scottish equivalent. There is likely to be some undercounting of (largely housing association) mixed tenure provision. EAC allocate all properties in a scheme to its dominant tenure.

2) In terms of Westminster Parliamentary seats