Antony Mason reports on the appearance of Angus Hanton in the latest episode of this BBC Radio 4 series, which focused on Inheritance
The BBC Radio 4 series “Poorer Than Their Parents”, presented by the American financial “guru” Alvin Hall, has had something of a rough ride. Divided into four parts and scheduled to replace Money Box over the summer, it was bumped off its Saturday slot by the emergency return of Money Box to cover the crisis in the Euro Zone, which in turn has been overshadowed in the news by the spate of urban unrest.
Nevertheless, Part 3 has now been broadcast (Wednesday 10 August 15:00), and is available on iPlayer. The subject was “Changing Patterns of Inheritance”, and Alvin Hall looked at the way in which these matched his general theme for the series: that the majority of people in Britain now feel that the next generation will be worse off than their parents.
Intergenerational Foundation
Angus Hanton of the Intergenerational Foundation made two contributions. The first was to point out how longevity has made family structures “thinner and taller”, with increasing numbers of living great-grandparents and fewer children in each generation.
Often great-grandparents and grandparents will leave their legacies to one generation below them, who may actually be in their 50s or 60s, whereas it is the next generations, perhaps in their 20s or 30s, who most need help.
Angus also explained how the housing market, with soaring values that have far outstripped the rises in salaries or the stock market, has provided windfall profits for the older generation. These are very lightly taxed when owners come to sell. In addition, it is the younger generations – who customarily buy these houses from older people as they downsize – that have to pay for these windfall profits, and may spend most of their lives doing so.
The older generations cannot really be blamed for this unfair situation, except for the fact that the market forces that have shaped it are strongly influenced by government policy – of governments that they elect.
Good intentions
Elsewhere, Alvin Hall found that, contrary to expectations, the older generation is very aware that the young stand to get a raw deal, and are doing what they can to mitigate this – and also that the younger generation are not as resentful as might be expected.
Efforts to hand down assets to the next generation can be frustrated by government policy, such as the limitations on gifts that may be subject to inheritance tax if the donor dies within seven years.
Equity release
Hall also investigated the way that householders have been turning to equity release, or “home income plans”, to raise loans against the value of their homes in order to fund gifts to the next generation – for instance to permit children or grandchildren to put down a deposit on a home.
His conclusion was that such loans are very expensive relative to their value – and that the best gift that any parents can make is to make sure that they are financially secure themselves and do not run the risk of being dependent on their children in later life.
Final episode
Part 4 of “Poorer than Their Parents” will focus on the vexed intergenerational issue of Housing, and is scheduled to be broadcast at 12:00 on Saturday 13 August, and again at 15:00 on Wednesday 17 August.