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Guardian Unlimited Money | News_ | Study reveals financial crisis of the 18-40s:

Patrick Collinson
Tuesday March 28, 2006
The Guardian

An official government study into Britain's personal finances reveals a lost generation of 18- to 40-year-olds unable to cope with debts and soaring house prices, with alarmingly low levels of savings and little hope of building a decent pension.

The study, by the Financial Services Authority (FSA) and Bristol University, published today, is the biggest of its kind undertaken in Britain. It paints a picture of a generational divide fuelled by higher education costs and the collapse of company pension schemes - with 42% of adults now with no pension and 70% with no meaningful savings.

The FSA will call today for a new national strategy to improve Britain's financial capability, including workplace-based financial seminars targeted at 4 million employees; making personal finance more prominent in the national curriculum from 2008; and "money doctor" packs which will be sent to 1.5 million new and prospective parents each year.

What a typical and completely ineffectual response. A few leaflets and seminars to tell people to do better. Whilst it is still important to ensure that those who have worked all their lives now have a decent quality of life in retirement, we need to radically rethink our economic and fiscal policies to address this looming generation of have-nots, including me!

All of this bullshit about us being better off than we ever have been and so on is worth nothing if that better off means that we slave longer and harder for it. The monetary system has created a similar problem to the feudal systems that preceded mass home ownership, only this time there is little way out because people just do not have the capability to build up that same asset backing as previous generations had.

Forbes reported recently that:

Making a billion just isn't what it used to be. In our inaugural ranking of the world’s richest people 20 years ago, we uncovered some 140 billionaires. Just three years ago we found 476. This year the list is a record 793. They’re worth a combined $2.6 trillion, up 18% since last March. Their average net worth: $3.3 billion.

India's quota, 23 people worth between them $99bn compares with per capita GDP of just $3,400. Lakshmi Mittal's fortune increased in one year by the equivalent of SIX HUNDRED THOUSAND UK median incomes. Now don't get me wrong, I do not believe in a zero sum wealth game. I'm not some rabid trot that thinks they only get rich because others are poor. They get rich because money attracts money, because of the system that they are so good at playing. Because assets are transferred from poor to rich through landlordism (check out how many of Britain's rich list as rich because they own large tracts of our common wealth, the land of the UK itself that the rest of us need to pay them to occupy) and debt money.

This is not a call for some kind of punitive taxation - what's the point if, like Philip and Cynthia Green you can go through a year paying something of the order of five figures only in tax anyway, but for a new predistributive system that allows us all to share in our birthright, this planet, equitably and gives people a chance.

Some of what makes Oxford a fantastic place also puts intense pressures on those who live in and use the city. We are rightly precious of both our built and natural environment and heritage. The City Council's current local plan, the document that sets out policies about how they expect Oxford to develop in land use terms, neatly encapsulates some of these pressures:

• We have about 145,000 residents, of which nearly 30,000 are students - and therefore not always "permanent" residents, and usually not paying council taxes, though of course of crucial importance to the local economy and cultural vibrancy of the city.
• Of the approximately 100,000 jobs in the city, around half are filled by people commuting from outside the city, putting intense pressures on our transport infrastructure, which are extremely difficult to accommodate given the historic urban design nature of the city centre.
• We have about 5 million tourist visitors a year, also adding to pressures on transport and accommodation.
• We are an attractive area of more affluent workers deciding to live outside of London and commute.

It is also clear that living in the city is disadvantageous to health, educational and economic achievement (of the long term resident population - often masked by the fact that we have the highest level of degree level qualifications in the South East), and wealth:

• Health - Oxford has several areas in the lowest twenty per cent of England and Wales for "good health"
• Educational achievement - again we have several areas, predominantly in the east of the city, in the lowest twenty per cent of pupils achieving 5 A* to C grades at GCSE
• Crime - again predominantly in the centre and east of the city we have several areas with crime rates in the highest twenty per cent of the country and nearly all of the city has higher than average crime for the whole country.
• Housing - the lack of affordable housing in Oxford means that we are amongst the worst places in the country for people to be able to get the housing they need at a price they can afford. On this map you need to look at the equivalent urban areas - blue means access to housing is most difficult and it's no surprise that in rural areas where few houses are developed or already exist there are more problems affording them, but look at Oxford compared with Banbury, Bicester, Witney and so on. Oxford is nearly all blue (unaffordable).

Putting all these together, this map shows that Oxford has some significant pockets of deprivation amongst the worst in the country. These areas can become a focus for anti-social behaviour on the part of the few that disproportionately affects the quality of life for the many.

These pressures feed through into pressures on city governance and directly affect all of us through our taxes and quality of life. For example:

• The cost of homelessness amounts to around £4.5 million to the council and double that to all public revenue sources such as central government funded Housing Benefit. That's fully half of the council tax collected.
• The need for people to commute, many of whom can only afford housing in the expanding towns beyond the green belt, causes traffic difficulties in our historic city centre and the radial feeder roads through our suburban centres.
• The city has an ageing housing stock, increasingly environmentally inefficient, in both the private sector and the council owned housing, its inner suburbs were built before the prevalence of private motor vehicles and the infrastructure of its outer suburbs is crumbling, and much of the inner suburbs local populations are displaced when family homes are converted to student lets.
• We have a cornucopia of facilities, for sport, leisure and the arts, but they are often in the control of and designed for the universities' and their students use. Whilst the city council owns and operates several major sporting and leisure facilities, lack of investment means they cannot compete with more modern private facilities and do not maintain the cross section of users to pay for them properly - the leisure centres run at a £3million loss on a turnover of just over £7million.
• In business, local businesses are often squeezed out by high and increasing commercial rents, especially in the city and district centres, whilst because of the housing pressures others find it difficult to recruit and retain employees.
• In governance, whilst the city is asset rich, amongst the highest in the country, it is cash poor, and what cash is generated will, if things carry on as at present, be required just to bring council houses up to the minimum "Decent Home" standards.

We need to find innovative ways around central government restrictions to free up assets to be used for the benefit of all the people of Oxford. I hope to set out in the remainder of this manifesto some of these ideas to see us into the twenty-first century as a city in which all get an equitable share of the many benefits of being part of this vibrant, diverse, innovative and world leading city.

If I'm a bit quiet at the moment it's because a. I have half a dozen unfinished blockbuster blog posts in progress and b. I seem to be putting in 12-14 hour days at work at the moment as I'm in the middle of a big software rollout. In fact I've just finished (at half past three in the morning) shutting down remotely tonight's 25 updated machines - perhaps I would be better off in India!

But I seem to have been "tagged" by James Graham for a response to George Osborne's statement that we are all living off the coat tails of the City of London, so I will try and honour him with a response! I'm not sure I share his or Jonathan Calder's interpretation that Osborne means the rest of us are living as "parasites" on the City. I don't detect such a value judgement in Osborne's comment. Rather I think he is in fact describing the status quo.

When as much Sterling is traded on forex markets in a week than our entire annual GDP - more in a single month than our entire national wealth - and when every trade generates a commission or turn for the middle-men in the City, Osborne is right if he is merely pointing out that we are too dependent on the City. What I can't fathom from what has been reported of his interview is whether any solution he might have to offer involves reducing the influence of the financial sector at the same time as trying to increase the competitiveness of British industry and non-financial sector wealth creation.

However much we may be dependent at the moment on financial markets for our national cash-flow (I won't say wealth creation because money is not itself wealth and pushing money around is not producing any tangible wealth, just pocketing tokens that could be used to buy actual wealth) it is unhealthy because it exploits all of us. In order to have enough tokens to trade in the volumes the interbank market needs to make a decent return they artificially inflate all the world's currencies. And then skim the cream off of what they have created.

I confess my mind is sorely troubled by recent events in the financial markets - partly why I am finding it very difficult to write about it. For several years now, after reading the likes of "The Future of Money: Creating New Wealth, Work and a Wiser World" (B.A. Lietaer) and "The Grip of Death: A Study of Modern Money, Debt Slavery and Destructive Economics" (Michael Rowbotham), I have become convinced that we are in the "last days" of a system based on debt, speculative froth and the dominance of money pushers, abetted by state protectionism of the highest order. Part of me wants this current crunch to precipitate the sort of crisis that will force us to find an alternative more sustainable system. The other part recognizes the inevitable pain to ordinary people such a collapse would cause unless we have an alternative waiting in the wings.

The problem is that they really do rule the world. Because we have given them the ability to create credit at will, to manipulate money supply, currency circulation and so on they utterly outgun all the real wealth production in the global economy. And it's only when we wake up to the fact that they are only able to do so by persuading us to borrow, usually on the back of land values that are in turn driven up by that borrowing until they reach what in the US has recently become a bursting point threatening the stability of the rest of the global market, that we will be able to do something about it.

A couple of blog posts in the past few days - one by Lynne Featherstone on Lib Dem Voice - have highlighted the issue of corruption, but there is no greater confidence trick and fraud than that perpetrated every day against us by the financial sector. Let's have some more discussion of how that affects us and what we can do about it.

This interested me today:

Telegraph - Sharia law is spreading as authority wanes

By Joshua Rozenberg, Legal Editor

Islamic sharia law is gaining an increasing foothold in parts of Britain, a report claims.

Sharia, derived from several sources including the Koran, is applied to varying degrees in predominantly Muslim countries but it has no binding status in Britain.

However, the BBC Radio 4 programme Law in Action produced evidence yesterday that it was being used by some Muslims as an alternative to English criminal law. Aydarus Yusuf, 29, a youth worker from Somalia, recalled a stabbing case that was decided by an unofficial Somali "court" sitting in Woolwich, south-east London.

I expect we're supposed to be appalled. Yet I'm not. I don't see a problem with this idea. In fact it's a good deal more responsible a solution than meting out punishment beatings or kickings to the local scrotes on the say so of the local hard-man.

In fact, I quite like the idea that communities deal with many matters of justice on their own. As the report says, people submit to these courts because their families make them. Those families are shamed amongst their friends and the rest of their communities by their relatives' actions. The only stipulation I'd make is that no punishment should be imposed that would itself be a criminal offense under British law or that the "arrests" do not actually amount to kidnappings - if miscreants do not submit voluntarily to such local community justice.

It has always struck me, especially since the experience of accompanying a friend to a magistrates' court on a driving charge last year, that our good old British magistrate system is failing miserably in many places. They appear merely to be applying a regular slap on the wrist to a group of people, chief amongst them the hapless and hopeless, on behalf of an overburdened legal system. There's no sense, to me at least, that the magistrate system is reflecting the wishes and concerns of the communities they serve in any way that would assist in rehabilitation of relatively minor offenders or reconciliation with the communities they offend against.

But in terms of these Sharia courts, I don't see why we should get any more worked up about it than by, say, a Catholic Charismatic Renewal church that holds confessions in public, or the idea of church congregations "shunning" miscreants in some Christian sects. All our communities should be encouraged to find their own answers within the overall framework of the law to the sort of crimes against the community these courts are dealing with. Far better, say, than a broad brush "Anti-Social Behaviour Order" I'd say.

Naim Zidane, reported the Telegraph last week, is a 70 year old Palestinian who all his life has worked in a vineyard owned by the Italian priests at the West Bank Salesian monastery of Cremisan, near Beit Jala, not far from Bethlehem. They've been working together as a community for 120 years. But soon, it appears, the Israeli security barrier will drag this last West Bank vineyard into the Israeli side of the wall, just as they have ripped away the livelihoods of thousands of other West Bank Palestinians with the closing off of many olive groves over the past few years.

Meanwhile, last night, they once again attacked civilian infrastructure in another sovereign state, Lebanon, closing Beirut airport with rocket attacks, in reprisals against a geurilla organization, Hezbollah, sponsored and many say, I gather, controlled by a third, Syria, for kidnapping two Israeli military personnel. And in the past few days seventy Palestinians and one Israeli, including, as always, mostly civilians, and with them lots of children, have been killed in Israeli incursions into the largest concentration camp on the planet, the Gaza strip, also, it seems, because some of their fellow "countrymen" if Palestine can be called, yet, a country, kidnapped an Israeli soldier who was, presumably, on his way to maim and kill more Palestinians.

I really hesitate to post about Israel. If I am lucky my visitor numbers will rise. But probably at the expense of abuse that seems to be meted out against anyone who says anything negative about Israel. I'm a pacifist. And I understand that things have been difficult, shall we say, in that part of the world for several decades. I believe, I think, in a two state solution, not because I support Israel - if Israel hadn't carved itself out of the desert in the first half of the twentieth century I certainly wouldn't be creating it now. But it exists, and as a pragmatist, I believe there are a whole load of peace-loving Israelis, who arrived there and brought their families up there, hoping for some kind of peaceful co-existence with those who also viewed that land as part of their history and we should work for that peaceful co-existence.

But can you imagine the uproar there would have been if, say, the US military had gone about searching for those two of their soldiers, Kristian Menchaca and Thomas Tucker, who were kidnapped by allegedly al-Qaeda linked insurgents in Iraq, by killing civilians and bombing civilian infrastructure there? Like the battle of Falluja? Despite all my misgivings about the US government's lack of respect for the rule of law, I cannot for the life of me see why Israel gets away with these things, almost unremarked upon.

Our seeming collective myopia disgusts me - note to any hardcore Zionists about to yell at me - not Israel per se, but us, who seem to let this violence trickle through in the inside pages of newspapers and down in the bottom half of the news hour, with hardly a mention, either to condemn, or to discuss solutions. Maybe this latest attack on the civilian infrastructure of a country that in recent years, despite the upheavals caused by the death of President Rafik Hariri a while back, has been getting itself back on its feet, will refocus attention on what's going on in the area.

Punishment attacks are the weapons of a desperate regime. They are disgusting. Against the rule of law. People who support, as I do, a two state solution (though I have to say with deep, deep misgivings about the carving out of settlements whenever it suits them leaving the West Bank looking like a land strafed with bomb craters like the Somme battlefield) will eventually lose sympathy and wonder what it is we actually support - which ones are the murdering terrorists. Because terrorism is exactly what's been going on in Gaza; state sponsored terrorism, and state sponsored theft as in the case of Naim Zidane's employers' vineyard.

And I for one am losing patience with it. Whatever the hurdles, whatever the attitudes of those they feel are ranged against them, Israel can be the "better man" in its response, respecting the rule of law. When I was young, I just about remember Entebbe - we were I think in Kenya at the time. We thought the surgical precision of Israeli special forces when they wanted to be was second to none in the world. Maybe that was naive (I was only seven I think and soldierly antics were exciting, not threatening), but it seems to me they have become little more than the terrorists they condemn. And if we lose patience with the situation, if we give up hoping for a peaceful, adult, settlement, then I would imagine that Israel's death throes could be as bloody as its birth-pangs. And we will not care, because we'll have grown used to the bloodshed, and really have stopped trying to work out who are the good guys or not.