Lord Best (CB)

My Lords, my comments on this excellent report concern a missing ingredient and omission from it: the role played by housing policies in preparation for demographic change. I am not seeking to make the case for private and public investment in more manageable, accessible, right-sizer accommodation that enhances health and well-being, saves NHS and social care budgets and releases family homes for the next generation; that job has been done so well by the Older People’s Housing Taskforce of 2024. I am referring to what we choose to do about housing policy today, which has profound economic implications for both helping pay for our long lives for some and, conversely, adding appreciably to the cost of our long lives for others. Some 75% of pensioners are home owners. Most pensioners will have paid off their mortgage. Their incomes in older age go much further, because they are not having to spend a large proportion of their income paying the rent. Most have accumulated a tax-free capital gain. Today’s pensioner owner-occupiers hold approximately £3 trillion in housing equity. This accumulation of significant resources has implications for the debate on paying for care costs and the current review by the noble Baroness, Lady Casey. However, for pensioners in the private rented sector, and particularly for retirees of pre-pension age in the private rented sector, there is serious trouble ahead. Here, rents that start out at one-third or so of earned income will absorb a much higher proportion of post- retirement income. In many cases, the impact of the increasing rent is likely to trigger an eligibility for housing benefit. The IFS estimates that the already massive housing benefit bill, currently around £38 billion per annum, will rise dramatically as a result of the switch from younger people buying to private renting. Home ownership is down from 71% to 65%. The prediction is that the housing benefit bill will rise to over £70 billion in the years ahead, much of the increase necessary to support the PRS pensioners. It is housing tenure, beneficial for homeowners but highly problematic for private sector tenants, that will make a massive difference to the wealth and living standards of older people and the cost of an ageing population to society at large. I strongly recommend another inquiry by our excellent Economic Affairs Committee to cover this.