The Center for Education & Youth printed an article by Baz Ramaiah regarding the economic impact created by COVID-19.
“With these considerations in mind, the government should go further in helping young people through a fund specifically for young people in poverty, independent of their location in the country.
“Housing: Despite Rishi Sunak’s rhetoric about turning generation rent into generation buy, the new budget may make access to housing even more difficult for young first-time buyers.
“The Mortgage Guarantee Scheme, increasing the availability of mortgages that require only a five percent deposit, is intended to dovetail with the extension of the Stamp Duty holiday to make buying a house easier for generation rent.. However, there is a reasonable chance that this pair of policies will rapidly drive up demand for houses, leading to inflated prices. Time will tell how the market responds, but if the latter scenario plays out then young people are destined to remain as generation rent.
“Young people living away from home are most likely to live in rented accommodation. The budget omits any support for private renters. Young renters are twice as likely as any other age cohort to be in COVID-induced rent debt to their landlord. The average individual debt works out to nearly $700. and reports suggest that landlords are already issuing eviction notices despite the government’s pledges. Young people are at risk of abrupt relocation or worse, homelessness.
“To better support young potential home-buyers, the government should limit access to the mortgage guarantee scheme. By working with the financial conduct authority, the scheme could be made available only to young people. This may stymie house price inflation as well as directly supporting home ownership for young people. Equally, the government should consider extending an eviction amnesty for six months after the easing of lockdown to give young people some runway to get back on their feet economically. More radically, as total rent arrears are estimated to come to $500 million, the government should consider a complete rent debt clearance initiative.
“Public Spending: The Resolution Foundation believes that there will be a fall in government expenditure of at least 2.5 billion. While the Department of Education is insulated from these cuts, services young people rely on outside of school are likely to be hit hard.
“While the government has tried to offset some of these concerns with ongoing capital investment, this initiative will likely end in a significant under spend. It fails to resolve the real problem: government departments, hobbled by a decade of austerity, trying to meet high demand for services they provide.
“After a year of sacrifice to safeguard the health of older generations, the government needs to make young people a priority for support. It could include an internal review of services within each department, with the aim of identifying those that young people disproportionately depend on. This could be delivered by, or with support from the National Audit Office. Department funding could then be awarded on agreement that these services are protected from any cuts by that Department.
“Conclusion: John Maynard Keynes, perhaps the most prominent economist of the 20th Century, once remarked that the purpose of government is to do what businesses cannot do. The past decade has shown us that we cannot rely on businesses alone to fix the major economic crises facing young people. The government will need to step up if it is to avoid creating a new lost generation.
“This will involve extending further support to young people beyond education, including support with jobs, housing, and other services. It is vital that we, as a sector, take every opportunity to remind the government of its responsibility to young people. It’s equally vital that we remind society at large of the risks of shirking this responsibility.”