On the Menu Today – Yesterday’s lunch with a sprinkling of chilli

Posted on Jan 05, 2024. by NTI

Sir Howard Davies, Chair of Natwest, must have read yesterday’s newsroom article (Today’s lunch is more than a sandwich) and missed the point made by the two stories covered.

When asked by the BBC on the Today programme this morning (Friday 5 January) when he thought it would be easier for people to get on to the property ladder in the UK, Sir Howard said: "Well, I don't think it's that difficult at the moment. You have to save, and that's the way it always used to be."  When pressed further on his reasoning, he admitted people had to save more, but said it was also due to fundamental changes in the housing market seen in the wake of the financial crisis.

"What we saw in the financial crisis was the risk of having people being able to borrow 100% and then suffering severe falls in the equity value of their houses and having to leave and having a bad credit record so there were dangers in very, very easy access to mortgage credit," added Sir Howard.

Critics (who of course can be reliably relied upon for criticism) said his comments were “astounding” and "out of touch with reality".  Ben Twomey, chief executive of campaign group Generation Rent, also questioned whether Sir Howard was an resident of Earth or from a different planet.

According to data from both the Office for National Statistics and HM Land Registry, house prices have risen 240% since 2000, whereas average weekly earnings have only risen by 112%.  This is one factor why the average age of a first-time buyer is now 32.

Torsten Bell, head of the Resolution Foundation, a think tank which focuses on improving living standards for those on low to middle incomes, said it was "increasingly not true" that people save for a house deposit, due to half of first-time buyers in their 20s getting help of an average of £25,000 from their parents.

In comments made before those made today by the Natwest boss on X (which seems forever destined to be named akin to Prince as formerly known as Twitter), Mr Bell said the most common living arrangement for an adult aged between 18 and 34 in 1997 was "being in a couple with children" whereas "today the most common is living with your parents,"

Sir Howard, who has been Natwest Chair since 2015 and oversaw the Nigel Farage debanking last year (which depending on your political viewpoint may mean you think he has credit in the bank) has a salary in excess of £750,000 a year.  He is due to stand down in April this year so may be trying to fill his last few months with some soundbites.  Time will tell.

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