As a veteran journalist, I have seen governments of every hue come and go.
Before coming to power they always promise much in their manifestos, but deliver little.
The chief reason for this failure in the UK is short-termism, accentuated by the brief election cycle. Every five years (or even less) sees a change in government
But other democracies are better at long-term planning than the UK. And the consequences from the UK’s failure in long-term strategy are dire, from interest rate volatility to energy and food insecurity.
Take mortgages as an example that hits advisers and their clients particularly harshly just now.
Any up and comer without rich relatives or much in the way of a deposit may well need a mortgage of £400,000 to buy a home fit to bring up a family. That has consequences.
The interest on a mortgage of £400,000 alone, without repaying a penny in capital, at 1 per cent a year is a highly manageable £4,000 a year, but interest at 10 percent would lead to outgoings of a shocking £40,000 a year, just on interest payments.
This would destroy most ordinary people’s lives.
Even at 5 per cent, just to service the debt and not to make any capital repayment whatsoever, would cost £20,000 a year.
This will inevitably mean financial ruin for many middle-class Londoners by the end of 2023. A financial noose hangs over their necks.
Yet in the UK we are all fixated on the lowest rate of interest possible, which experts say comes though short-term fixes of two years or so. That system is now broken.
Young families bearing huge mortgage burdens cannot live under this black cloud of volatility.
They cannot budget or look forward to the simple joys of life such as the birth of a first child for, who knows, tomorrow everything will be different.
Even the monied classes may worry about withdrawing their children from expensive public schools if they can no longer afford the fees (with their children the innocent victims as their education is interrupted).
Bring back 25-year ‘fixes’
Fixed rate mortgages in the UK for terms as long as 25 years are just not available. According to press reports, they are standard in Canada, Denmark and elsewhere.
It is time to bring such mortgages back.
My late father, Frank Hawthorne, after retiring from the RAF, was a maths lecturer and part-time insurance broker, trading as Growth Assured Brokers, until a new regime in 1986 made it too complicated to continue.
He bought his first family home in 1956. Then, fixed rate mortgages for 25 year terms were readily available in the UK.
He was happy to pay 1 per cent or so, more for the certainty of knowing his outgoings. This was vital. He was the father of seven children, with school fees for the eldest four at boarding school when the RAF sent him to post-war Germany.
