I was born just nine years after the end of WWII, a global war that probably killed more than 80 million people[1]; devastated much of Europe and the UK; and most notoriously devastated Japan, the awful spearhead of which were the atomic bombings of Hiroshima and Nagasaki. Rationing in the UK only officially ended on 4 July 1954.
As a consequence of the extensive bomb damage to so many cities, there was a dire shortage of housing. My elder sisters and myself were born in a small, terraced house typical of its day – no central heating, open fires and a toilet at the bottom of the garden. No telephone, no mobile phone, nor any of the gadgets that we now come to regard as the ‘norm’. Mum handwashed the household laundry and used a manual mangle.
Added to this rustic simplicity of peoples live, the NHS was founded on 5 July 1948[2]: welfare was in its infancy – often incorrectly perceived as a warmonger, Churchill was in fact a socialist and reformist. Having introduced the very first old age pension (1908[3]), it was under his premiership in the 40s that he commissioned the Beveridge Report[4], giving birth to both the Welfare State and the National Health Service – the first country in the Western World to introduce a free national health service.
Politically there was a mood of discontent – two world wars were a ‘bridge too far’ for the working class, who were no longer inclined to ‘doff their caps’ to the ruling classes. The message trumpeted by a Conservative government of bread today, jam tomorrow fell on deaf ears as did a subsequent political message – “you’ve never had it so good” (Harold McMillan 1957[5]). This led to a major swing to the left of British politics in protest (Harold Wilson 1964[6]). As the economy left behind wartime austerity it inexorably led to a more liberal society ……and to coin a phrase ‘the swinging 60s’.
This was my childhood, but sadly I was too young to reap the more hedonistic benefits of the 60s!
It was in the main a good decade for the vast majority and the one in which perhaps memories of the war and deprivation started to fade – notwithstanding that Britain was unsurprisingly still revelling and celebrating winning the war against the odds. My boyhood memories are of comics with names like ‘Victor’ and full of heroic wartime stories of British commandos.
It is against this backdrop that it was quite incredible that England’s only men’s football world cup triumph was England against Germany in the 1966 World Cup, which England won 4-2.
However, a general ‘feel good’ atmosphere, the result of decent economic performance (and world cup euphoria) overshadowed the silent cancer of deeper economic problems that began to manifest at the end of the decade when the British economy nearly collapsed. Up until then, manufacturing was the dominant sector with many products exported worldwide.
Manufacturing had accounted for almost half of the economy but the cracks stated to appear in the 60s as it increasingly became apparent that British manufacturing simply could not compete on the world stage. Ironically, having lost the war, both the German and Japanese economies were rebuilt with enormous support from the US, but our out of date infrastructure, constrained by union power, was no match for these developing titans. Within 20 years of the end of the war the Japanese and German economies were the second and third largest respectively in the world (behind the US).
It is important to note that the reason why the Germany and Japanese economies were rebuilt by the US was to counter the threat of growing communism from Russia – capitalist democratic West Germany needed to be able to demonstrate that it could outperform communist East Germany (then part of the USSR) both economically and socially. And the same with Japan to create a capitalist democracy in a part of the world surrounded by the growing threat of communism. Britain was left to lick its war wounds and saddled with enormous war debt.
A child of the sixties was brought up with the main savings options simply being cash in the bank, with owning your home an ever-stronger aspiration. But as young adults we had to contend with hyperinflation and sky high interest rates – mortgage rates reached c7%[7] by the end of the 60s but rocketed to c15%[8] later in the 70s.
So the 60s had a part to play in the degradation of the UK economy, and the ultimate demise of the Empire. But it was that tectonic shift that acted as the catalyst for the Thatcher government of 1979 to develop a service-led economy with financial services in the Vanguard. While a service-led economy has not been able to restore the UK’s golden days, financial services has been a very real success with London one of the three main financial capitals around the world.
Not only has financial services been a great success, being one of the top three sectors in the UK economy, but with its growth has come complexity. For example, the Pension Simplification legislation announced with a fanfare of trumpets in 2006[9] created different complexities – how, when and best to draw tax-free cash, and how to use flexible drawdown to minimise income tax.
More recently, thought may need to be given as to how to minimise the Inheritance Tax imposed on many unused pension funds and pension death benefits from April 2027, intended to be legislated soon.
Tax allowances including personal allowance, marriage allowance, ISAs and investment income allowances, including single premium bonds, can be deployed to ensure that only minimal Income Tax needs to be suffered on retirement income.
The prospect of long-term care also needs to be considered and managed, with monies put aside to cover such an eventuality. And last but certainly not least, making a will and keeping it regularly updated needs to go hand in hand with the wider financial planning, not forgetting the importance of powers of attorney for both health and financial matters.
At this stage of life, capital preservation tends to take over from capital accumulation. This will involve not just secure investment strategies, but minimising tax.
Regular financial advice is needed as much as ever before.
1 https://www.statista.com/statistics/1293510/second-world-war-fatalities-per-country/
2 https://history.blog.gov.uk/2023/07/13/the-founding-of-the-nhs-75-years-on/
3 https://commonslibrary.parliament.uk/research-briefings/sn04817/
5 http://news.bbc.co.uk/onthisday/hi/dates/stories/july/20/newsid_3728000/3728225.stm
6 https://www.gov.uk/government/history/past-prime-ministers/harold-wilson
9https://researchbriefings.files.parliament.uk/documents/SN02984/SN02984.pdf
