Ageing society will have ‘serious consequences’ for young people, government warned
The UK is “strikingly unprepared” to deal with the pressures of an aging society, a group of Lords’ colleagues have warned, as they paint a clear picture of the future for the country’s young people.
In a damning report, the House of Lords Economic Affairs Committee accuses successive governments of failing to deal with the problems that will arise from people living longer.
The group argues that continuing to raise the state pension age (soon to rise to 67) is no longer an adequate solution to the economic pressures of an aging population, as increasing numbers of people are leaving the workforce before reaching that level.
These warnings are based on findings that people over 65 will make up 18.9 percent of the total population in 2023, up from 16.5 percent in 2011 and just 13 percent in 1972; This indicates a sharp increase.
Latest research by the Office for Budget Responsibility (OBR) reveals this figure could rise to over a quarter (27 per cent) by 2074.
The Lords Committee finds that this will have a particularly profound impact on those born now and in the recent past, as they are likely to live longer and therefore need to retire later and save more to be comfortable in old age.
According to the report, the fertility rate has also been falling since the late 1970s; It falls to a record low of 1.44 (children per woman) in England and Wales in 2023; This is below the 2.08 required to ensure ‘natural’ replenishment of the population in the long term.
Former Institute for Fiscal Studies (IFS) director Paul Johnson said this trend would have ‘serious consequences’, adding that the current fertility rate “suggests a rapidly falling population” that “poses urgent challenges for policymakers”.
“What will we do with all these empty school quotas?” posed Times. “In England we have so far seen a decline in teacher numbers, but almost no reduction in school numbers, perhaps partly because the policy environment for deciding on school closures is so complex. This is unlikely to be sustainable as pupil numbers continue to decline.”
He adds: “The change still raises a more fundamental question. Will we use this decline in numbers to reduce education spending? Or will we use it to increase spending per student and try to improve quality? I don’t know.”
The OBR estimates that “in current policy environments”, the economic impacts of these trends will increase borrowing to over 20 per cent of GDP and debt to around 270 per cent by 2070. This is due to the rising cost of factors such as state pensions plus social and healthcare needs.
Lord Wood of Anfield, chairman of the House of Lords Economic Affairs Committee, said: “People are having fewer children and living longer, and successive governments have failed to focus on the seismic effects that a rapidly aging population will have on our economy and society.
“Raising the state pension age, which saves the state money but increases pensioners’ poverty because most people stop working in their sixties, is a fallacy. Ensuring more people in their fifties and sixties stay in or return to work is crucial.
“To successfully meet this challenge, the financial management approaches of today’s and tomorrow’s young people will need to change. They will need to plan and prepare from a much earlier stage in their lives to work longer and save more.”
Labour’s peer adds that the lack of a government strategy on the issue shows the issue is “not being taken seriously enough”.
A government spokesman said: “We recognize the challenges faced by an aging population and are taking action to increase healthy life expectancy and reform adult social care.
“We are moving towards a National Care Service that delivers better quality care, more choice and better integration between services, backed by over £4bn of additional funding for adult social care by 2028-29.
“We will boost employment through our Put Britain to Work reforms, overhauling Job Centers and providing personalized business and skills support.”
