Key Takeaways:
- The UK is unprepared to deal with the pressures of an ageing society, with a growing proportion of older people and a declining fertility rate.
- The state pension age is set to increase to 67, but this may not be an adequate solution to the economic pressures of an ageing population.
- The fertility rate has been falling since the late 1970s, dropping to a record low of 1.44 children per woman in England and Wales in 2023.
- The economic effects of these trends are expected to push borrowing above 20% and debt to around 270% of GDP by 2070.
- The government is being criticized for not taking the issue seriously enough and for lacking a clear strategy to address the challenges of an ageing population.
Introduction to the Issue
The UK is facing a significant challenge in dealing with the pressures of an ageing society. A report by the House of Lords’ Economic Affairs Committee has warned that the country is "strikingly unprepared" to cope with the issues that will arise from people living longer. The report highlights the need for a comprehensive strategy to address the economic and social implications of an ageing population. With the state pension age set to increase to 67, the committee argues that this is no longer an adequate solution to the economic pressures of an ageing population, as many people are already exiting the workforce before they reach this age.
The Demographic Challenge
The demographic trends in the UK are stark. The proportion of people aged 65 and over has increased significantly, from 13% in 1972 to 18.9% in 2023. This is expected to rise to over a quarter of the population by 2074. The fertility rate has also been falling since the late 1970s, dropping 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 long-term ‘natural’ replacement of the population. The implications of these trends are far-reaching, with significant consequences for the economy, education, and healthcare.
Economic Implications
The economic effects of these trends are expected to be severe. The Office for Budget Responsibility (OBR) has forecast that borrowing will rise above 20% and debt will increase to around 270% of GDP by 2070. This is due to the rising cost of factors such as the state pension, social care, and healthcare. The OBR’s forecast is based on current policy settings, and it is clear that urgent action is needed to address the challenges of an ageing population. The committee argues that getting more people in their 50s and 60s to stay in or return to work is key to mitigating the economic effects of an ageing population.
The Need for a Comprehensive Strategy
The House of Lords’ Economic Affairs Committee is critical of the government’s lack of a clear strategy to address the challenges of an ageing population. The committee argues that successive governments have failed to grapple with the issues that will arise from people living longer. The chair of the committee, Lord Wood of Anfield, has stated that "people are having fewer children and living longer and successive governments have simply not focused on the seismic effects a rapidly ageing population will have on our economy and society." The committee is calling for a comprehensive strategy to address the economic and social implications of an ageing population, including measures to encourage people to work longer and save more.
Government Response
The government has responded to the report by acknowledging the challenges of an ageing population and outlining some of the steps it is taking to address them. A government spokesperson stated that "we recognise the challenges of an ageing population and are taking action to improve healthy life expectancy and reform adult social care." The government is also progressing towards a National Care Service with higher quality care, greater choice, and better integration between services. However, the committee argues that this is not enough, and that a more comprehensive strategy is needed to address the challenges of an ageing population.
Conclusion
In conclusion, the UK is facing a significant challenge in dealing with the pressures of an ageing society. The demographic trends are stark, with a growing proportion of older people and a declining fertility rate. The economic effects of these trends are expected to be severe, with significant consequences for the economy, education, and healthcare. The government is being criticized for not taking the issue seriously enough and for lacking a clear strategy to address the challenges of an ageing population. It is clear that urgent action is needed to address the challenges of an ageing population, and that a comprehensive strategy is required to mitigate the economic and social implications of these trends.
