The UK is “strikingly unprepared” to deal with the pressures of an ageing society, a group of Lords peers have warned, as they paint a stark picture for the future of young people in the country.
In a damning report, the House of Lords’ Economic Affairs Committee accuses successive governments of failing to grapple with the issues that will arise from people living longer.
The group argues that continuing to raise the state pension age – soon increasing to 67 – is no longer an adequate solution to the economic pressures of an ageing population, as an growing number of people are already exiting the workforce before they reach it.
These warnings are based on findings that those aged 65+ comprised 18.9 per cent of the total population in 2023, up from 16.5 per cent in 2011 and just 13 per cent in 1972 – illustrating a sharp increase.
Recent research by the Office for Budget Responsibility (OBR) finds that this could rise to over a quarter (27 per cent) by 2074.
This will have an especially profound effect on those born now and in the recent past, the Lords’ committee finds, as will likely live longer and so will need to retire later and save more to be comfortable in old age.
The fertility rate has also been falling since the late 1970s, the report points out, dropping to a record low of 1.44 (children per woman) in England and Wales in 2023 – below the 2.08 required to ensure long-term ‘natural’ replacement of the population.
Former Institute for Fiscal Studies (IFS) director Paul Johnson says there will be ‘serious consequences’ arising from this trend, adding that the current fertility rate “implies a rapidly falling population” which “presents immediate challenges for policymakers”.
“What to do with all those spare school places?” he posed in The Times. “So far in England we’ve seen a fall in the number of teachers, but hardly any reduction in the number of schools, perhaps in part because the policy landscape is so complex when it comes to making decisions to close schools. As pupil numbers continue to decline this looks unlikely to be sustainable.”
He adds: “The change poses a more fundamental question still. Will we take advantage of this fall in numbers to reduce spending on education? Or will we use it to increase spending per pupil and try to improve quality? I don’t know.”
The OBR has forecast that “on current policy settings”, the economic effects of these trends will push borrowing above 20 per cent and debt about 270 per cent of GDP by 2070. This is because of the rising cost of factors like the state pension, plus social and health care needs.
Lord Wood of Anfield, chair of the House of Lords Economic Affairs Committee, said: “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.
“Raising the state pension age, which saves the Government money, but increases pensioner poverty as many people have already stopped working by their sixties, is a red herring. Getting more people in their fifties and sixties to stay in or return to work is key.
“To successfully confront this challenge the approach to financial management of today’s and tomorrow’s young people will need to change. They will need, from a much earlier stage in their lives, to plan and prepare to work longer and save more.
The Labour peer adds that the lack of a government strategy on this issue shows it is “not being taken seriously enough”.
A government spokesperson said: “We recognise the challenges of an ageing population and are taking action to improve healthy life expectancy and reform adult social care.
“We are progressing towards a National Care Service with higher quality care, greater choice and better integration between services – backed by over £4 billion additional funding for adult social care by 2028-29.
“Through our Get Britain Working reforms, we will boost employment by overhauling Jobcentres and providing personalised work and skills support.”
