First, tackling the problem at source. It is often assumed that you cannot fight demographics, but this is not always the case. After all, the infamous “one-child policy” is now set to contribute to a sharp fall in China’s population.
The Government needs to take the opposite approach and actively seek to raise the fertility rate. Many families would like more children but simply cannot afford them, often because of the punitive costs of childcare and housing. This is yet another example of the wider benefits from allowing more homes to be built.
Other countries in Europe also have much more generous systems of tax breaks and subsidies for larger families. Jeremy Hunt’s Budget at least did something about the high-income child benefit charge, but perhaps he should think again about the two-child benefit cap too.
Second, we need to mitigate the impact of an increase in the old-age dependency ratio, both by encouraging those who can delay their retirement to do so, and by ensuring that a larger proportion of people of traditional working age do indeed work.
In particular, labour market policies need to be as flexible as possible in order to maximise the opportunities for people who might otherwise not need, want or be able to work. This should include a more positive attitude to remote working, job sharing, and even to so-called “zero-hours contracts”, which Labour want to ban despite their popularity with older people.
Third, we need a more serious debate about the future of the state pension. This is perhaps too much to hope for in an election year. Indeed, it is striking how the most robust pushback against the claims of Waspi women have come from people no longer seeking elected office, such as David Gauke and David Willetts.
Options here include raising the state pension age further, unpicking the triple-lock (which guarantees that the pension rises by the greater of inflation, average earnings growth, or 2.5pc), or some form of means-testing. Each option has its pros and cons, but any package of reforms should probably also include a top up to the benefits for pensioners on the lowest incomes.
