With the General Election in full swing, the #icaewchartoftheweek is on one of the principal drivers of public spending: age.
As data from the Office for Budget Responsibility illustrates, public spending on the young increases as the population is educated, but then falls back to a low of around £600 per month at around age 28, after which spending per person starts to increase gradually over working lives until retirement age. From that point on, not only is there a significant increase in welfare spending as the state pension kicks in, but the costs of health care, and then adult social care start to increase dramatically.
With the number of people in the UK aged 70 or more expected to increase by 58% over the next 25 years, total public spending will increase accordingly, especially with all political parties promising to protect and improve the state pension, health provision and adult social care.
The number of people under the age of 70 projected by the ONS to increase by only around 2% over that same period, or potentially even fall by around 7% if net inward migration is lower than expected, while further cuts in public services are apparently off the table with the 'end of austerity'. The implication is that taxes will need to rise, that social provision in retirement will need to be cut, or for there to be a resumption in austerity policies (or a combination of all three).
Unfortunately, none of the major political parties appear to have a fiscal strategy that extends beyond the next five years, with only limited measures to address the big financial challenges of more people living longer. This is disappointing given that relatively small actions taken now could make a big difference to the financial position of the nation in 25 years' time.
This election, voters have the opportunity to focus on the big challenges of sustainability, technology and the public finances. To find out more, visit GE2019 – It’s More Than a Vote.