New UK figures released by the ONS (Office for National Statistics) report that by the end of this year, pensioners will outnumber children for the first time (Daily Mail, 24th October 2007). Last year, 11.3 million drew a state pension compared with 11.5 million children under 16 years. By 2031 there will be 15 million pensioners even though the pension age will have increased to 66 for men and women after 2024. In comparison, the numbers of children will rise from 11.5 million to 13 million in 2031. Currently the average age of the population is 39.6 and this will reach 40.6 by 2016 and 42.6 by 2031.

Current forward projections are that the population of England would increase by 8% by 2016, compared with 7% in Northern Ireland, 5% in Wales and 3% in Scotland (BBC, 23rd October 2007 (2). The proportion of those of working age paying taxes to support the elderly will fall from 3.3 of working age for every pensioner today, to 2.9 in 2031, by which time the UK population is expected to reach 71 million (BBC, 23rd October 2007).

These dramatic demographic changes in the population would pose huge implications for hospitals, care homes, the housing stock, pensions and benefit systems. Evan Davis, the BBC economics editor, suggests that whilst it is possible for the UK to absorb increases in population, however it won’t be done very comfortably by simply squeezing more and more people into the existing infrastructure of houses, roads, shops, GP surgeries and schools. (BBC, 23rd October 2007 (3)

The Daily Mail highlights that last year the total bill for pensions owed to Health Service staff soared by more than 30% (£52 billion) to reach £218 billion (Daily Mail, 24th October 2007). So how will Britain cope with increasing demands for pensions, housing, healthcare, education and transport services? How will the Government be able to increase the provision of such services given a worsening dependency ratio?

The Guardian highlights that the ONS attributes 47% of the population increase to immigration, at the same time noting that immigrants would contribute to the rising birth rate. (The Guardian, 24th October 2007). This increasing birth rate might improve the dependency ratio in the longer term. Another answer would be to encourage flexible working, enabling more workers to continue beyond retirement age or job share, so getting more people working. The Times 100 provides a useful case study explaining how flexible working has been introduced at the Audit Commission.

The Times 100 HMRC Case Study – How HMRC Collects Revenue to Support Government Policy

BBC News – Population to hit 65m by 2016, 23rd October 2007

The Guardian – Higher Feirtility, immegration, and longer lives fuelling Britain’s Population Rise, 24th October 2007

BBC News – Impact of a Bigger UK Population, 23rd October 2007

BBC News – Population ‘at least 75m by 2051’, 21 October 2007

Office for National Statistics

Daily Mail, 24th October 2007 Print Edition – ‘By 2008, we will have more old than young’

Daily Mail, 24th October 2007 Print Edition – ‘NHS pension bill balloons 30pc in a year’

Potential Study Questions:

  • What effect might the lowering ratio of working to retired population have on the national economy? What effect will the increasing retired population have on benefits?
  • How might the demographic changes affect the National Health Service?
  • What might be the effect on taxation levels?
  • Evaluate two different government policies that might be implemented to reduce the impact of an ageing population in the UK.

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