Preparing for an Ageing Society (Economic Affairs Committee Report)

Debate between Lord Liddle and Lord Wilson of Sedgefield

Friday 4th September 2026 Lords Chamber

[Lord Liddle]

That this House takes note of the Report from the Economic Affairs Committee Preparing for an Ageing Society (2nd Report, HL Paper 236, Session 2024–26).

[Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)]

My Lords, before we start, I want to make a short statement. As set out on Today’s Lists, speeches in all three debates should be limited to three minutes, with the exception of those of the movers, winders and Ministers. I know from experience that if everyone goes over by just a few seconds, those seconds mount up. I am sure I speak on behalf of Members across the House when I say that I would be grateful if Members could stick to the advisory speaking time to ensure that the Ministers have adequate time to respond to the points raised in each of the debates today.

[Lord Liddle (Lab)]

My Lords, it is a great privilege and pleasure to introduce this report on behalf of the Economic Affairs Select Committee of the House in place of our former chair, my noble friend Lord Wood of Anfield. He has, as the Salvationists would say in the 19th century on the death of one of their senior members, been promoted to glory, which in his case is ministerial office as one of Ed Miliband’s Foreign Office Ministers.

I have known Stewart for more than two decades. He demonstrated a very high level of intellect by his appointment as a fellow of Magdalen at a young age. When I was in No. 10, he was a member of Gordon Brown’s council of economic advisers. Although we did not agree on every aspect of government policy, we were both committed European social democrats and were fascinated by the lessons for Britain of post-war Germany. He has been a great chair of our Select Committee to work under, and we owe him a lot.

No report is ever produced without the contribution of the clerks, the expert advisers, our technical and administrative support, and our witnesses. This whole operation was brilliantly orchestrated by our committee clerk, Matthew Manning, to whom I also pay tribute.

We learned a lot from many excellent witnesses. To pick on one is unfair, but I will take the liberty of breaching that rule by paying tribute to Charles Goodhart, the former Bank of England economist. His brother William was a distinguished Member of this House, whose contribution at the age of 89 lost nothing in its clarity and pungency. He is a great exemplar of why we should not be pessimistic about the possibilities of an ageing society. I also pay tribute to other members of the committee, including those rotated off before this debate.

The UK is a rapidly ageing society. The numbers are striking. The Office for Budget Responsibility’s projections say that the old age dependency ratio—that is, the number of people above the state pension age relative to the number of working people—will rise from approximately 31% now to 38% in 2050 and 47% in 2074. Indeed, in the years of the Conservative Governments from 2010 to 2024, the population aged over 65 rose from something like 16.5% to 19%.

The decline in fertility rates is even more striking. In 1964, a peak fertility rate of 2.93 children per woman was achieved. This has fallen precipitously. In 2023, it had reached a new low of 1.44 in England and Wales and 1.25 in Scotland. The long-term replacement rate is 2.08, so we can see the basis of the demographic crisis.

We heard from our witnesses that the prospects for raising the fertility rate are dim and that policy attempts elsewhere to do this have failed. That was a great disappointment to me, because when I worked for the President of the European Commission two decades ago, we had confidence that the adoption of Nordic-style family-friendly policies—subsidised childcare, gender equality and more equally shared responsibility for bringing up children between men and women—would help sustain an adequate fertility rate. Sadly, that has not proved to be the case.

Immigration is likewise not the panacea that in some quarters it is made out to be. It might help if immigration were circular—that is, immigrants returning home as their countries become more prosperous, which to some extent has happened with eastern European immigration. The problem with the immigration from further afield that Britain has experienced since 2019 is that families are more likely to settle here permanently, adding in the short term to public spending costs but not adding to demographic sustainability in the longer term, as second-generation birth rates tend to adjust to UK norms.

Among our witnesses, people were optimistic that the change in profile of the population is manageable. However, the rate at which it is occurring could pose substantial challenges, though it is worth highlighting that some of that is the result of a great success story. Rising life expectancy is something to be celebrated—for girls born today, life expectancy is 90, while for boys it is 86.7—but there is a worrying gap between life expectancy and healthy life expectancy. Healthy life expectancy has actually fallen in the last couple of years. There is already a huge north-south gap emerging; for instance, the gap in healthy life expectancy between London and the north-east is seven years. These are very worrying trends.

The fiscal picture is also stark. In its Fiscal Risks and Sustainability 2025 report, the Office for Budget Responsibility—for which I have great regard, unlike some other people—says that by the early 2070s, on current policy settings, borrowing will be pushed up to a clearly unsustainable 20% a year, and debt will rise to over 270%, which again is clearly unsustainable.

We are not alone in facing this challenge, but that is no source of comfort. The fact that others will be grappling with the same issues could increase competition between nations over a dwindling workforce, at the same time as our economy will be struggling.

This is about more than just the current elderly. The current young population will become the older generation of the future; indeed, thanks to the increases in life expectancy, they will be older for longer.

Yet demography is not destiny. One key conclusion we reached is that the Government need to focus on the older economically inactive who are below state pension age, and I think these facts are not particularly well known. Discussion of raising the state pension age to deal with this problem is, in our view, misplaced. Those still working at the point of state pension age are entitled to claim it but are in fact highly likely to continue working beyond it. The focus has to be on those who exit the workforce before reaching the state pension age.

This is the scale of the problem: at the age of 50, 80% of the age group are still in work, but at the age of 65 the participation rate has fallen to 25% to 30%. That catastrophic fall in the participation rate is the public policy challenge that we feel needs to be addressed. Simply to raise the state pension age would plunge a significant number of people in that late-60s bracket into poverty, as happened when the pension age was raised from 65.

The Government are beginning to think hard about how to promote workforce participation at the other end of the age spectrum, among young people, with the brilliant Milburn review, which is greatly to be welcomed as an outstanding contribution to public policy. However, we hear nothing, or very little, about the scale of what is required to prepare an ageing workforce for those in their mid-50s to mid-60s. The Government’s response is their mid-life MOT programme and targeted jobcentre support for older job seekers. All that is welcome but it hardly seems an ambitious enough response to this crisis, and that is a crucial conclusion of our report.

There are a number of reasons for people to leave the workforce at older ages, which present policy does little to address. Some are benign. People want to stop working if they have the financial resources to do so. Unfortunately for the Treasury, these are often those who contribute the most in taxes, and the Government need to find ways of incentivising these people to remain in or return to work. However, we also heard about those who want to work but are unable to do so because of caring responsibilities, either to ageing parents or to dependants. We recognise that this is a priority for the Government and we are looking forward to the recommendations of the commission that the noble Baroness, Lady Casey of Blackstock, is working on. But you cannot help noting that a number of these grand reviews have been held in the past, with very little action taken. Let us profoundly hope that the Casey review will be the last before concrete policies are announced and enacted.

There has obviously been some focus in discussion on reforming the triple lock. This has proved an expensive driver of real-terms increases in the state pension, due to the recurring volatility of both inflation and earnings, which have led to real-terms increases. Linking pensions to earnings—that is, to the living standards of the working population—is estimated to save some £15.5 billion. That is a significant sum of money. It would take the defence budget up by over 0.5% of GDP. But in our report, rather than focus on that, we have chosen to focus on the much longer-term issue of raising labour force participation among those over 50. The continued yearly focus on the Budget, and the Government’s fiscal headroom and all that, means that there is a danger that we lose sight of the far more serious long-term issues. I am afraid that nothing in what the Government had to say reassured us in this regard.

The Cameron Government, to their credit, made the ageing population one of the subjects of their foresight studies, but this was lost in the aftermath— I would say “chaos”—of Brexit. The present Government, in response to our recommendation that they publish an overarching strategy statement setting out how they plan to address the challenges of an ageing society in a cohesive way, said that an “integrated approach” was

“preferable to a single standalone strategy”.

I do not know quite what that means. They went on to say that they were taking

“a strategic and cross-cutting approach to issues relating to an ageing society”.

Well, without some clear statement of what the strategy that underpins the purported integrated approach is, I find this answer devoid of significant and substantial content.

The lack of any published strategy on ageing is a worrying indication that the Government would prefer not to face up to these challenges as an immediate question, and that the UK is therefore woefully unprepared for the future. This is a harsh conclusion, but the point of having Select Committees is to point out difficult conclusions that our politics is failing to address. On that basis, and with that reason, I beg to move.