United Kingdom Declining Birth Rate Debate

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Department: HM Treasury

United Kingdom Declining Birth Rate

Lord Livermore Excerpts
Wednesday 6th November 2024

(2 days, 1 hour ago)

Lords Chamber
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Lord Farmer Portrait Lord Farmer
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To ask His Majesty’s Government what assessment they have made of the United Kingdom’s declining birth rate and its likely effect on the future tax base of the country.

Lord Livermore Portrait The Financial Secretary to the Treasury (Lord Livermore) (Lab)
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My Lords, in its annual fiscal risks and sustainability assessment, published on 12 September, the Office for Budget Responsibility has projected an additional 6.5 million people in employment by 2074. This will support future tax receipts.

Lord Farmer Portrait Lord Farmer (Con)
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I thank the Minister for his Answer. The UK’s tax system discourages childbearing; it is one of the least family-friendly in the OECD. No allowances are made for dependants, so our tax system also disadvantages single parents. The current level of marriage allowance gives scant recognition of low-earning or non-earning second parents. Child benefit reform, announced earlier this year, which took both incomes in a household into account and partly mitigated families’ tax situation, was repealed in last month’s Budget. How will this Government make our tax system more family-friendly?

Lord Livermore Portrait Lord Livermore (Lab)
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I am very grateful to the noble Lord for his question. The example he gives of the reform that is no longer going ahead is an interesting one. It was a £1.4 billion commitment made by the previous Government but not a single penny was put behind it in the Budget that they prepared. It is exactly an example of how we got to £22 billion of unfunded spending—it simply was not affordable. If noble Lords opposite would like to find that £1.4 billion or tell us how to raise it, we would be happy to spend it. This Government are committed to family-friendly policies; it is at the core of our opportunities mission. In the Budget, we allocated £8 billion to family services because it is one of our key priorities.

Lord Sikka Portrait Lord Sikka (Lab)
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My Lords, low wages, poverty, poor housing, food, the high cost of living and household debt dissuade many people from having children. the eradication of poverty must be a priority for the Government. Can the Minister ensure that, within a decade, no one on the national minimum wage will pay any income tax or national insurance, and that the cost of that policy will be borne by the ultra-rich? After all, 1% of the population has more wealth than 70% of the population combined. When will he do that?

Lord Livermore Portrait Lord Livermore (Lab)
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I am afraid I cannot agree with my noble friend on that, but I agree with him that alleviating poverty should be central to the Government’s objectives. Clearly, work is one of the best routes out of poverty. Equalising women’s participation rates in the economy with those of men would add 1.3 million economically active people into the workforce, which is why helping women back into work is central to the Government’s goals.

Baroness Kramer Portrait Baroness Kramer (LD)
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My Lords, our demographic profile lies at the heart of this Question. I quote from the ONS, which said that

“the population is projected to age twice as quickly under zero migration than under a high migration scenario”.

Facing our dependency ratio, which is worsening by the year, should we not be resetting the conversation on immigration to recognise the role that it plays both in prosperity and in the provision of public services? Does the Minister share my fear that we are ceding this issue to a right wing that has decided that raising resentment and scapegoating is a glide path to power?

Lord Livermore Portrait Lord Livermore (Lab)
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I am grateful to the noble Baroness for her question. I agree with much of the sentiment that sits behind it. The Government recognise and value the contribution that legal migration makes to our country. We will continue to strike a balance between ensuring that we have access to the skills that we need while encouraging businesses to invest in the domestic workforce.

Lord Tyrie Portrait Lord Tyrie (Non-Afl)
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Further to that question, what conclusions do the Government draw from the substantial evidence now that immigration at the margin increases the tax yield by more than it increases public expenditure?

Lord Livermore Portrait Lord Livermore (Lab)
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It is a very important point and one that we should retain as we make policy.

Lord Hamilton of Epsom Portrait Lord Hamilton of Epsom (Con)
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My Lords, was the Minister not moved by reports in the press that AI is going to account for 6 million jobs in this country? If that happens, will we not be quite grateful for a low birth rate?

Lord Livermore Portrait Lord Livermore (Lab)
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We have to ensure that changing technology works to the benefit of all in society and contributes to our key objective of economic growth.

Lord Watts Portrait Lord Watts (Lab)
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My Lords, it appears that the major problem is the number of older people now living longer. It is not a problem for them or for us but it has economic implications. Is it not the case that it takes two working people in each household to pay tax to keep one pensioner at home? What are we going to do to bridge the gap between the number of people working and the number who are not?

Lord Livermore Portrait Lord Livermore (Lab)
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Clearly, we have an ageing society and there are associated costs with that. That is why increasing the levels of economic growth in our country is so important, so that we have the resources to fund the priorities that matter to us.

Baroness Boycott Portrait Baroness Boycott (CB)
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My Lords, we will never get women back to work unless we have adequate childcare, which this country has failed to provide. In all the years that I have been involved in feminist things, we have been behind the curve. Can the Minister update us on where the Government are in their provision of free childcare? Are there enough staff in the nurseries and enough places for the children of young women who would like nothing more than to get back into the workplace and pay tax?

Lord Livermore Portrait Lord Livermore (Lab)
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I 100% agree with what the noble Baroness says. The ONS has said that the two biggest barriers to people having children currently are a lack of affordable housing and a lack of affordable childcare. The Government are prioritising making childcare more affordable. We will provide an additional £1.8 billion next year to continue the expansion of government-funded childcare, bringing the total spending on childcare to over £8 billion. This will support working families and help parents, particularly mothers, stay in work and return to work.

Lord Brooke of Alverthorpe Portrait Lord Brooke of Alverthorpe (Lab)
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Does the Minister agree that we missed a trick, as we saw the internet develop and never found any ways in which we could start to use it as a tax base? To pick up the question of AI, can we ensure that the Treasury is doing some forward-thinking on this, not just in UK terms but about the way that we need to develop international relationships in regard to tax on a worldwide basis?

Lord Livermore Portrait Lord Livermore (Lab)
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My noble friend makes some very interesting points. I assure him that the Treasury is working closely with the Department for Science, Innovation, and Technology to advance the things that he mentions.

Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe (Con)
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My Lords, we have just had a Budget which the OBR says will lead to a loss of jobs and the first ever taxes on education. What does this do for family life and for the birth rate in the shorter term?

Lord Livermore Portrait Lord Livermore (Lab)
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To clarify, the OBR is very clear that, over the next five years, employment will grow by 1.2 million people.

Baroness Wheatcroft Portrait Baroness Wheatcroft (CB)
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The Joseph Rowntree Foundation calculates that 30% of children are living in poverty. Does the Minister have access to any information on what that might mean for long-term fertility prospects in this country?

Lord Livermore Portrait Lord Livermore (Lab)
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The noble Baroness makes a very important point, which is why reducing child poverty is central to this Government’s objectives. The previous Labour Government made massive strides towards reducing child poverty and, unfortunately, we had to sit and watch while it rose under the party opposite over 14 years. We have established the Child Poverty Taskforce to ensure it falls. It is a contributing factor, but so are affordable housing and affordable childcare, as I have said, and we are prioritising all those things.

Lord Foulkes of Cumnock Portrait Lord Foulkes of Cumnock (Lab Co-op)
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My Lords, on the birth rate, does the Minister agree that, although there are dozens of reasons for us to criticize him, this is one area in which we can be grateful to Boris Johnson?

Lord Livermore Portrait Lord Livermore (Lab)
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I sympathise with my noble friend’s point, but I find it hard to sympathise with that man on anything.

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Baroness Walmsley Portrait Baroness Walmsley (LD)
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My Lords, in providing additional childcare places, will the Government ensure that the additional staff are well trained and highly skilled? Perhaps we should be replacing the word “childcare” with the phrase “early education”, to make sure that children develop well and to give parents going back to work the confidence that their children will be properly looked after.

Lord Livermore Portrait Lord Livermore (Lab)
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The noble Baroness makes an absolutely central point. All the evidence shows that the first months and years of a child’s life are fundamental to the opportunities that they have throughout their life, so I agree wholeheartedly with everything that she said. Skills England, the new body that we have established, is there to make sure that exactly what the noble Baroness said about the skills available to that sector happens.