How best to support an ageing population? More immigration

The financial stressed put on the welfare state by Britain's ageing population could be assuaged by higher levels of immigration.

Next month a Lords committee will reveal the results of its investigation into the growth of the number of people above retirement age in Britain.

Chair of the committee, Lord Filkin, has warned that society and the welfare state face dramatic changes as a result of Britain’s ageing population.

According to the Guardian, the committee has been told that:

  • Half of those born after 2007 can expect to live to over 100.

  • Between 2010 and 2030 the number of people aged over 65 will increase by 51%.

  • The number of people aged over 85 will double during the same period.

The concerns in the report mirror those expressed by the Deloitte Centre for Health Solutions, who warned last year that Britain’s ageing population risks endangering GP services in England as practices are overwhelmed by demand.

The Daily Mail also reported last year, based on the findings of the Office for Budget Responsibility (OBR), that:

‘Britain faces decades of painful austerity to defuse a financial timebomb created by the country’s ageing population, the Treasury watchdog declared yesterday.’

Reports like this should not be dismissed as scaremongering.

The rate at which the population is ageing means that, while there are now four people of working age supporting each pensioner, by 2035 it will be just two and a half, and by 2050 only two.

For the austerity hawks, an ageing population requires – you guessed it – cuts, cuts, and more cuts. The state must be stripped back to the bone; services must be minimalistic and cater only to the most needy.

It doesn’t have to be like this, however.

The OBR also pointed out in 2012 that higher levels of migration could spare taxpayers much of the financial pain associated with an ageing population.

The OBR statement read:

Higher net migration, close to levels that we have seen in recent years, would put downward pressure on borrowing and public sector net debt, as immigrants are more likely to be of working age than the population in general.’

The important point made by the OBR is that increased levels of UK Immigration would see a significant rise in the percentage of the UK population that are of working age.

A series of calculations were carried out by the OBR, using varying levels of UK Immigration.

Its central projection was that immigration would fall to around 140,000 per annum for the next 5 decades to 2062. If that were to happen, by 2062 the population would reach 77.2 million (it currently stands at 62.3 million).

44.5 million – 57.6% – of those people would be of working age. If immigration were to fall to zero, then the population in 2052 would be 64.1m, of whom only 35m, or 54.6%, would be of working age.

If immigration were to continue at its current level, the population would reach 85.8m and the working population would be 50.3m, or 58.6%, of the total by 2052.

The more people of working age, then, the more revenues the Treasury will have to fund its spending commitments.

Undoubtedly an ageing population represents a challenge for the welfare state, but that is no reason to buy into the notion that it requires a wholesale reduction in the size of the state.

Allowing more people of working age into the country would, ironically considering so much tabloid fearmongering, take some of the strain off the welfare state.

29 Responses to “How best to support an ageing population? More immigration”

  1. supermink

    Putting aside that I believe that any of these type of solutions are built on a system which is prone to crisis (125 systemic banking crises around the world since 1970)

    Also its funny how you are one of the many who think that the EU is some kind of left wing organisation,The Tories fought and won to keep land subsidies in Brussels a couple of weeks ago- in essence state benefits for the rich.,Your description of the EU which is run by the IMF is too one dimensional for me.Its also worth pointing out that a lot of the eastern european migrant workers arent all working in starbucks they are tradesman.welders.postmen.rig workers,bus drivers,businessmen.They have quickly taken a myriad of jobs,yet the long term unemployed are left untouched while meantime council services and social housing are in crisis.

    There are certain industries like fish processing where the owners prefer to employ east Europeans because they will work longer for less and I dont think these business men would be happy to hear their cheap source of labour will be stopped and most of them vote Tory.

    So ok I go along with your plan and taking out a NI fund in your name would save the day.Not being a micro numbers man its not yet crystal clear how your sums add up but I do know that the NI fund is not completely ring fenced and government use that fund for some projects.So where would the government go for that project money in future?

    Also im presuming that all the things that were paid by the NI before like benefits etc will now come directly out of each persons NI fund?anything else youd like to disappear by sticking it onto a NI account?

    By the way Liverpool care pathway is to be axed.Im sure David Cameron is delighted that as a result more working class people with gold plated pensions will be living longer.

    .

  2. OldLb

    Banking crisis is largely irrelevant to the state system. The banks aren’t involved.

    However, if you compare the profit the state has made out of the banks since the crisis – 250 bn profit, with the increase in the state pensions debt over the same time, 4 * 724 bn or 3 trillion, the banks are equally an irrelevance.

    On subsidies, I want them abolished – completely.

    Lots of migrants are doing different jobs. There is no doubt they are hard working, and plying worthwhile trades. I cannot fault most of them for their application.

    However that is irrelevant when you ask the question are they a net benefit to the UK. For that its back to the subsidy. Lots of people are subsidising them. ie. 12K a year per person government spend. That needs 40K a year salaries, per migrant (include another 40K for each child) to break even. That’s not the case.

    ========

    They have quickly taken a myriad of jobs,yet the long term unemployed are left untouched while meantime council services and social housing are in crisis.

    ========

    Yep, because they are competing against the unemployed. They are prepared to take lower wages, and with the other benefits out competing the unemployed. So the unemployed don’t get jobs, languish on benefits, and that’s yet another form of subsidy. Housing is in crisis because the official figure of 5 million migrants are living somewhere. Lots are in social housing, which is just more evidence that they are not an economic benefit to the UK.

    =======

    I dont think these business men would be happy to hear their cheap source of labour

    =======

    Tough, However given the reduction in the need for welfare, I suggest cutting employer’s NI for the low paid. A tax on jobs is like a tax on smoking. Bad for jobs.

    So what things are paid by NI?

    http://en.wikipedia.org/wiki/National_Insurance_(United_Kingdom) has the list.

    5% on civil servants. Value for money? Hmmm, perhaps I should set up a pension fund, get the state to force people to pay me money, and cream off 5% each year.

    Now look at the payouts for the rest.

    Retirement Pensions (including Christmas bonus) 79.321

    Widows/Berevement Pensions 0.571

    Incapacity 2.591

    Unemployment benefit & support 3.463

    Maternity & Guardians allowance 0.373

    Administrative costs & Transfers 4.693

    Total 91.012

    NI Receipts. 84.263

    Not the best formatting but check out wikipedia.

    So under 10% goes to non pension items.

    However, if a 26K a year worker had invested their NI, they would have had a fund of 627K. Instead the state pension, which is going to be cut more, costs 152K. That’s 475K out of 627K, that has gone on 10% of the payments, or money has been siphoned off for other things.

    You can look at it in allsorts of different ways.

    1. Lack of compound interest

    2. Money siphoned off.

    3. Cost of insurance for the items above.

    So on the insurance items, is 475K from a 26K a year worker good value for those items?

    Bereavement benefit? You would have to be a serial killer bumping off wives to gain any benefit.

    JSA? 6 months at 71.70 for six weeks, then you are locked out until you’ve worked for 3 months. Doesn’t add up to much does it?

    https://www.gov.uk/jobseekers-allowance/what-youll-get

    Incapacity. For some this is significant. Now I take that as a moral obligation to pay the extra costs of those that need it. However, ICB claimants went from 1 million to 2.5 million. It was all about hidding the unemployed. Or the NHS really has got it completely wrong.

    Maternity? Look at the numbers. Insignicant in the scheme of things.

    The other observation, they have a deficit. Less money coming in than payments out

  3. OldLb

    And if you haven’t noticed, they still get their pensions, but pay no taxes in the UK. It’s a dire deal.

  4. OldLb

    So why is Milliband saying Labour made mistakes over immigration?

    It means it was Labour policy. Everyone knows that.

Comments are closed.