Best budget for our ageing society? An alternative reality…

Janet stopped working well before she could afford to, and on top of this found it more difficult to care for her mum, who at 86 needed lots of help. Janet applied for disability benefits and received housing benefit to help with her rent. Despite wanting to get back into work, the combination of a lack of secure work that suited her and didn’t worsen her health, the attitudes of potential new employers to her age and disability and the risk of losing benefits made this an impossible task. After several visits to the GP for her back pain, she was eventually told that a hip replacement would help, though not solve, all of her mobility problems.

The flat she rented was on the top floor of a Victorian terrace. The NHS and local authority failed to agree who should pay the reablement package Janet needed given the multiple challenges with her back and mobility. Cuts to social care also meant there was no one to support her with basic tasks like washing. As result she was unable to return home promptly after her operation. Meanwhile her mum, who relied on Janet to care for her could no longer manage at home and was admitted to residential care.

Whilst this is a made-up story, it is not far from the reality for many people. But what has this gloomy tale got to do with the budget? In this story, there are significant costs to the public purse including out of work benefits, housing benefits and residential care. These all put pressure on public expenditure. The doom mongers blame the state of the public finances on the ageing population, which leads to sterile debates about intergenerational fairness and the need for further cuts or abolition of the triple lock. It doesn’t have to be like this. As our society ages, there’s huge opportunity for us to have long, healthy and productive lives, but society needs to support and enable this. An alternative budget could support people to be healthy, active and work for longer. This would require a radical shift in public expenditure.

There are a range of options to consider, ensuring everyone had access to occupational health including people who are self-employed or in insecure jobs; support for lifelong learning and career reviews for people in mid-life to consider options and retrain; flexible access to benefits for those with health conditions or disabilities but who want to work; support for carers to enable them to balance work and caring responsibilities; prompt access to housing adaptations that can support independent living. All are possible. A more preventive and proactive approach to support better later lives could result in higher tax receipts, lower welfare benefits, lower health and social care costs and enable people to save more to support themselves in later life. For example, if the employment rate for the 50–64 age group matched that of the 35–49 age group, the UK’s GDP would grow by £88 billion (5.6%). All this ultimately represents both a saving to the public purse and a boost to GDP – budget nirvana.

As well as a fundamental reshaping of public expenditure, there could also be a fundamental look at who pays. Some tax measures – including a change to inheritance tax – could help generate more revenues to fund this more proactive approach. Older home owners in London and the South East have benefitted from a windfall in assets from rising house prices. Ensuring that everyone benefits from these gains, and not only their grandchildren, will be important.

While there are huge inequalities in the income and assets of people in later life, should we consider what wealthier pensioners could be contributing and maybe review some of the universal benefits they receive. Those who are benefitting from generous pensions could also be asked to make national insurance contributions, in part to offset the costs, which to some extent fall to the current working population. The Chancellor has the opportunity to use the budget to create a future where age is seen as having a positive impact on the public purse and is no longer seen as a drain on it.