Lord Burns (CB)

My Lords, I would also like to thank the noble Lord, Lord Liddle, for outlining the conclusions of the committee’s report so well, and thank the noble Lord, Lord Wood of Anfield, for chairing the committee during this investigation. He has now gone on to greater things and I hope he will have the opportunity to continue to deploy his considerable economic skills in that role as well. There is nothing new or recent about the phenomenon of an ageing population. This been going on throughout my working life, but it is now a major factor in the conduct of economic policy. In the mid-1960s, when I started work, there were fewer than 7 million people aged 65 or over. Today, that number is approaching 14 million and by 2050 it is forecast to reach almost 19 million. The increase in those over 85 is even more impressive. Over the same period, their number has gone from fewer than 500,000 in the mid-1960s to almost 2 million today. It is now forecast to reach 4 million by 2050. This is something to celebrate; it was one of the things we had to keep reminding ourselves of in the committee. It has been a remarkable measure of the progress that has been going on. But it does have consequences for fiscal policy. Our concern is that, despite this success, the proportion of people aged between 50 and 65—this was mentioned by the noble Lord, Liddle—either working or looking for work drops off considerably compared with the cohort just before them: the 35 to 50 age group. There has been some noticeable increase in the participation rate of those over 65, but it remains quite modest. It was these figures and the starkness of this that formed the basis for our report. It is clear that, unless working lives are extended, our successors will have to fund many more years of retirement than in the past. The report also emphasises the need to rethink our approach to lifelong financial planning for individuals; this is not just a matter for government but for individuals as well. As has been noted, the committee concluded that, from a fiscal point of view, the best response would be to encourage and incentivise those in their mid-50s to mid-60s to remain active in the workforce, but this would also require greater recognition of the valuable contribution that experienced people can make to the workplace. The issue of the growing number of people requiring health support and social care has been mentioned. As others have noted, the unsatisfactory arrangements for adult social care have been recognised for years, but no policy proposal has received the necessary support. Fundamental questions remain about service provision, our lifetime contributions, how we share costs between the state and the individual, and the potential role for insurance. Let us hope that the noble Baroness, Lady Casey, can unlock this puzzle. Finally, there is the testing question of pensioner incomes. The old system of indexing pensions solely to prices meant that pensioners did not automatically benefit from economic growth. However, the triple lock guarantees that the level of pensions will increase faster than earnings over time, but in an arbitrary and random way. This is a problem that must be fixed.