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.
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.
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this year, which took both incomes in a household into account and partly mitigated families’ tax situation, was repealed in last month’s Budget.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?
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.
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?
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.
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?
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.
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?
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?
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?
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.
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?
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.