The fiscal clouds and the long-term vision

Pound coins - Photo: Flickr user hitthatswitchOver the last few days and weeks economists and analysts have speculated about the comprehensive spending review. In the build-up, endless rumours and ‘leaks’ and even snapshots of confidential papers inundated the media and kept almost everyone busy – and worried.

After the announcements, some breathed a deep sigh of relief, many felt disappointed while others felt outraged. However important it may be, the CSR only presents a set of fiscal measures to tackle the short term – until 2014 at the most – or, as the Chancellor put it in his speech, measures that ensure “that what we buy, we can afford; that the bills we incur, we have the income to meet; and that we do not saddle our children with the interest on the interest on the interest of the debts we were not ourselves prepared to pay.”

The Chancellor also announced that “a stronger Britain starts here”. Perhaps, but it will take a lot more than fiscal restraint for this attempt not to become a false start.

Fortunately, economics has developed the life-cycle approach, but unfortunately it is taught solely as a way to study consumption and saving decisions. There’s more to it than this.

Let’s consider the Marmot Review on health inequalities, for example. It lists a number of key policies over the life course. When it comes to ‘adults of retirement age’, one of the policy objectives was to increase access to apprenticeships. Certainly most apprentices are young adults – so, how come this is an appropriate objective for people past state pension age? It is, if we look far at the horizon where these young people get to retirement age.

Around 21 per cent of all economically active adults in England have qualifications below Level 2. Students who leave our schools with no or very low qualifications are twice as likely to claim job-related benefits before they are 25 as those with better qualifications. And it is also much more likely that it will be them who may have to struggle most to keep warm in winter and who may have to get by on very low incomes when they get to retirement age, and it is them who are more likely to endure worse health earlier in life and even more likely not to make it to retirement age.

A life-cycle or life-course approach helps dispel the short-term fiscal clouds and focus our effort on the long term vision more clearly. In our submission to the Comprehensive Spending Review, we highlighted 12 key long-term challenges we face as an ageing society. That is, even though we discussed and proposed measures related to public spending over the next four years, we refused to be locked in the short-term fog and never lost our vision.

The best thing about the CSR announcements – if there is such a thing as a ‘best thing’ about it – is that now the focus of the economic discourse may concentrate on the bigger, more meaningful and crucial picture, that of raising productivity and employability, and reducing inequalities, on behalf of everyone – including the people currently in older age and the future older people. This is the real challenge facing us in the longer term and Age UK will be seeking to ensure that it is not forgotten.

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