Britain is strongest when each generation keeps faith with the next. Those who have worked hard and contributed all their lives deserve dignity and security in their old age. But those who are starting out or in the middle of their working lives must not be asked to fund a system that will not be there to provide for them in their turn. That is the challenge that this report confronts, with honesty, boldness, and a refusal to pit young against old. 

It is widely understood in Westminster that our current pension settlement is under huge pressure and that this pressure is increasing. Our population is getting older, people are having fewer children, and the ratio of pensioners to working age people is deteriorating. The political choice to retain the Triple Lock adds huge cost and a volatile dynamic to this precarious situation. 

What happens when younger workers are asked to fund ever mounting costs while, correctly, doubting that the same system will keep them secure in old age? It is a social experiment we should be unwilling to run. At the same time, ending the Triple Lock is likely to be politically very challenging. And so there is cross-party paralysis regarding a policy that is unsustainable and is increasing our national indebtedness, but that is dauntingly difficult to assail. This has become a moral question: we must not allow ourselves to forget that the growing national debt is a claim on the labour, enterprise and earnings of people who do not yet vote and who in some cases have not yet been born. This is yet another reason that getting spending under control and prioritising growth are so vital, not only for us, now. But for them, tomorrow.

Even though reform of the current system will not be painless and must be radical, the answer is not to abandon pensioners. It is to move from a system of unpredictable and ratcheting costs to one based on clear, fair and durable rules, and this report lays out one vision for doing so. 

Onward should also be commended in treating pensions policy and family policy as deeply intertwined. That is the reality of our pay-as-you-go system, in which today’s children are tomorrow’s contributors. Making it easier for people to start and raise families is desirable not only because for personal, social and moral reasons we want our country to be a place where good lives can flourish, but because families are central to the long-term sustainability of the state and the support we want to be able to offer at certain times of life. 

Establishing a new settlement, that is financially sustainable into the future, that protects the old while commanding the confidence of the young and allowing them to move their lives forward, is a great and necessary task for policymakers in the coming decade. But not an easy one. 

Rt Hon Sir Jeremy Hunt MP

Chancellor of the Exchequer 2022-2024

1 Introduction

If society is indeed a contract between the living, the dead, and the unborn, then that contract depends on each generation receiving consideration from those who came before and then themselves making provision for those who will come after. Today in Britain, that balance is under mounting strain.

Young people find it increasingly difficult to reach the milestones that have traditionally marked a secure adult life: earning enough to live independently, buying a home, starting a family, and raising children without persistent financial anxiety. Most young people still want children, but many are delaying parenthood or having fewer children than they would like, with financial pressure one of the most important reasons. At the same time, Britain’s population is ageing, the ratio of workers to pensioners is deteriorating, and the cost of old-age entitlements is rising. The result is a growing gulf between the support older generations expect and what younger and future generations will be able to afford. 

This is not a zero-sum conflict between young and old and should not be portrayed as such. Older people have contributed throughout their lives and deserve security, dignity and predictability in retirement. Younger people want to start families because children and family life are valuable in themselves, not a mere national socio-economic consideration. But the current settlement compromises both sides of the intergenerational bargain. The State Pension is protected by the Triple Lock, politically attractive but fiscally volatile, increasingly expensive, and difficult for both households and governments to plan around. Pension spending is already one of the largest items in the public budget, and it will rise significantly as the population ages. Under less favourable demographic assumptions, the pressure could be greater still. Meanwhile, government support for families is often poorly timed, too weakly connected to the early years when costs are highest, and insufficiently responsive to the realities of childcare, parental earnings and household financial pressure.

In seeking to address these two problems together, this report from the think tank Onward and the Konrad Adenauer Foundation in the UK also seeks to more tightly bind the fortunes of older and younger people together. It proposes reforms that form the basis of a new intergenerational contract, that sees older people receive the support they need while helping younger people to get a fair start in life. It looks to honour social obligations to those who have contributed to our society and economy all their lives, and make sure that today’s young adults are able to contribute in their turn. Because if we do not fix our fraying social contract, the only certainty is that everyone will lose out.

2 Reforming the State Pension system

One in three working-age people say they do not believe that the State Pension will exist in thirty years’ time.^[1] In our pay-as-you-go system, wherein those now in work support those now drawing down their pension, that means a large number of people who are paying into the system do not expect to be able to benefit from it in turn. 

As difficult as it might be to imagine a world with no pensions or social security for the aged, our current state pension system is indeed threatened by spiralling costs caused by demographic pressures, low growth, and policy choices. The UK’s state pension is the second-largest item in the government budget after health, and the system is so unaffordable that major reforms will be necessary to save it. Though it has become somewhat more common in Westminster to hear this admitted, reform itself has not been forthcoming, with politicians understandably very nervous about floating changes that will make the system less generous for older voters. 

But getting ahead of the trends that are making our pension system unsustainable needs action which will take decades to work. That is why the time to act, and to clearly communicate to the public the need for action, is now, even if the problem appears to belong to tomorrow. This section of the report lays out why it is that the State Pension system has become so unsustainable and recommends a package of measures which can help governments to correct our course. Not only will such reforms help to ensure sustainable support for the old far into the UK’s future, over time they can lessen the fiscal burden on governments and help fund the policies we recommend in Chapter 3 to make it easier for more people to start and raise young families.

2.1 Spiralling costs

Older people, who have contributed much in taxes and in other ways throughout their working lives, represent a significant expense to the government, primarily in terms of health, social care, and pension costs. The expense of an older population makes it important that there is a proportionally larger working-age population, working and paying into the system now, and enabling the government to give older people the entitlements and the care that they need.

But as Chart 1 below shows, the UK has a rapidly increasing old-age dependency ratio, meaning the ratio of working-age people to those aged over 65. The old-age dependency ratio is by no means a perfect measure, particularly as more of us work later in life. Nevertheless, the very significant increase of the UK’s older population as a proportion of the working-age population does represent a fundamental challenge to the government, particularly in terms of maintaining old age social security.

Chart 1: Pension age persons per 1,000 persons of working age, 2024-80^[2]

As discussed above, this is because the UK has a pay-as-you-go pension system, so that the taxes of people working now are used to cover the costs of the State Pension for those who are retired. Fewer working-age people means fewer people paying in to support pensioners who are relying on their State Pension payments. 

In 2025 projections based on current policy, the OBR expects spending on the State Pension to rise from 5% of GDP today to 7.7% in the early 2070s.^[3] At the current size of the economy, that would see the State Pension costing £213 billion in today’s money, around £75 billion more a year than it does now.^[4] That is equivalent to, respectively, more than the entire annual defence budget, more than half of the education budget, and around a third of what we spend on health. This projection assumes that the number of adults of working-age to those above State Pension age declines from 3.4 today to 2.7 by the 2070s, meaning a smaller base of working people supporting higher pension costs. That is the kind of fiscal pressure that will absolutely necessitate some one or combination of significant tax rises, major spending cuts, or even greater levels of borrowing (assuming the latter is even feasible).

However, in making this projection, the OBR must make assumptions about the future, some of which are arguably highly optimistic. In particular, it assumes a TFR of 1.59 births per woman by mid-2045 which then remains at that level.^[5] The ONS’s latest 2024 based population projections are already less optimistic, projecting that UK TFR declines to 1.38 by 2029 and then rises to 1.42 by 2049.^[6] Since 2010, the ONS’s long term fertility projections have been consistently too high and required revision downward. The UK’s TFR is currently 1.39 and there is no guarantee fertility is about to rebound.^[7] As numerous international examples show, it is possible for developed nations to decrease in TFR far below this point and for extended periods of time. 

Similarly, and again in line with the ONS at the time in 2024, the OBR assumed net migration of 315,000 a year into the UK in forming its central projection.^[8] Already, the ONS has revised this projection down to 230,000 a year from mid-2027.^[9] However, much political will exists in the UK, across the political spectrum, for net migration to be much lower. 

The ONS itself publishes an ‘old age structure’ of its demographic projections that combines lower fertility, lower migration, and higher life expectancy. In the most recent version of that variant, from 2024, fertility is projected to fall to 1.22 in 2049 and net migration settles at 105,000 a year from 2027.^[10]

A simple stress test of the OBR central projection using the ONS’s ‘old age structure variant’ projection shows how State Pension costs could significantly rise under this plausible scenario. Using this official variant, the UK is projected to have just 1.85 working adults per pension-age person by 2073, compared with 2.7 in the OBR’s central projection. 

Mechanically scaling the OBR’s projection by that weaker support ratio could push spending from 7.7% of GDP to 11.2%. In today’s money, that would mean a State Pension bill of roughly £310 billion a year, nearing £100 billion more than that in the OBR central projection. That is the equivalent of a government having to find the money to hire an additional two million nurses, or build the Elizabeth Line five times over, every single year.

This should not be read as an alternative OBR forecast. It is a mechanical stress test. It holds constant the OBR’s assumptions about pension generosity, earnings, employment and GDP, and varies only the demographic support ratio.^[11] But the exercise is starkly revealing and illustrates how under plausible future scenarios the fiscal burden on the UK from its State Pension as currently designed could be far greater than is centrally projected.

In addition to this demographic pressure, the UK pension system is also strained by the ‘Triple Lock’, a policy which began life in the Liberal Democrat manifesto for the 2010 election^[12] and was adopted by the Coalition Government, likely as part of the horse trading of coalition negotiations. The Triple Lock guarantees that the state pension will be increased each year by whichever of the following metrics is highest: earnings growth; inflation (CPI); or 2.5%. 

The Triple Lock in part arose as a reaction to what happened when the Thatcher Government decided in 1980 to uprate the State Pension only by prices, breaking the earnings link.^[13] This saved successive governments money but meant that pensioners ceased to share in the rising living standards the rest of the country enjoyed. As a result, the State Pension fell from around 26% of average full-time earnings in 1979 to 16% between 2000 and 2010. This state of affairs and worries about pensioner poverty then ushered in the political conditions for the Triple Lock.

Politicians can be forgiven for not having given much thought to the Triple Lock when it was introduced. At the time, wages had persistently outstripped inflation in the past four decades – if the triple lock had been in place for those years, it would have more or less  amounted to an earnings link. But a long period of sluggish earnings growth and, in more recent years, high inflation, has made it absolutely unsustainable, leading to very significant jumps in value, as seen in Chart 2 below. 

Chart 2: The Triple Lock in action

Chart 3: Real Growth in the State Pension and workers’ earnings since 2011

In a further illustration of how serious the implications are for the UK public finances, in 2025, the OBR reported that the cost of the Triple Lock is forecast to be three times higher by 2030 than was modelled at the time of its introduction in 2011.^[15] The non-earnings linked element of the Triple Lock had been triggered in eight of the 13 years to date, because inflation “has turned out to be significantly more volatile” than had been expected.^[16]

The Triple Lock is a highly politically sensitive topic and politicians have been reluctant to discuss reform, when ever growing numbers of voters are direct beneficiaries of the policy. Because Triple Lock reform has been seen as politically challenging, governments have looked to another major lever in their effort to control cost: raising the State Pension Age. As we live longer, we have to work longer, and adjusting the pension age must play a role in calibrating the system. But there is an argument that the State Pension Age lever is subject to a hard limit in a way that uprating is not. This is because most people can try to do something about the level of their state pension, chiefly saving more during their working lives. By contrast, we can do very little about our life expectancy – it is essentially a fixed factor. 

Arguably, the most important test for state-provided, non-means tested retirement income (labelled ‘Pillar 1’ in international pensions literature, with Pillar 2 being private pension saving, and Pillar 3 being means tested help like Pension Credit) is to act as the ‘foundation’ income on which to plan your retirement. Some people have big plans which require lots of money, others want to wind down into a quiet, modest lifestyle. In both cases, knowing how much they need to be saving to hit their retirement goals is mostly dependent on how much State Pension they can expect to be getting. Under the Triple Lock, this is impossible to answer with any certainty. 

Firstly, we cannot know with any certainty how long the policy will be in place. It is a political commitment over which the main parties agonise over every five years. Secondly, even if we were certain, the way it operates produces results which will always run ahead of earnings and inflation, but it’s difficult to know how with much certainty. This makes ‘doing the right thing’ quite difficult for savers.

The uncertainty of the Triple Lock also forces the government to be more pessimistic about the cost of social security than potentially it should be, which is bad for the poorest pensioners. Long-term planning is basically impossible under the Triple Lock not just for savers, but also governments that have to administer it.^[17] Arguably this means prudent governments have to be very conservative when setting State Pension policy, whereas if the cost was more easily predictable, the public debate around it would likely be on different terms.

2.2 A generational three-part pension reform package

2.2.1 Reforming the Triple Lock

Recommendation: State Pension should be uprated according to a Demographics-Adjusted Earnings Link (DAEL)

As described above, the Triple Lock works by increasing the value of the State Pension each year by earnings growth, inflation or 2.5%, whichever is higher. The policy helped to increase the value of the State Pension after decades of erosion and has ensured that pensioners share in rising living standards. However, it is also expensive and highly volatile. 

In reforming the Triple Lock, two separate questions should be considered: first what the State Pension should be worth when someone first reaches State Pension age, and second, how the pension should be uprated once someone has retired.

One option for reform, which could control the cost of the earnings link in the long-term, particularly given demographic pressures, would be to only apply it to the value of the State Pension paid in the first year, and only uprate by inflation thereafter. After all, the State Pension is ultimately a benefit: when working-age benefits are uprated it is by inflation in order to protect purchasing power. 

However, there is a serious drawback with this reform, which is that over decades of receiving a State Pension uprated only by inflation, pensioners’ living standards will fall further and further behind the living standards of the rest of society. Particularly for those who rely heavily on their State Pension payments, this will mean rising pensioner poverty. To avoid such an outcome, there remains a strong case for retaining an earnings link in some form. The challenge is therefore not to abolish the earnings link but to make it more sustainable. 

To meet that challenge, this paper proposes that we retain the principle that the State Pension should rise with living standards, but adjust that link to reflect demographic pressure. In other words, the State Pension will rise in line with earnings but not automatically, or without reference to the number of people who are currently paying for it, a vital consideration in the UK’s pay-as-you-go system wherein today’s National Insurance contributors fund today’s pensioners.

The earnings link should therefore be adjusted or moderated by a demographic mechanism, which would reduce the earnings linked uprating when the base of contributors is weakening or when the number of pensioners is growing faster than the future workforce. 

Not only would this demographic slide put State Pensions on a more stable financial footing for the long term, but it would powerfully change the social contract that exists between older and younger voters. Binding the value of the State Pension to earnings and the demographic pressures the country is facing will also bind the fortunes and interests of earners and pensioners more closely together. For example, older voters will be incentivised to support policies that make it easier for young people to start families and be more focused on the barriers such young people face to doing so, including housing shortages or the expense of childcare. Japan has used a similar system since its 2004 pension reforms, using a macroeconomic slide that can respond to a decline in the contributor base or increase in the number of older people.^[18]

One way of designing a mechanism for Britain  would be through a two-part Demographic Slide, that subtracts measures of demographic pressure from the annual increase in the State Pension generated by earnings growth. The two demographic measures could be:

1. Current Support Ratio – The percentage change in the ratio of National Insurance payers to State Pension recipients, calculated over a three-year rolling average to avoid large swings from year to year
2. Birth Cohort Ratio – The percentage change in the size of the future workforce relative to the number of pensioners, which could be measured by looking at the number of live births registered in the UK N years ago. For example, if people usually start paying National Insurance at around the age of 21, births 20 years ago provide a rough indication of the size of the new cohort entering the labour market, which can then be compared with the growth in the number of pensioners.

The Demographic Slide formula could therefore work broadly as follows:

State Pension increase = earnings growth × (1 + weight on the change in the contributor-to-recipient ratio + weight on the change in the new-workers-to-pensioners ratio).

Where the weight is 60/40 in favour of the Current Support Ratio, to reflect its greater relevance to the current fiscal pressures affecting uprating.

However, to prevent the demographic slide from eroding the State Pension to the point that it no longer provides a sufficient foundation for retirement income, the formula should be subject to a floor, so that the value of the State Pension never falls below 28% of average earnings. This allows demographic pressures to moderate the generosity of the earnings link, but still gives people a predictable foundation upon which to plan and save for their retirement.

Projections suggest that this policy, of a DAEL with a 28% of average earnings floor, implemented in 2029 to reflect the current political commitment to maintain the Triple Lock until the end of this Parliament, would lead to State Pension spending of 5.58% of GDP in 2060. This is significantly below the 7.1% projected for 2060 with the Triple Lock in place and also below the projected cost of a pure earnings-based uprating (6.14%). By 2060, this policy would save the government around £30 billion a year in today’s money in comparison to a pure earnings link and £86 billion in comparison to the Triple Lock. Crucially, it does so without eroding the amount that the government spends on State Pensions as a percentage of GDP. In purchasing power terms, using the OBR’s CPI projections, it also means a 2060 pensioner is in fact 49% better off than they would have been in 2024.

However, it is important to understand that these projections use the ONS’s principal projection for births, which as discussed in section 2.1, may prove optimistic. In these circumstances, the effect of the demographic slide would be to reduce the uprating of the State Pension, except in circumstances where the 28% floor would kick in.

2.2.2 Automate increases in the State Pension Age.

Recommendation: The State Pension Age setting should cease to be a political decision taken every few years and instead should be set automatically with reference to life expectancy, using a smoothed mechanism that gives at least a decade’s notice of any change. 

It is right that as we live longer, we work longer. We already know that our pay-as-you-go public pension system works only as long as the ratio of payers to payees – all things being equal – remains constant. Life expectancy is one of the key factors determining whether or not that is the case, alongside other factors such as the relative sizes of generations.

This does not stop the pension age from being one of the most contested political issues a developed economy with an ageing population can face. Italy’s 2011 Fornero reforms, introduced during the eurozone debt crisis, among other labour law changes sharply increased retirement ages and linked future rises to life expectancy.^[19] Feeling against the reforms, the pension elements of which were in part rolled back, ran so hot that the minister whose name they bear was for some time not able to go outside without a guard of ten police officers.^[20] Government spending on pensions in Poland is already extremely high, estimated at over 11% of GDP,^[21] but with little political will to make cost saving changes like increasing the State Pension age. There is much to lose if such systems buckle under the strain and go bankrupt: state pension payments are the only source of income for 80% of EU pensioners.^[22] Variation in average life expectancy by socio-economic characteristics and debates over life expectancy versus healthy life expectancy further muddy the waters when reform is raised.

Today in the UK, setting the State Pension Age is a protracted political process which consumes a huge amount of government bandwidth – it is almost as controversial as the Triple Lock. A key reason for the controversy is because life expectancy rises are increasingly slower than the previous setting cycle anticipated.^[23] This gives the Secretary of State for Work and Pensions two options. Either commit to a setting cycle based on out of date life expectancy data (in recent years, likely to have deteriorated) or insist on sticking to the ‘⅓ of life spent in retirement’ commitment, which likely means picking a fight with the Treasury. The end result is – much like with the Triple Lock – that successive ministers are strongly motivated to kick the can down the road. For example, in 2023 the government declined to bring forward the State Pension age rise to 68 and instead left the question for a further review, which was launched in 2025.^[24] Yet in many other developed countries, including Finland, Greece, Denmark, Portugal, and the Netherlands,^[25] the pension age is set more or less automatically with reference to life expectancy, avoiding major political difficulties.

The UK should move to a similar automated system for setting the State Pension Age, doing so according to a formula that is primarily driven by life expectancy but that also aims for every generation to spend the same proportion of their life in retirement, which is currently around one-third. These changes should be designed to be gradual, with plenty of notice given so that people can plan and save accordingly. 

While life expectancy generally is still increasing, those increases have slowed, and the public debate around the last State Pension Age setting cycle centred around this exact fact. Some will argue that the formula should take account of healthy life expectancy, not just life expectancy, as the Tony Blair Institute recently proposed in the form of its ‘Lifespan Fund’ policy, which would use individual characteristics to actuarially personalise access to the state pension.^[26] While the concern is understandable, healthy life expectancy is too uncertain and subjective to serve as the trigger for automatic changes to something as important as the State Pension age. Healthy life expectancy varies significantly by region, income and occupation, and is much more difficult to measure consistently than overall life expectancy, requiring unwieldy levels of complexity in any policy that sought to include this measure fairly. 

The better approach is to keep the pension-age formula simple and objective, while protecting those who genuinely cannot work longer through other parts of the system. That could include more flexible access to private pensions on health grounds, stronger disability and sickness support, and targeted help for people in physically demanding occupations. The State Pension age should be set by a clear demographic rule; hardship and ill health should be addressed directly, not by making the whole formula less stable.

The government should commission an independent expert review to design a smoothed automatic mechanism for setting the State Pension Age, with a guarantee of a minimum of a ten years’ notice before any change takes place and using rolling averages of life expectancy projections to prevent short-term shocks causing major swings in the timetable. 

2.2.3 Automate the receipt of Pension Credit. 

A strong objection to Triple Lock reform flows from the desire to prevent increases in pensioner poverty and protect the pensioners who depend the most on their State Pension. But this is ultimately an argument for strengthening Pension Credit, not preserving the Triple Lock and all its problems. 

Pension Credit is the part of the pension system that is specifically designed and intended to protect the poorest pensioners and played a very significant role in reducing pensioner poverty in the 2000s.^[27] It is formed of two parts: Guarantee Credit, which is a means-tested element that tops up pensioners’ weekly income; and Savings Credit, which is a smaller additional payment for some pensioners who reached State Pension age before April 2026 and is not closed to newer pensioners. Currently, the problem with Pension Credit is that it does not reach enough of the people it is supposed to: in 2023 to 2024, only 62% of those entitled to the benefit received it, leaving up to £2.5 billion unclaimed, on average around £2,600 per year per eligible family.^[28]

To fix this problem and make sure Pension Credit is working as it should, the government should move towards automating Pension Credit awards. This can be done in two steps:

First, the capital rules should be simplified. Savings and investments above £10,000 reduce the award. But this rule makes automation much harder, because DWP cannot determine a claimant’s capital holdings without asking them what they are. Removing this requirement would be the simplest reform and would mean that HMRC and DWP know everything they need to know about whether someone is eligible for Pension Credit without a proactive application necessary. After all, Pension Credit is aimed at pensioners with very low weekly incomes and those whose incomes are low enough to qualify but have substantial liquid savings are unlikely to be a large group. However, this can be tested using the Family Resources Survey and DWP administrative data.

Second, HMRC should automatically share an applicant’s income details with DWP when they apply for the State Pension. This will enable DWP to automatically add Pension Credit to that applicant’s State Pension payment, thus removing the need for the eligible pensioner to apply.

Together, these measures can ensure that even as the Triple Lock is removed, more of the poorest pensioners are receiving the help they need and are intended by the government to receive. Finally, it is also the case that factors such as the introduction of pension auto-enrolment and the very significant increase in female labour market participation mean that the number of people who need to and will need to rely on Pension Credit is diminishing over time.^[29] This declining caseload may mean that, in time, the government can consider simply withdrawing Pension Credit. 

2.3 A Pension Reserve Fund?

The three reforms laid out above are intended to stabilise and strengthen the UK’s existing pay-as-you-go public pension system. A further question is whether the UK should supplement that system by creating a pension reserve fund.

As laid out above, currently the UK system works by using National Insurance contributions and wider tax revenues raised from the current working-age population to fund State Pension payments to the current generation of pensioners. Workers do this on the implicit understanding that the next generation will do the same for them. Now, because of people living longer, falling birth rates, and a greater share of the population reaching retirement, this system has become unstable. 

The proposed response of this paper has been to adjust the pay-as-you-go system itself, by automating the State Pension age and changing uprating policy. But a further reform that could be introduced would be to build a reserve fund in advance, so that some of the cost of future pensions is met not only by future workers, but also by investment returns accumulated over time. Around the turn of the century, a number of developed economies established funds of this kind, including France, Japan, Australia, New Zealand and Ireland. Their designs differ, but the core principle is similar: set aside public money, invest it in a diversified portfolio of higher-return assets, and use the proceeds at a future date to help support the public pension system during a period of pressure, thus smoothing out the pressure on younger and future generations. The UK has not taken this route, and an opportunity to establish a sovereign wealth fund was arguably missed in the 1980s, when revenues from North Sea oil were at their height. Instead, the Thatcher Government explicitly chose to return that revenue to the public in the form of tax cuts.

But a UK reserve fund does have an attractive intergenerational logic. It would allow the state to convert a temporary fiscal windfall into a permanent asset, with the returns used to reduce future pressure on taxpayers, workers and pensioners. It could also make the pension system less reliant on repeated political adjustments to the triple lock, the pension age or National Insurance. If created, such a fund should be managed independently, invested in a highly diversified manner, probably best globally, and with strict governance to avoid political interference. 

While the UK does have a National Insurance Fund that technically invests its surplus, it is obligated to invest that surplus almost entirely in gilts.^[30] This means that in practice, this money is lent to the government, at an interest rate near the Bank of England base rate, for general spending purposes. Repurposing any part of that money, therefore, would amount to raising the government’s borrowing requirement by that amount. In other words, the ‘surplus’ isn’t really a surplus, because it already is being used for something. If the money were diverted from gilts into equities, infrastructure or other higher-return assets, the government would need to borrow more elsewhere to replace it. This amounts to borrowing to invest.

Borrowing to invest is not automatically wrong. There are circumstances in which it can be justified. But it creates a demanding test: the fund must be expected to earn more than the government’s cost of borrowing, and by a sufficient margin to compensate for risk, volatility and political constraints.

That is a difficult test today. With gilt yields elevated, the return hurdle for a new UK fund is much higher than it would have been in the 2010s. If the Government can borrow at around 5%, and a conservatively managed long-term fund might be expected to earn around 6% nominally, the expected spread is thin. A one percentage point margin may not justify the risk of using scarce fiscal capacity to invest in markets rather than reduce borrowing, cut taxes or fund public services.

This is why sovereign wealth funds and public pension reserve funds have traditionally been thought most suitable for countries with budget surpluses, natural resource revenues or major one-off windfalls. For countries with persistent deficits, the policy can look less like saving and more like leveraged investment. In the words of Paul Goldsmith, New Zealand finance minister arguing that payments to New Zealand Super Fund, the country’s PPRF, should be suspended because the country cannot afford them: ‘If it was a slam dunk, we may as well borrow a half a trillion dollars and give it to the Super Fund. It’s not a slam dunk.’^[31] However, this has not stopped several countries with large deficits from establishing such funds in recent years, including Ireland and Canada.

A UK pension reserve fund would need to reach £300-£600 billion at maturity to deliver £15-£30 billion a year in drawdowns (roughly 10-20% of today’s State Pension cost). Working backwards from this with the sort of growth profile the model can produce – 6% annual return, 25 years of accumulation – implies a present-value seed somewhere around £80-£200 billion, or a smaller seed (£20-50 billion) plus very substantial annual contributions for more than 25 years.

There are a number of ways a government could find the money to create such a fund, including by using the National Insurance Fund surplus, though as discussed this is essentially funding through borrowing. Perhaps the least painless way for a nation to seed its reserve fund is through windfalls, such as might be generated via the selling of government assets such as land. This is what the Trump Administration says it intends to do for its proposed Sovereign Wealth Fund. Alternatively, the fund could be seeded through the levy of a new, hypothecated tax, though this would raise questions from the many voters who believe their National Insurance contributions are already going to fund their future retirement. 

It may be the case that the specific conditions the UK currently faces, not least surging gilt yields and a rapidly growing national debt, mean that there are simply too many opportunity costs to allow a reserve fund to be established. However, when conditions permit, or in the event of windfalls that could seed such a fund, it would be wise for the government to strongly consider establishing one.

3 Reforming Family Support

In this section, we propose three policies aimed specifically at making life better and easier for new parents, through changes to the tax, social security, and childcare systems. These policies are neither a ‘reward’ for people who have children nor a punishment for people who do not want to, or cannot, start a family. They recognise the fact that children, every single one of whom is important in their own right, are a contribution to our future national prosperity even as they are expensive to raise. In other words, because we all benefit when people choose to have children and so we all benefit when policy makes it easier for people to do so. 

This is particularly a matter of concern because the Total Fertility Rate in England and Wales is 1.39 In Scotland – due to start depopulating in less than a decade’s time – it is just 1.25, on par with famously low fertility Japan.^[32][33]

As fertility falls and life expectancy rises, the ratio of retired to working-age people increases. This places growing fiscal pressure on the working-age population, as a larger share of government revenue is required to fund healthcare, pensions, and social care for an ageing population. Core elements of Britain’s social infrastructure, including the NHS, were designed for a much younger society. Without demographic renewal, their long-term sustainability is in question. 

The immigration of working-age people mitigates an increasing old-age dependency ratio, more quickly but less durably than more children being born. But even after the very high levels of immigration the UK has experienced over the past decade, our old-age dependency ratio has continued to increase. With increasing political and democratic consensus that immigration to the UK must come down very sharply, we can expect the mitigating effect of working-age immigration to lessen over the coming years.

Low fertility also constrains economic growth. An older population absorbs more public spending, limiting investment and reducing disposable income through higher taxes. Over time, fewer births mean fewer workers and lower output. And because innovation depends on people, demographic decline ultimately weakens the ideas and dynamism on which growth depends: for there to be ideas, there must be human beings.

Taken together, it is vital that the British government does not remain neutral on whether or not people have children. Instead, policymakers must make life easier for British people to start, grow, and support their families. Furthermore, there is strong evidence that British people are having fewer children than they would like to have. 

While the British state already supports parents, through universal provision like education and targeted measures such as Child Benefit, children remain materially costly for individual families, even though they generate large social returns. The costs begin before birth: equipment such as prams, cots, and car seats is expensive, while caring for young children significantly reduces parents’ earning capacity. Mothers in particular are likely to take time out of the workforce in a child’s first year, and even with the aid of government-subsidised childcare provision, parents face constraints on working hours that persist well beyond infancy.

These pressures help explain why households with dependent children are much more likely to experience financial difficulty than those without. Survey evidence^[34] consistently shows that financial insecurity is a major factor deterring people from having children they want, whether that means postponing parenthood or deciding against another child.

Taken together, the policies proposed in this section focus on the period when children are youngest. The financial pressures associated with parenthood are not evenly distributed across childhood. They are heavily concentrated in the early years, when parents’ earning capacity is most constrained and childcare costs are highest. The reforms outlined below aim to rebalance support towards this phase of family life, reducing the upfront financial shock of having children while also making it easier for parents to remain in work.

3.1 Child Tax Allowance

One way to recognise the social value of raising children is through the tax system. While the government provides transfers to families through benefits and services, the structure of taxation itself remains almost entirely individualised. This means that the tax system does little to recognise that households raising children face higher costs while having lower effective earning capacity.

Should parents pay less tax? This paper argues that they should. Specifically, we propose that those who are raising young children should pay less income tax, making it easier for these parents to raise their young families. 

3.1.1 The problem: high burdens on new parents

Despite the extra costs borne by parents, especially when children are young, the British tax system takes no account of family responsibilities. Two adults earning the same income pay the same tax, even if one is supporting children and the other has no dependents. This ignores both the social value of children and parents’ reduced ability to pay tax. 

3.1.2 Our proposal

In recognising this reality, a Child Tax Allowance could ease the financial burden of raising children, making it easier for people to form and expand families in the first place. 

We propose a basic rate Child Tax Allowance of £10,000 per child aged under five, £20,000 per two children under five, and £30,000 per three or more children under five. This would effectively increase the amount that parents of children aged under five keep of what they earn. This Allowance would be worth up to: £2,000 for a household with one child aged under five; £4,000 for a household with two children aged under five; and £6,000 for households with three or more children aged under five. Because the relief of the Allowance would only be applied to basic rate income tax, the Allowance would function much like an increase of parents’ personal tax allowance. Parents or primary caregivers would be able to choose to split the Allowance between themselves or have it applied to one income only. We estimate this policy would cost £4.8 billion a year, assuming that every two-parent household opts to split the Allowance between them in a tax efficient manner.^[35]

These hypothetical case studies illustrate how the Allowance would work for families:

1. Nicola is the single mother of a four year-old boy. She earns £40,000 and pays the basic rate of income tax of 20% on her earned income above the personal tax allowance, which amounts to £27,430. That means her income tax bill is £5,486. But the Child Tax Allowance of £10,000 reduces the amount of income she has to pay income tax on to £10,000. That makes her tax bill £3,486 rather than £5,486. 
2. Adam and Amina have a daughter aged three and twin boys aged one. Amina is working part-time and earns less than the personal tax allowance Adam earns £60,000 and so pays income tax on £47,430, amounting to £9,486. Because Amina’s earnings are currently low, the couple decide Adam should claim the entire £30,000 Child Tax Allowance the family is entitled to. The Allowance means that Adam’s income tax bill decreases from £9,486 to £3,486. 
3. Sarah and Ben have three daughters all aged under five. Their household is entitled to a £30,000 Child Tax Allowance. Ben earns £35,000 and Sarah earns £28,000. If either of them were to claim all the Allowance, they would miss out on some of the £6,000 they could save in tax because neither of them is independently earning enough to make full use of it. They split the Allowance in half between them, so that each removes £3,000 off each of their tax bills. Now, Ben pays just £1,486 in income tax and Sarah just £86. 

It is important to note that the splitting element of our Child Tax Allowance policy would currently be very complicated for HMRC to administer, because it lacks data on families. A version of the policy that applies it only to one parent’s income would be significantly easier to administer with data the government currently has access to, and would also be cheaper. However, it would also mean more eligible parents keeping less of their earned income.  

3.2 Compensating Informal Childcare 

Reducing the tax burden on parents addresses one dimension of the cost of raising children. But financial transfers alone cannot resolve the practical constraints that many parents face when attempting to combine work and family life. In particular, access to reliable childcare remains one of the most significant barriers preventing parents from returning to work or increasing their working hours. Addressing this constraint requires reforms not only to financial support, but also to the childcare system itself.

Parents in England face restricted access to childcare in terms of both cost and availability. The government’s free childcare offer expanded in September 2025 but there has not been the necessary increase in spaces to be able to accommodate the ensuing increased demand, especially as shortages existed before the expansion. At the same time, there is a long-running decline in the number of childminders in the UK. Difficulties finding the right childcare makes it more difficult for the parents of young children, especially mothers, to work or increase their hours. Yet, the government does very little to encourage another, very popular type of care: the informal care provided by trusted relatives like grandparents. 

3.2.1 The problem: A shortage of childcare places

Under the government’s current free childcare offer,^[36] working parents with a child aged between nine months and five years old are entitled to 15 free hours of childcare a week during school term time. The parents of all three to four year olds are entitled to 15 hours of free childcare a week and working parents to 30 hours a week during school term time. As of September 2025, the government’s free childcare offer increased in generosity: now, 30 hours of free childcare a week is available for eligible working parents with a child from nine months old up to school age, during school term times. 

But in 2024, before the offer expanded in generosity, less than half of English local authorities reported^[37] having enough childcare places to meet the entitlement. Only 45% said they had sufficient provision to meet the current 15 hour entitlement for two year olds, and 62% said they had enough provision to cover the 15 hour entitlement for three and four year olds. Between December 2024 and December 2025, the number of registered childcare places in England increased by only 15,800, a far cry from the 85,000 new places that the Department for Education estimated would be necessary by September 2025.^[38][39]

A contributing factor to the anaemic increase in places is the sharp decline in the number of childminders. Between 2013 and 2023, the number of childminders in England declined^[40] by over 50%. Between 2024 and 2025, over a thousand childminders left the sector.^[41] The decline in childminders also means available formal childcare has become less flexible, as childminders are often able to be more flexible and offer services like wraparound care. 

For parents, England’s childcare shortage places means long waiting lists^[42] for places and long journeys to settings that do have availability. Government analysis finds that access to childcare has declined overall in England since 2020, but that the decline is regionally concentrated^[43], with the North East, the East Midlands and Yorkshire and The Humber seeing the largest proportional decrease in their childcare access over this period. However, there is also evidence that parents in London are more likely to struggle to access childcare, with 65%^[44] of mothers in London with a child aged under ten struggling to find childcare, compared to 54% across the UK.

This matters because access to childcare is a key factor affecting the ability of parents to work: more people enter the workforce where access to childcare improves. 2023 analysis^[45] found that the government’s introduction of 30 hours a week of free childcare for all working parents of three and four year olds led to around 286,000 more people in employment a year on and an increase of £22.3 billion in Gross Value Added. Equally, poor access to childcare has negative labour supply effects and England’s childcare shortage is making it more difficult for the parents of young children to work or increase their hours. 

In England, there is a significant cohort of parents of young children who would prefer to work if they had access to the right childcare. In 2023, 54% of non-working mothers with children aged 0 to 4 said^[46] that if they could arrange good quality childcare that was convenient, reliable and affordable, they would prefer to go out to work. 

But this effect is not felt equally between parents, with mothers more likely than fathers to struggle to return to work or increase their hours where there are difficulties finding childcare. Mothers themselves clearly identify this difficulty as making it harder to work. 2023 polling^[47] of UK mothers with at least one child aged under ten found that 46% of those who reported struggling to find childcare said this challenge had prevented them from working more hours. 29% said they had reduced their working hours as a result of struggling to find care. 

Expanding formal childcare provision is one response to this challenge, but it is not the only one. A large share of childcare in Britain already takes place outside formal settings, provided by relatives and trusted adults. Yet this informal care receives almost no recognition in public policy, despite playing a crucial role in enabling parents to work.

Currently the only government scheme to incentivise and support informal care allows grandparents providing childcare to working parents to claim National Insurance credits in order to help fill gaps in their National Insurance record. The scheme^[48] is restrictive and uptake is low^[49]: credits are only available to grandparents under state pension age and the value of the scheme is limited to £6,000 over the entire course of retirement. There is zero government support for the informal childcare provided by other trusted adults, such as aunts and cousins.

But the informal care provided by grandparents and other close relatives is an important form of childcare that helps parents, especially mothers, go out to work. In England in 2023, 48%^[50] of working mothers with pre-school children identified having relatives who can help with childcare as a factor that helps them to work. Grandparents are the key providers of this informal care – 28% of grandmothers and 16% of grandfathers report^[51] caring for their grandchildren, at an average of just over eight hours a week.

Beyond the reports of young mothers, evidence does show that access to grandparental childcare helps mothers work. Cross-country European research shows^[52] that when grandparents care for young children they increase the likelihood that the mother of those children works by 13 percentage points, and that the effect is most significant for mothers of pre-school children.

But even as the number of young mothers returning to work has increased over the past few decades, the average hours of childcare provided by grandparents and the proportion of grandparents providing such care has not increased^[53]. There have been no policy attempts to encourage more grandparents to provide more childcare.

3.2.2 Our proposal

Rather than relying exclusively on the expansion of formal childcare provision, government policy should also recognise, support and incentivise the informal childcare that already underpins the childcare system. By allowing parents to allocate part of their childcare entitlement to trusted caregivers such as grandparents, the state could expand the effective supply of childcare quickly and at relatively low cost.

We propose that working parents should be able to use their free childcare entitlement to compensate the informal childcare provided by trusted adults like grandparents, which would require an amendment to the Childcare Act 2016.

To be eligible for this expansion in the scope of the free childcare entitlement, parents would need to meet the work and minimum earnings requirements of the 30 free hours childcare entitlement. This would mean that both parents must be in work, and earning on average the equivalent of 26 hours a week at the national minimum or living wage. However, parents should not lose eligibility if their income exceeds £100,000 – this is in order to protect incentives to work and maximise the labour supply effects of the policy change.

To make use of this policy change, parents would continue to apply online to register for the entitlement but will also be able to allocate some or all of their 30 hours to their named trusted adult. Parents would need to apply with: the name and address of the trusted adult and their relationship to them; and an enhanced DBS check with barred lists for the trusted adult.

We anticipate that the vast majority of trusted adults would be grandparents or other close relatives. The hourly compensation rate provided by the government would reflect that this informal care is not equivalent to that offered by EYFS-qualified nursery staff and childminders and so will be set at a rate lower than that awarded to nurseries and childminders, initially at £5 an hour. To protect high standards of care and reduce the chance of fraud, no one trusted adult will be able to be registered as and receive compensation for caring for more than four children.

The compensation should be delivered via a tax credit for parents, who can then pass the compensation on to the trusted adult. For employed parents, the tax credit would be administered via PAYE, so that trusted adults may be compensated on a monthly basis. Self-employed parents would need to claim the tax credit via their yearly self-assessment. The named trusted adult should themselves receive regular email communications informing them when the compensation has been issued to parents and how much has been issued. 

This policy change would enable more grandparents to care for their grandchildren, and to do so for more hours, by recognising the value of the childcare that they do and contributing to costs^[54] incurred in providing this care. This policy can also encourage other trusted adults, such as aunts, uncles, cousins and close family friends, to increase the childcare support they give to parents now.

Encouraging the highly flexible care that grandparents and other trusted adults can provide would help to ameliorate England’s childcare shortage. This policy can also achieve these goals at a lower cost to the Treasury than purely subsidising the formal care provided by nurseries and childminders. This is because the care provided by grandparents and other such trusted adults is informal and not equivalent to that offered by qualified nursery staff and childminders. To reflect that, the hourly compensation rate should be below that awarded to formal settings.

Compensating grandparents for childcare can help address the childcare shortage by enabling more grandparents to care for their grandchildren, for more hours, and at a lower cost to the government than the formal care provided by nurseries and childminders.

The economic impact of this policy will be multifaceted. The main objective of the tax credit is to incentivise grandparents or other trusted caregivers to provide additional childcare. But from an economic standpoint, this could have effects through three different channels.

1. Providing additional informal childcare: the tax credit would incentivise parents to arrange additional informal care with trusted caregivers, increasing the provision of informal childcare and freeing them up to take on more hours at work or get back into employment. This effect is likely to be particularly pronounced among parents who are: starting from a low base of childcare provision; looking to increase their working hours; and struggling to find formal childcare places. Some of these parents might then begin to use their childcare entitlement. Although any parents entering the childcare system in this way would produce a fiscal cost, this could produce positive labour supply effects. 
2. Subsidising informal childcare that would have taken place already: there will be an extent to which the tax credit subsidises informal childcare that would have taken place anyway – for example, grandparents that were already willing and able to provide 5 hours of childcare a week. While there is a moral argument for recognising this contribution, from an economic standpoint this is a deadweight loss: using resources (in this case, taxpayer money) to subsidise actions that would have happened anyway, without providing any additional benefit. 
3. Substituting formal childcare for informal childcare: a third possibility is that parents who are already using the free childcare allowance reallocate some of this allowance from formal childcare to informal childcare. While this would not provide additional childcare, since childcare is simply being shifted to a different form, it would – because informal caregivers would be compensated at a lower rate than formal providers – represent a fiscal saving for the government.  

3.4 Frontloading child benefit

The reforms discussed so far focus on reducing the tax burden on parents and improving access to childcare. But the structure of direct financial support for families also matters. In particular, the timing of government support can influence family formation decisions and the financial pressures experienced by parents when children are youngest.

Child Benefit is a means-tested payment that sees eligible parents receive payments every four weeks, per child. Even after 2010 reforms that have limited eligibility, Child Benefit is an expensive and generous benefit. But changes to how and when Child Benefit is received by families could transform its impact and value to parents.

3.4.1 The problem

Child Benefit can only be claimed by one parent and is currently worth £26.05 a week for an eldest child and £17.25 a week for an unlimited number of further children, paid out on a monthly basis. A parent can claim Child Benefit until their child is 16, and until 18 if they stay in full-time education. Child Benefit has been means-tested since 2010, through the High Income Child Benefit Charge (HICBC). The form taken by HICBC today means that if anyone in a child’s household earns above £60,000, Child Benefit payments begin to be tapered away, diminishing to zero once anyone in the household is earning £80,000 or more. Onward has previously called for the abolition of HICBC, which contributes to severe effective marginal tax rates for many families.^[55]

Child Benefit is expensive, costing the government £13 billion a year, and it is worth a lot to parents. For an eldest child who stays in education until they are eighteen, a household can expect to receive over £24,000 in payments in total, and a little over £16,000 for a second child. That is a significant sum of money, but spread out over a long period of time. That is despite the fact that children are particularly expensive to their parents when they are pre-school age, because the care they require impedes their parents’ ability to work and because of the cost of childcare.

The amount of financial support that new parents receive is particularly important to helping them realise their desired number of children. Personal financial outlook and stability is a key factor that influences when and how many children parents and prospective parents choose to have. That means that support given around the time that these decisions are being made, particularly the decision to have a second or third child, is disproportionately effective in helping parents to decide to have wanted children.

3.4.2 Our proposal: front-loading Child Benefit

In addition to giving Child Benefit payments piecemeal over a sixteen or eighteen year period, the government should also allow eligible parents to opt into a new system that will see them receive a smaller amount of money but concentrated over the much shorter period before their child starts school.

We propose that, as an alternative to receiving £26.05 a week for an eldest child and £17.25 for any subsequent child, parents opting for the new system instead receive £57.60 per week for all children aged under five. Overall, this will mean that these parents receive £12,000 in Child Benefit payments for each of their children, at a time in life when their children are particularly expensive to them. 

Chart 4: Child Benefit reform – proposed savings by family size

The government would also save money for every parent who chose to take up this new system. As the chart above shows, the government would save over £12,000 for every oldest child whose parents opt into the new system, and a little over £4,000 for any second and subsequent children who choose the new system. 

This hypothetical case study illustrates how the new system could help young families. 

George and Angela live in north London with their daughter, Millie, aged two. George works full time and Angela works four days a week. Millie goes to nursery four days a week, from 8am to 6pm. As eligible working parents, George and Angela benefit from 30 hours a week of government-funded childcare. But they actually use 40 hours a week and the 30 free hours only apply to 38 weeks of the year, during school term time. To cover those extra hours, they pay for 10 hours on top of the funded entitlement and for the full 40 hours for 12 weeks of the year. That means that despite subsidised childcare, George and Angela spend £796 a month on childcare, or £9,552 a year.^[56]

George and Angela opted into the new Child Benefit system when Millie was born and will receive £3,000 a year in Child Benefit until Millie starts school. This money has been very helpful in making their childcare bill more affordable and helped Angela to decide that it was worth her while to return to work. Initially, she was not sure it would be as she only takes home £13,944 post tax from her salary of £30,000, and nursery fees take up 68% of that. And during the first year of Millie’s life, the family found the extra Child Benefit very helpful in meeting household expenses while Angela was only receiving Statutory Maternity Pay. 

The couple are aware that receiving the enhanced level of Child Benefit means they will not be eligible for any Child Benefit at all once Millie is aged five. But they are not concerned about that because the extra money is so helpful in meeting childcare costs which they know will not be an issue once Millie starts school. 

It should be clearly stated that though this reform would indeed save the government money over time, it would have implications for the government’s near-term financing requirements, because Child Benefit expenditure is being brought forward. This higher upfront spending is likely to raise gilt yields, thus putting up the cost of government borrowing. This is a real risk and should be mitigated by proposing this policy alongside cost-saving measures, including those proposed in Chapter 3 but also potentially wider reforms to the benefit system. 

4 Conclusion

This report has argued that pension reform and family support should be understood together as part of the same agenda. The common principles that underpin that the proposals are reciprocity and sustainability.

The pension reforms this paper proposes seek to protect pensioners from inflation and ensure they share in rising living standards, while reflecting real demographic pressures. Increases to the State Pension age would become significantly less politically fraught and more predictable, allowing people to plan. And the poorest pensioners would be protected in a targeted way through a strengthened Pension Credit system rather than through an expensive universal Triple Lock. When fiscal conditions allow, a pension reserve fund could help future governments smooth the costs of ageing across generations and further stabilise the State Pension system. 

But Britain must also make it easier for people to start and raise families. The policies proposed in this report are deliberately focused on the early years, when the financial shock of parenthood is greatest and parents’ earning capacity is most constrained. A Child Tax Allowance would recognise that parents of young children have a lower ability to pay tax than otherwise similar households without dependents. Compensating informal childcare would make better use of the trusted care already provided by grandparents and other relatives, while helping parents return to work or increase their hours. Frontloading Child Benefit would give families more help when children are young, without necessarily increasing the lifetime cost of support.

The aim is not austerity for the old or unlimited subsidy for the young. Moving from Triple Lock to family support must mean reform that is honest about our fiscal future if politicians fail to act to solve the unaffordability of our current pension system or face the challenge of the demographic pressures we are already experiencing. 

^[1] Cribb, Emmerson, and Barker, “The Pensions Review”, Institute for Fiscal Studies (2023). https://ifs.org.uk/sites/default/files/2023-12/IFS-R291-The-future-of-the-state-pension.pdf

^[2] UK Summary Table 3 from the “National population projections: 2024-based”, ONS, https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationprojections/bulletins/nationalpopulationprojections/2024based (2026).

^[3] “Fiscal risks and sustainability – July 2025”, Office for Budget Responsibility, https://obr.uk/frs/fiscal-risks-and-sustainability-july-2025/ (2025).

^[4] “Welfare spending: pensioner benefits”, Office for Budget Responsibility, https://obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/welfare-spending-pensioner-benefits/ (2023); Cash figures are Onward calculations applying the OBR’s projected GDP shares to the current spending of £138 billion.

^[5] “National population projections, fertility assumptions: 2020-based interim”, ONS,https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationprojections/methodologies/nationalpopulationprojectionsfertilityassumptions2020basedinterim(2022).

^[6] “National population projections, fertility assumptions: 2024-based”, ONS, https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationprojections/methodologies/nationalpopulationprojectionsfertilityassumptions2024based(2026).  

^[7] “Births in England and Wales: 2025”, ONS, https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/livebirths/bulletins/birthsummarytablesenglandandwales/2025, (2026).

^[8] “Net migration forecast and its impact on the economy”, OBR, https://obr.uk/box/net-migration-forecast-and-its-impact-on-the-economy/ (2024).

^[9] “National population projections: 2024-based”, ONS, https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationprojections/bulletins/nationalpopulationprojections/2024based (2026).

^[10] “Dataset – Old age structure variant – UK summary”, ONS, https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationprojections/datasets/tablel11oldagestructurevariantuksummary (2024).

^[11] This is a mechanical stress test, not an alternative OBR forecast. The OBR’s central projection has State Pension spending reaching 7.7% of GDP in the early 2070s, with around 2.7 adults below State Pension age per pensioner. The ONS’s 2024-based old age structure variant projects that, by 2073, the UK will have 35.7 million working-age people and 19.3 million pension-age people, equivalent to 1.85 working-age adults per pension-age person. Holding the OBR’s assumptions about pension generosity, earnings, employment, productivity, GDP and policy constant, the State Pension cost is scaled by the deterioration in the support ratio: 7.7 × (2.7 / 1.85) = 11.2% of GDP. Since the current State Pension bill of £138 billion is around 5% of GDP, 1% of GDP is approximately £27.6 billion; 11.2% of GDP therefore implies a bill of roughly £310 billion in today’s money. The exercise is intended only to illustrate the sensitivity of a pay-as-you-go pension system to adverse demographics. 

^[12] “Liberal Democrat Manifesto 2010”, https://www.markpack.org.uk/files/2015/01/Liberal-Democrat-manifesto-2010.pdf, p.19

^[13] Cribb, Emmerson, Johnson and Karjalainen, “The future of the state pension”, IFS. https://ifs.org.uk/publications/future-state-pension (2023). 

^[14] Calculated using the following data sources: “Basic State Pension (Rate)”, Royal London, https://adviser.royallondon.com/technical-central/rates-and-factors/state-pension/basic-state-pension-rates/; “AWE, Whole Economy Level (£): Seasonally Adjusted Total Pay Excluding Arrears”, ONS, https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/timeseries/kab9/emp (April 2026); “CPI Index 00”, ONS, https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/d7bt/mm23 (April 2026). 

^[15] “Fiscal risks and sustainability – July 2025”, OBR, https://obr.uk/frs/fiscal-risks-and-sustainability-july-2025/ (2025).

^[16] “UK’s pension triple lock to cost three times more”, BBC News, https://www.bbc.co.uk/news/articles/cy7nv3pdgr4o (2025).

^[17] Heidi Karjalainen, “What are the effects of the ‘triple lock’ and how could it be reformed?”, IFS, https://ifs.org.uk/articles/what-are-effects-triple-lock-and-how-could-it-be-reformed#:~:text=Contents&text=The%20level%20of%20the%20state,with%20average%20earnings%20since%202011 (2025). 

^[18] Jun Saito, “Macroeconomic Slide Mechanism of the Japanese Pension System”, Japan Center for Economic Research, https://www.jcer.or.jp/english/macroeconomic-slide-mechanism-of-the-japanese-pension-system (2023).

^[19] Raitano and Jessoula, “Changes in the pension debate under the new government in Italy”, ESPN Flash Report 2018/41, European Commission (2018). 

^[20] John Hooper and Phillip Inman, “Italy’s jobs minister fears for life as labour market shaken up”, The Guardian (2012), https://www.theguardian.com/world/2012/mar/23/italy-jobs-minister-elsa-fornero.

^[21] Sawulski, Magda, Lewandowski, “Will the Polish pension system go bankrupt”, Instytut Badań Strukturalnych (2019) https://ibs.org.pl/app/uploads/2019/06/IBS_Policy_Paper_02_2019_en.pdf.

^[22] “Pensions timebomb: why Europe’s social contract is becoming unsustainable”, The Guardian (2025), https://www.theguardian.com/money/2025/dec/29/pensions-timebomb-europe-social-contract-becoming-unsustainable.

^[23] “State Pension age Review 2023”, Department for Work and Pensions (2023), https://www.gov.uk/government/publications/state-pension-age-review-2023-government-report/state-pension-age-review-2023.

^[24] “UK launches review into raising state pension age”, Reuters (2025), https://www.reuters.com/world/uk/uk-launches-review-into-raising-state-pension-age-2025-07-21/#:~:text=LONDON%2C%20July%2021%20(Reuters),by%20workers%20towards%20their%20retirement.

^[25] “Pensions at a Glance 2021”, OECD (2021), https://www.oecd.org/en/publications/pensions-at-a-glance-2021_ca401ebd-en/full-report/component-6.html.

^[26] Browne and Smith, “The Lifespan Fund: Reforming the State Pension for a More Affordable, Flexible and Fair Future”, Tony Blair Institute, https://institute.global/insights/economic-prosperity/the-lifespan-fund-reforming-the-state-pension-for-a-more-affordable-flexible-and-fair-future (2026). 

^[27] Cribb, Henry, and Karjalainen, “How have pensioner incomes and poverty changed in recent years?”, IFS, https://ifs.org.uk/publications/how-have-pensioner-incomes-and-poverty-changed-recent-years (2024). 

^[28] “Income-related benefits: estimates of take-up: financial year ending 2024”, Department for Work and Pensions (2025), https://www.gov.uk/government/statistics/income-related-benefits-estimates-of-take-up-financial-year-ending-2024/income-related-benefits-estimates-of-take-up-financial-year-ending-2024.

^[29] “DWP benefits statistics: August 2025”, Department for Work and Pensions, https://www.gov.uk/government/statistics/dwp-benefits-statistics-august-2025/dwp-benefits-statistics-august-2025 (2025).

^[30] “Great Britain National Insurance Fund Account for the year ended 31 March 2025”, HMRC, https://www.gov.uk/government/publications/national-insurance-fund-accounts/great-britain-national-insurance-fund-account-for-the-year-ended-31-march-2024 (2025).

^[31] “Paul Goldsmith on why using borrowed money to invest in the Super Fund is a bad idea, even if halting contributions would reduce the size of the fund by $20 billion over 10 years”, Interest, https://www.interest.co.nz/banking/107453/paul-goldsmith-why-using-borrowed-money-invest-super-fund-bad-idea-even-if-halting (2020).

^[32] “Tackling Scotland’s population challenges”, Scottish Government, https://www.gov.scot/news/tackling-scotlands-population-challenges-1/ (2024).

^[33] “Scotland’s birth rate falls to lowest level since 1855”, BBC News, https://www.bbc.co.uk/news/articles/c209en3zwyko (2025).

^[34] Berrington, Kuang and Perelli-Harris, “Economic uncertainty and intentions to remain childless: Macro-economic worries or individual-level economic uncertainty”, Centre for Population Change, https://eprints.soton.ac.uk/497235/1/WP_109_Economic_uncertainty_and_intentions_to_remain_childless.pdf (2024).

^[35] Calculated using Family Resources Survey microdata, please see appended methodology note for a full explanation. Calculation excludes Scotland, due to Scotland’s different income tax thresholds.

^[36] “Free Childcare for Working Parents”, Gov.UK, https://www.gov.uk/free-childcare-if-working/check-youre-eligible.

^[37] “Childcare Survey”, Coram, https://www.familyandchildcaretrust.org/sites/default/files/Childcare%20Survey%202024_5.pdf (2024).

^[38] “Childcare and early years provider survey”, Department for Education, https://dera.ioe.ac.uk/id/eprint/41798/1/Childcare%20and%20early%20years%20provider%20survey%2C%20Reporting%20year%202025%20-%20Explore%20education%20statistics%20-%20GOV.UK.pdf, (2025).

^[39] “Future rollout of new early years entitlements faces challenges”, National Audit Office, https://www.nao.org.uk/press-releases/future-rollout-of-new-early-years-entitlements-faces-challenges, (2024).

^[40] “A focus on childminders”, Ofsted, https://www.gov.uk/government/publications/early-years-inspections-statistical-commentaries-2022-to-2023/a-focus-on-childminders (2023).

^[41] “Main findings: childcare providers and inspections as at 31 August 2025”, Ofsted, https://www.gov.uk/government/statistics/childcare-providers-and-inspections-as-at-31-august-2025/main-findings-childcare-providers-and-inspections-as-at-31-august-2025, (2025). 

^[42] “Childcare shortage worsens as costs rise – report”, BBC News, https://www.bbc.co.uk/news/education-68580918 (2024).

^[43] “Commentary: Changes in access to childcare in England”, ONS, https://www.gov.uk/government/publications/changes-to-access-to-childcare-in-england/commentary-changes-in-access-to-childcare-in-england (2024).

^[44] https://www.progressive-policy.net/downloads/files/CPP_Growing-Pains-Report-_March-2023_SP.pdf

^[45] https://www.pwc.co.uk/press-room/assets/impact-of-childcare-policy-in-the-uk.pdf

^[46] Department for Education, “Childcare and early years survey of parents”, https://explore-education-statistics.service.gov.uk/find-statistics/childcare-and-early-years-survey-of-parents/2023 (2023).

^[47] Franklin and Fogden, “Growing pains: the economic costs of a failing childcare system”, Centre for Progressive Policy, https://www.progressive-policy.net/downloads/files/CPP_Growing-Pains-Report-_March-2023_SP.pdf (2023).

^[48] HM Revenue & Customs, “Looking after the grandchildren? Make sure it counts towards your State Pension”, GOV.UK, https://www.gov.uk/government/news/looking-after-the-grandchildren-make-sure-it-counts-towards-your-state-pension (2013).

^[49] This is Money, “Grandparents can boost state pension by £6,000 just by looking after grandchildren”, https://www.thisismoney.co.uk/money/pensions/article-13568555/Grandparents-boost-state-pension-6-000-just-looking-grandchildren.html (2024).

^[50] Department for Education, “Childcare and early years survey of parents”, https://explore-education-statistics.service.gov.uk/find-statistics/childcare-and-early-years-survey-of-parents/2023 (2023).

^[51] Broome, Hale, and Slaughter, “An intergenerational audit for the UK: 2024”, Resolution Foundation, https://www.resolutionfoundation.org/app/uploads/2024/11/Intergenerationl-Audit-2024.pdf.

^[52] Barslund and Schomaker, “Grandparental Childcare and Parent’s Labour Supply: Evidence from Europe”, Sozialer Fortschritt, Vol. 68, No. 4, https://www.jstor.org/stable/45174929 (2019).

^[53] Broome, Hale and Slaughter, “An intergenerational audit for the UK: 2024”, Resolution Foundation, https://www.resolutionfoundation.org/app/uploads/2024/11/Intergenerationl-Audit-2024.pdf (2024). 

^[54] “Grandparents are saving families £96bn a year in equivalent childcare costs”, Sunlife,  https://www.sunlife.co.uk/press-office/news/grandparents-childcare-salary/ (2023).

^[55] Phoebe Arslanagić-Little, “A New Deal for Parents”, Onward, https://ukonward.com/wp-content/uploads/2024/08/NEW-DEAL-FOR-PARENTS-7-August-PM-PDF-1.pdf(2024).

^[56] Childcare costs and hours are based on what a real family living in north London are paying, whose names have been changed.

The post From Triple Lock to Family Support appeared first on Onward.

The post In Ponzi scheme Britain, parenthood is a luxury appeared first on Onward.

“Sometimes when I go to bed at night, I think that if I were a young man I would emigrate.”

Rt Hon James Callaghan to Cabinet, November 1974

****

A social contract seems like a logical, even natural, thing – until it isn’t.  For time out of mind, it was widely accepted that if young people worked hard and did the right thing, Britain was a country where this would be rewarded with success. That success might be more or less dramatic, but its core elements – a good job, a decent home, the chance to raise a loving family – were commonly understood. They reflect very fundamental human needs.

The existence and importance of this social contract united both the political Left and Right.  Whatever political tradition we flow from, there has been a broad confluence of agreement around this shared vision. Helpfully, throughout most of the twentieth century it was supplemented by gradually increasing material prosperity. Not for nothing did Mrs Thatcher celebrate the triumph of Marks and Spencer over Marx and Engels. Life transformed for the better for most Britons between the 1920s and the 1990s.

Yet today, our social contract is broken. Politicians may still deploy the rhetoric of an opportunity society, but the reality for many younger people is increasingly one of collapsing dreams. As this paper sets out, modern Britain is less “no country for old men” than “no country for young people”.  Wage growth has been stagnant for years.  Yet many crucial costs have soared: most notably, the cost of the average deposit for a home has tripled in real terms since 2000.  Young people are trapped in expensive, often low-quality, rented houses deep into their twenties and thirties – or face the unattractive option of living as perma-teenagers with their parents.  Meanwhile childcare is exorbitantly expensive. Unsurprisingly, our birth rate is collapsing, testified to eloquently but silently by closures of maternity wards and schools. This is a profoundly unhealthy place for any society to be.

In the face of this, the British state is running a kind of giant Ponzi scheme, with young people as the victims. An ageing society is catastrophically expensive for fewer people of working age to support.  The OBR forecasts that by 2070, the state pension, adult social care and healthcare costs will account for almost half of government spending, compared to a third in 2020. Who seriously believes the triple lock can survive this kind of demographic change? On this trajectory, what are the odds on the state pension being affordable at all?

Immigration was long held out as the answer to economic and demographic sustainability, but it has proved no answer at all. The OBR’s analysis has exploded the myth that low-skilled immigration generates a net fiscal contribution – instead, the reverse is true.  Meanwhile in recent years immigration has imposed huge new pressures on our housing stock, public services and social cohesion alike, further complicating existing problems and creating dangerous new fault lines.

Renewing our social contract is vital, and in all our interests.  It is not simply a matter of fairness.  It is about the viability of the nation. Without action, people will pay ever more in tax, but public services will decline and the national accounts still won’t add up. Without action, your parents’ wealth and the availability of the Bank of Mum and Dad will make more of a difference to your outcomes in life than anything you do. Without action, faith in mainstream politics and even democracy itself will increasingly be at risk.

The Left will call for redistribution, but you will never get ahead of the problem that way, and efforts to do so will kill economic growth. The only solution is to restore opportunity: to build the homes we need, to lower immigration to manageable numbers, to better support family formation and to open a rational conversation about a fair rebalancing of welfare entitlements.  At its heart lies one key word: reciprocity.

This will not be easy.  As the demographic squeeze grips tighter, so zero-sum positions become easier to adopt. But most of the threats to the social contract have been at least worsened, and in some instances entirely created, by public policy choices. As these were made, so they can be unmade. This launch paper begins the journey of setting out how this should be done.

Rt Hon Sir Simon Clarke
Director, Onward

Introduction

Britain has become dangerously tilted towards older age groups in both its politics and its policymaking. The failure to confront the country’s changing demographic reality compromises not just intergenerational fairness, but threatens the medium to long-term sustainability of the state itself.

The ‘social contract’ is the implicit agreement between the British state and citizens, and between citizens themselves. It is a shared understanding that if people work hard, play by the rules, and contribute to society, they will be rewarded with opportunity and security. This shared understanding is reciprocal, not unilateral. It rests on principles of reciprocity, mutual obligation and consent and is not imposed by diktat.

For much of the post-war period, this social contract underpinned Britain’s political economy. Economic growth was strong, living standards rose from generation to generation, and the welfare state offered protection from hardship and at vulnerable times of life. There was a widely shared belief that hard work would lead to a better life, materially and in terms of dignity, agency, and the ability to build a future for oneself and one’s children. 

But for younger generations, the link between contribution and reward has weakened. Home ownership, stable family life, and financial security – traditional milestones of adulthood – are becoming harder to attain, even for those in full-time work. At the same time, trust in institutions is falling, the tax burden on working people is rising (in some cases serving to penalise hard work and progress through high marginal tax rates), and important social infrastructure struggles to deliver. For many, the system no longer seems to work as promised: it demands more but delivers less.

These symptoms are the warning sirens of a breakdown in the social contract. That breakdown is driven by demographic change, economic stagnation, and a political class that is failing to adapt to new social realities. The working-age population is shrinking relative to the retired, yet is being asked to shoulder an ever-increasing fiscal burden. 

At the same time, political incentives remain skewed towards older voters. This reinforces a system in which wealth and public spending increasingly flow to those in retirement, and away from those starting families, building businesses, or saving for the future, who are being asked to fund services that may no longer be available once they reach old age. 

This paper makes the case for renewing the social contract for a new generation. It begins by diagnosing the material and institutional symptoms of breakdown and then explores the structural drivers of those symptoms. It then turns to the political challenge of how to communicate a vision of change that is both honest about trade-offs and capable of winning broad public support. Rebalancing between generations is essential. Not to play zero-sum games, or to divide society, but to preserve and strengthen it for future generations. 

Symptoms of breakdown

Identifying how the breakdown of the social contract manifests in people’s lives is key to understanding what is causing that breakdown. Below are detailed the major indicators that suggest the system is no longer working for too many people, especially working people.

Material declines in prospects

That contribution is met with reward is key to working people’s sense that society works for them and is fair. Through taxes, the contributions made by working people fund key social infrastructure that all rely on, or expect to rely on in the future, from healthcare that is free at the point of use to the State Pension. In exchange for these contributions, working people expect to be able to build a good life for themselves. They also expect that the social infrastructure they have helped to fund will be there when they themselves need it, particularly in old age. 

This link between contribution and reward is breaking down. Working people are being asked to increase their contributions, but as the demands upon them increase key elements of a good and stable life drift out of their grasp. Even the likelihood that key elements of the social infrastructure they have helped to fund will one day be there for them is decreasing.

This breakdown is visible across several important indicators. It is more difficult to buy a house or start a family. Inherited wealth is an increasingly important determinant of their life outcomes, trumping the returns on hard work. Higher taxes are making work itself less attractive to younger generations. And even for those in work, levels of debt are increasing.

Housing

The housing crisis means that fewer people are able to buy a home and those that can are being forced to wait longer and longer to do so. Average property values for first time buyers have reached 6.6 times the average UK salary, meaning that even those in full-time employment have years of saving ahead of them to get into a position to buy a home.¹ 

Figure 1: Average UK house prices have rapidly increased and new build homes have become comparatively more expensive.

Source: Nationwide²

In 2025, very different financial demands are made of a working person in their late twenties or early thirties looking to buy their first home than those twenty years ago. In 2000, the average deposit for a first home was £9,865 (£18,349.50 in real terms).³ Today, it is over £60,000.⁴ As a result, first time buyers are getting older. The average age of a first time buyer hit 33 in 2024, up from 29 in 2000 and 27 in 1980.⁵

This means today’s buyers will still be paying off their mortgages much later in life, potentially delaying retirement in order to be able to do so. But even as the average age of first time buyers increases, mortgage terms are also increasing with ultra-long mortgages becoming more popular as a way of bringing down the cost of monthly payments.⁶ In 2015, the average mortgage term for a first time buyer was 28 years, but today it is 31 years.⁷ Ultimately, accruing interest means that these extended mortgage deals are more expensive for buyers. 

Renters are also being squeezed. The average monthly cost of renting a room is £744 in the UK as a whole.⁸ Rents are highest in Greater London, where the average cost of renting a room is nearly £1000 and cheapest in Yorkshire and Humberside at £557.⁹ Prices have risen considerably over the past decade. In 2015, renting an entire one bedroom flat in Greater London cost £1,155, only around £155 more a month than a room does today.¹⁰ Renting a room in Huddersfield, Yorkshire in 2015 cost an average of only £350 a month.¹¹

High rents and expensive deposits work together to make it very difficult for younger people to save enough to buy a home, even when in fulltime, well paid work. The average time to save for a mortgage deposit has hit 7 years and the average worker saves just 1% of their income.¹² Furthermore, the 70% of first time home buyers who buy without assistance from the so-called Bank of Mum and Dad, are likely to take longer to save for a deposit.¹³ Today, only 10.4% of people aged 20 to 44 have the level of income and savings that would allow them to buy their first home.¹⁴

Figure 2: Young people are caught in an affordability trap. House price inflation has cooled, but private rent inflation has skyrocketed amidst stagnating wage growth. 

Sources: ONS, ONS^{15 16}

This means that younger people are forced to make difficult financial decisions in order to build up the savings necessary to put a deposit down on a first home. Pension contributions are often among the first sacrifices made by these hard-pressed savers, putting the old-age financial security of an entire generation at risk. Among recent and prospective homeowners, 15% have paused, reduced, stopped, or never started saving into a pension.¹⁷ This figure rises to 19% among first-time buyers, as younger generations make the trade off between buying somewhere to live and preparing for retirement.¹⁸

The birth gap 

UK women are having fewer children than they want to have. British women of childbearing age say they want 2.35 children on average, but England and Wales’ birth rate is 1.44 children per woman and falling.^{19 20} In Scotland, the birth rate has fallen to 1.28, closing in on ultra-low fertility nations like Japan.²¹ 

In part, the UK’s falling fertility rate is the result of people waiting longer to start their families, with the average age of first time motherhood rising to 29.1 in 2020, up from 26.5 in 2000.²² But developing alongside the increase in delayed parenthood is a rise in childlessness. 18% of women born in 1975 are childless, up from 13% of those in their mother’s generation.²³ Childlessness is increasing markedly in younger generations also. Of women born in 1993, the majority (56.5%) were childless by the age of 30.²⁴ While many of these women will go on to have children, their chances of remaining childless are higher, even as the majority of young women continue to want two children or more. 

Figure 3: Women in England and Wales had over 300,000 births fewer than desired in 2023. 

Source: ONS, Onward analysis²⁵

Tellingly, childlessness is not being felt evenly across British society. The UK has a widening ‘parent gap’ between rich and poor, with wealthier people increasingly more likely than poorer people to ever become parents.²⁶ In short, factors like sky-high rents and childcare costs mean that many are less likely to ever be in a position to become a mum or dad, perhaps particularly in the era of intensive parenting as society’s sense of the resources necessary to raise a child increase. In 2023, 41% of Brits who were unsure about having children said they would need to become “less economically vulnerable” to do so.²⁷ 

For those who are parents, policy choices make it more difficult to bring up children or to expand their families. Parents are more likely than those not raising children to be struggling financially and be behind on mortgage payments and other bills.²⁸ Children are especially costly to parents in early childhood, reducing parents’ ability to work and because of childcare costs. Yet not only do parents pay the same tax as non-parents, with no recognition of the cost of children in the UK’s tax system, but the UK has several policies which directly make parents’ lives more difficult. This includes the tapered means-testing of Child Benefit starting at a salary of £60,000 and the two child benefit cap, which means families can only receive the child element of Universal Credit, or the legacy benefit Child Tax Credit, for a maximum of two children. 

Greater levels of debt

Poor pay progression post the 2007 financial crisis, coupled with the cost of living crisis and inflation, mean that working people are accruing higher levels of debt. This includes problem debt, with an increasing number of people struggling to make repayments.

As goods become more expensive, consumers are relying more heavily on credit, with credit card debt rising by nearly 10% in 2023.²⁹ The debt charity StepChange has not only seen an increase in those seeking their help in the past few years, but specifically an increase in those who are in full-time employment but still have problem debt: nearly 3 million people are in full-time work yet unable to afford debt repayments.³⁰

Figure 4: An increasing share of low income households are having to take out loans to pay for essentials and those loans are of an increasing value. 

Source: Joseph Rowntree Foundation³¹

An increasing number of working people are also burdened with student debt. Total outstanding student debt owed to the government was £250 billion at the end of 2024. With university tuition fees rising again, the average amount of student debt owed by a graduate leaving university in 2025 is £45,600.³² In 1999-2000, UK university students left university with approximately £2,500 in student debt.³³

The student loan system has also recently become less generous in the wake of reforms made in 2022, particularly for lower to middle earning graduates. Pre-2022, student loans essentially worked as a graduate tax, but post-2022, the majority of students will pay off their loans in full.

One part of these reforms has been to lower the salary threshold for making repayments on student loans to £25,000.³⁴ This means that a graduate earning the minimum wage and working full-time will be making payments on their loan.

The mortgage debt that people owe has also risen to very high levels, in large part because of the rise in house prices. By the end of 2024, the total outstanding value of all residential mortgage debt was £1,678.2 billion.³⁵

Including mortgage and student debt, the above factors combine to mean that total UK household debt passed £2 trillion in 2023; enough to fund the UK’s spending on defence for over thirty years.³⁶

Declining trust in institutions

As the link between hard work and reward weakens across key areas of life including homeownership, family formation and financial security, a broader sense of disillusionment with the way that Britain works – or does not work – is also taking hold.

Public faith in institutions to listen, respond, and deliver is declining. This is reducing the legitimacy of the political system and driving voters to support populist alternatives like Reform UK, with trust in politicians collapsing to a 40 year low in 2023 and recovering only modestly in 2024.³⁷ The loss of public faith in institutions can be seen in declining trust in the government, the political system as a whole, and also important public bodies like the police.

Figure 5:  Trust in UK politicians has collapsed. 

Source: IPSOS³⁸

The public’s trust in the government’s ability to deliver is falling, alongside a loss of faith in how the UK is governed. Only 14% of Britons trust the government ‘most of the time’ or ‘always’.³⁹ 79% say the system of governing Britain could be improved.⁴⁰ There is also a generational trust gap opening up, with younger people less likely to say they trust politicians. 2% of 25-34 year-olds and 8% of 18-24 year-olds say they trust politicians to tell the truth, compared to 13% of those aged 65 and over.⁴¹ 

There is a corresponding loss of faith in how the UK is governed. Confidence in the traditional political parties is waning. Nearly a third of the public (31%) say they do not feel represented by any of the UK’s main parties.⁴² Falling confidence in traditional parties has coincided with the ascent of populist alternative party Reform. In the 2024 General Election, Reform secured 14% of the vote and sent five MPs to Parliament. In the May 2025 local elections, Reform won the plurality of the vote (31%) and the majority of seats.⁴³ 

Figure 6: There is growing support for authoritarian alternatives of governance, particularly amongst the young. 

Source: Onward⁴⁴

Again, there is evidence that this loss of faith in our political system is concentrated among younger people. 2022 Onward research shows rising support for authoritarian governance among young people.⁴⁵ 61% of 18-34s agreed that “having a strong leader who does not have to bother with parliament and elections would be a good way of governing this country” and 46% agreed that “having the army rule would be a good way of governing this country”. In comparison, only 29% and 13% for over-55s agreed with these statements, respectively. A quarter (26%) of 18-34s thought that democracy is a bad way of governing the UK, while only 8% of those aged over 55 did.

Figure 7: Falling confidence in the state is not limited to the Government, but also institutions such as the police. 

Source: YouGov⁴⁶

Alongside declining faith in how we are governed, there is falling public trust in important public services and institutions, including the police and their ability to maintain law and order. Nearly 80% of people in England and Wales believe that crime is rising and public faith in the police has fallen along with an increase in antisocial behaviour and highly visible types of crime, such as shop lifting, vandalism and fare dodging.⁴⁷

Around 70% of the public think the police have effectively “given up” on tackling low-level crimes of this kind.⁴⁸ Over a third of the public say they would not bother reporting a crime, believing doing so to be pointless as the police would do nothing about it.⁴⁹ 52% of the public say they have little to no faith in the police to carry out their core duty of tackling crime.⁵⁰ The increase in highly visible crimes and antisocial behaviour coupled with the public’s sense of a withdrawal by the police fuels an atmosphere of impunity among both offenders and members of the public.

Underlying drivers

The symptoms identified above, including economic strain, diminished life prospects and disillusionment with how Britain is governed, are the warning indicators of deeper, structural strains on the social contract. This section identifies and describes those forces and pressures. 

Demographic change

The UK has an ageing population, caused by longer life expectancies and falling birth rates. This changing population pyramid is eating away at the social contract by increasing financial pressure on the state, driving desperate governments to seek to alleviate that immense economic strain by increasing their demands upon working-age people and increasing immigration.

In 1950, the UK had an old-age dependency ratio of 16.2%. That means that for every 100 working-age people, there were 16 people aged over 65. Today, that has nearly doubled to 30 people aged 65 for every 100 working-age people.⁵¹ The ONS predicts that the UK’s population will increase by over 13 million to 81.7 million by 2070, and it expects two-thirds of the people comprising that increase to be aged over 65, giving us a working-age dependency ratio of 47%.⁵² This represents a hugely increasing burden on the shoulders of working people.

Figure 8: The UK is an ageing society.

Source: Our World in Data⁵³

The ageing population is the result of two factors: increasing life expectancy and falling birth rates. As detailed above in section X.X on the birth gap, British people are having fewer children in a trend that is picking up pace. Between 2000 and 2023, the proportion of people aged over 65 increased by 41%. But the proportion of people aged under 15 in the UK’s population increased by 7%.⁵⁴ Already, the UK is a nation of fewer and fewer children. All over the country, classrooms are emptying out and schools are closing down. London’s primary schools are emptying particularly rapidly: the capital saw a 20% decrease in its birth rate between 2012 and 2021. 

Figure 9: The tax burden is rising to an all time high whilst the gap between the old age dependency ratio and tax burden has been narrowing in recent years.

Sources: Our World In Data, Tax Payers Alliance⁵⁵⁵⁶

The situation poses a significant challenge for policymakers because an older population is an inherently very costly one. Public spending per individual soars with age and an older population exerts great pressure on public services. The OBR projects that State Pension, adult social care, and healthcare costs will account for nearly 50% of UK government spending in 2070, up from 35% in 2020.⁵⁷

The strain is particularly visible in local authorities which already have a higher proportion of older people.⁵⁸ In 2023, Hampshire County Council’s spending on social care made up 83% of its budget, up from 53% in 2011.⁵⁹ As the people of the baby boom generation – comprising a fifth of Britain’s population – continue to retire and reach old age, this problem will become markedly more severe in the next decade. 

Yet, as this demand on the public purse intensifies, its income through tax revenue will diminish because low birth rates mean the working-age population shrinks. This not only harms productivity and economic growth, but severely curtails our ability to care for this older population and to provide entitlements like State Pension. 

Indeed rising costs coupled with dwindling revenue may simply mean that the state finds it impossible to maintain provision of key entitlements for citizens, such as healthcare that is free at the point of use, a State Pension, and government-funded care homes. This means that the working-age population of today are paying high taxes to fund services that may simply not exist by the time they are old enough to need them.

If the status quo is to be maintained, there are three main options available to the government, in addition to ever increasing national debt. One, taxes can be increased to bolster revenue to the public purse, even as the working-age population shrinks. Two, higher levels of immigration can be sought to boost the working-age population and ameliorate the old-age dependency ratio. And three, the government can increase the UK’s birth rate, although this third option will take time to have an impact. 

The first two of these options are already pursued by policymakers, but are unsustainable, piling yet more pressure onto the social contract.

Tax

Already, the tax burden on working people is increasing. Between 2010 and 2019, tax revenue as a share of national income stayed at 33%. But as of 2024, it has increased to 36%, the highest tax burden since 1948.⁶⁰ Much of this increase in taxes has occurred through fiscal drag: personal tax thresholds have been frozen since 2021, meaning that more and more taxpayers are being moved into higher tax brackets. 

Figure 10: The tax burden is at a high.

Source: Tax Payers Alliance⁶¹

In addition to fiscal drag operating as a tax rise by stealth, many working people are also facing very high marginal tax rates. The marginal tax rate refers to the percentage of tax that applies to the last portion of income earned. Very high marginal tax rates are an artefact of poorly designed policies, including: the tapered means-testing of Child Benefit; the withdrawal of the free childcare hours entitlement for those earning over £100,000; the removal of the personal tax-free allowance for those earning over £100,000; and the student loan system. 

Marginal tax rates mean that a parent in London with two children under five is actually better off earning £99,999 than £149,000, strongly disincentivising such an individual to seek progression and a higher pay.⁶² Indeed, there is strong evidence that high marginal tax rates are acting to disincentivise work and progress, with a clear and increasing trend of bunching of salaries around tax thresholds.⁶³

Together, a higher tax burden and high marginal tax rates are eroding the link between work and reward. When demands upon earners increase, even as their hard work and success lead only to marginal increases in take-home pay, or actively leaves them worse off, the motivation to continue contributing into the system diminishes, to everyone’s disadvantage. 

Economic stagnation

Nearly two decades of low productivity in the wake of the 2007 financial crisis is straining the UK’s social contract by opening up extremely wide regional disparities in opportunities and wealth,  and by creating an economy in which the returns for hard work are diminished. 

Between 1993 and 2008, the UK’s annual average growth was around 2%, but has hovered at 0.5% since then.⁶⁴ This economic stagnation has been unevenly distributed across the country, with long-term regional disparities leaving many communities feeling economically excluded. In the 1980s the productivity of London was approximately 128% that of the UK average. But today it is as high as 170%.⁶⁵ When London is removed from the equation, the UK is less wealthy per capita than Mississippi, America’s poorest state. 

The British people are aware that some areas are doing considerably better than others, and that wealth and opportunity are concentrated in some regions. Nearly half of Britons say politicians focus more on some areas than others (48%) and that job opportunities are unevenly distributed (47%).⁶⁶ This regional disparity and awareness of it contributes to a sense that the system is not working well for everyone and is unfair. 

Another major consequence of the UK’s record of low growth and productivity is stagnant wage growth. If median incomes had continued to grow according to the pre-2007 financial crash trends, they would have grown 30% between 2010 and 2023.⁶⁷ Instead, they grew 6%.⁶⁸ Median household disposable income crawled up by just 7% between 2008 and 2023.⁶⁹ This is in stark contrast with the 15 years before the 2007 crash, when median household disposable income increased by 41%.⁷⁰

Figure 11:  Median real income divergence between pensioners and the working age population has been stark and is protected by state transfers. 

Source: Institute for Fiscal Studies⁷¹

Yet even as earned income has been stagnant, asset prices have gone up. This means that wealth has grown rapidly in comparison with earnings. This has increased intergenerational inequality and made inheritance and family wealth a greater determinant of life outcomes. Even as the economy has reflected in poor wage growth for the working age population, pensioners have seen significant real improvements in their incomes at the same time.

Immigration

In recent years immigration has spiralled out of control. In 2022, 2023 and 2024 respectively, gross migration to the UK exceeded one million every year.⁷² This was despite the British people repeatedly voting to bring numbers of arrivals down. Immigration of this volume has strained our social contract by: reducing trust in the government’s ability to deliver or to respond to clear signals from the public; increasing pressure on infrastructure and public finances; and negatively affecting community cohesion.

2024 Onward research found that the public underestimate the amount of immigration to the UK, with the average estimate 70,000, an estimation of some 17 times fewer people than the actual number.⁷³ But even though the majority of British people very considerably underestimate net migration to the UK, they still believe it should be much lower. This is even the case among groups more likely to be more pro-immigration, including those aged 18-24 and Remain voters. 

Figure 12: Voters across all key segments desire lower immigration. 

Source: Onward⁷⁴

Polling from 2023 shows that 52% of British people say immigration should be reduced, in comparison with only 14% who favour an increase, and the public have repeatedly voted to reduce the number of immigrants arriving in the UK.⁷⁵ 33% of those who voted in favour of Brexit in the 2016 Referendum said that restoring control over immigration was their main reason for voting to leave the EU.⁷⁶

Despite these clear signals from the public, immigration has increased under successive Labour and Conservative governments for more than twenty years. Since 2010, six prime ministers have each promised to bring down the number of people arriving into the UK, and all have failed. 

A very similar story has played out with illegal immigration. The number of people who have been detected arriving in the UK without authorisation has sharply increased since 2019, driven by an increase in the number of people arriving via small boats across the Channel. In 2024, 43,630 irregular arrivals, an increase of 19% compared from 2023.⁷⁷ 84% of irregular arrivals in 2024 were people who came to the UK via small boats. Since 2020, successive governments have promised to crack down on small boat arrivals and have failed to do so. 

In addition to wearing away public trust in elected politicians’ ability to deliver key pledges and promises they have run on, the volume of both legal and illegal immigration received by the UK is putting pressure on infrastructure and public finances and services. 

Figure 13: Low wage migrant workers are negative fiscal contributors.

Source: Migration Observatory⁷⁸

Analysis shows that many of the recent arrivals to the UK will not be net fiscal contributors to the UK, but instead net recipients of government money.⁷⁹ Out of the UK’s two million non-EU arrivals between 2019 and 2024, only 15% explicitly came to work, making it less likely that they will be net contributors. 

One reason for this is because once an immigrant has lived in the UK for five years, they are eligible to apply for Indefinite Leave to Remain (ILR). A successful application for ILR entitles a non-citizen immigrant to many of the same benefits that citizens enjoy, including a State Pension, and access to Universal Credit and social housing.⁸⁰ Based on historical patterns of ILR applications, analysis suggests that the ultimate long-term cost to British taxpayers will be £234 billion or more for providing these entitlements to immigrants who arrived in the UK between 2021 and 2024.⁸¹ It is also important to recall that even before an immigrant is granted or applies for Indefinite Leave to Remain, they are still entitled to use state-funded services like the NHS.

Many of those who arrive in the UK irregularly, principally via small boats, claim asylum and must be housed by the government while their claims are processed. Temporarily housing refugees and asylum seekers is proving extremely costly. In 2023, hotel accommodation for migrants – not including the cost of housing migrants in private rented accommodation – cost the tax payer £8 million per day.⁸² These costs have been driven up by the increase in the number of people arriving in the UK via small boat and the subsequent backlog in processing asylum claims.⁸³ Over the next decade, the cost of accommodation for asylum seekers is projected to reach £15 billion.⁸⁴

The exceptionally high levels of immigration to the UK in recent years is also contributing to the housing crisis, by causing a significant surge in demand in a housing market where there is already a serious shortage of homes to rent and buy. This increase in demand, with no corresponding increase in the supply of homes, means a more intense competition for properties and higher prices.

Figure 14. Net housing is below target and shortages are exacerbated by the additional pressures of net immigration. 

Sources: MHCLG, Migration Observatory⁸⁵⁸⁶

Analysis shows that in 2022 alone, immigration to the UK would have meant an additional net 450,000 people entering the rental market.⁸⁷ This effect will be concentrated in larger cities, also where housing shortages are most acute – 67% of privately rented households in London are headed by someone who was not born in the UK.⁸⁸

Cultural and social shifts

The social contract does not solely consist of economic exchange or legal obligations, but also rests on shared norms and trust. In recent decades, changes have weakened these norms or at least made us question the extent to which they still exist. Onward’s Social Fabric Programme has identified these trends across the UK and created its Social Fabric Index to map them.⁸⁹ These shifts, though less tangible than fiscal or demographic ones, nonetheless interact with the assumptions and obligations that form the social contract, and may be acting to undermine it.  

The cultural effects of immigration

The above section explains how very high levels of immigration to the UK has eroded public trust in politicians’ ability to deliver and put pressure on public finances and infrastructure. But the rapid influx of people into Britain over the past few years has also had a great impact on communities, with many areas left to grapple with changes in community identity.

Figure 15: England and Wales have experienced rapid demographic change by share of the population in the last two decades, with the growth in absolute number of non-UK born residents between 2011 and 2021 pinpointed.

Source: ONS, Onward Analysis⁹⁰

Between 2001 and 2021, the number of immigrants as a share of the population doubled from 8.9% of England and Wales, to 16.8%.⁹¹These demographic changes are regionally concentrated, with some areas seeing particularly major changes. Today, 50% of central Bradford’s population was born outside of the UK. Between 2001 and 2021 Dagenham’s white British population fell 51%.⁹²

Another extreme example of how rapidly immigration has changed UK communities is offered by the town of Boston in Lincolnshire.⁹³ Following the expansion of the EU in 2004, Boston received a large number of immigrants from Eastern Europe and by 2011, 13% of the town’s population was born in the EU. In 2016, Bostonians were the most likely in Britain to vote to leave the EU, with 75% of the population voting in favour of Brexit.⁹⁴

The absence of a coherent integration strategy has made these changes more difficult, with little in the way of a coordinated national policy to support the smooth assimilation of people who are newly arrived, or to actively develop community cohesion. 

A different information landscape 

In the twentieth century, a relatively small number of news sources, from broadcasters to newspapers, were consumed by the majority of the public. But these traditional news outlets now compete with algorithm-driven social media platforms.

Figure 16: News is increasingly consumed online as more traditional means of consumption have declined.

Source: Reuters⁹⁵

One effect of social media, and the older phenomenon of rolling news, has been to remake the relationship between politicians and the electorate. An important manifestation of this change are the extremely rapid feedback loops that now exist between politicians and the public, sometimes delivering near-instantaneous negative or positive reactions. On the one hand, these rapid feedback loops make politicians more sensitive and responsive to the public view. On the other hand, they give politicians less time to make the case for a policy change or decision to the public and may mean that a small proportion of the electorate that is both vocal and online have undue influence on a government’s policy and political decisions.

News content is also increasingly highly personalised, consumed via algorithm-curated apps like TikTok. Though it can facilitate highly targeted political messaging, this fragmentation also makes reaching a broader audience more difficult. This reduces the potential for shared national conversations or narratives, and complicates the building of national consensus on difficult questions. 

Alongside these changes in the news and entertainment that people consume are concerns that everyday technologies like smartphones or social media apps are negatively impacting our mental health. This concern is particularly intense for younger people, with debate over whether or not the UK is experiencing a mental health crisis and whether or not government intervention on the matter is merited. 

Communicating the case for change

The British electorate is increasingly elderly: 19% of the population was aged 65 or over in 2022 and that is projected to rise to 27% by 2072.⁹⁶ Older voters have become increasingly electorally powerful, because there are more of them and also because they are more likely to vote and to do so consistently.

This makes taking the decision to rebalancing our fraying social contract, some of which must include stopping or reducing wealth transfers towards older people, politically very difficult. This challenge encourages inertia among politicians and policymakers, who are wary of being punished at the ballot box for introducing reforms that reduce older people’s entitlements. 

A political and policy environment which is tilting decisively in favour of older cohorts has served to lock in wealth transfers to older age groups, as over the past decade, tax and benefit changes have reduced working-age incomes even as they have bolstered those of pensioners.⁹⁷ Even transfers to older groups which are becoming fiscally unsustainable are politically near-impossible to unwind with even modest attempts to rebalance spending met with fierce resistance.

Figure 17: The Winter Fuel Payment removal has been the most contentious of any Labour policy so far.

Source: More In Common⁹⁸

One of the first fiscal decisions of the 2024 Labour Government, to end Winter Fuel Payments to 10 million pensioners, was positioned by the Government as a necessary correction to spiralling costs.⁹⁹ Winter Fuel Payment has been in place since 1997, brought in to address fuel poverty among older people. Today, it is younger households that see higher rates of fuel poverty.¹⁰⁰

The decision to withdraw Winter Fuel Payment from most pensioners was immediately extremely controversial, not only because it was unexpected, but because of the Government’s rejection of a means-tested alternative, marking a significant departure from the principles of universalism that have long underpinned this welfare entitlement for older people. 

Indeed the policy has faced such vehement opposition – it was identified by pollsters as the Government’s most well known and least popular policy, ahead of the early release of prisoners, cuts to welfare, and hikes in NICs – that the Government has essentially U-turned.¹⁰¹ Now of the 10 million pensioners due to lose the payment, 7.5 million will receive it after all.¹⁰²

The Winter Fuel saga echoes the fate of the then-Prime Minister Theresa May’s ‘Dementia Tax’ in 2017. This proposal intended to reform social care funding by treating home and residential care equally, reflecting the growing property wealth of older generations by including housing assets in means-testing, while guaranteeing that no one’s assets would fall below £100,000.¹⁰³ 

But, the policy also meant that old people receiving at-home care would have to contribute if their house was valued over £100,000, which was not previously counted in the means-test.¹⁰⁴ This led to discontent amongst older voters and made social care reform politically toxic. The U-turn on this policy eventually came in the form of a cap on care costs, introduced in England in 2023 and set at £86,000 to limit how much people have to pay for social care over their lifetime.¹⁰⁵

Figure 18: There is support for the triple lock across generations (as of 2021).

Source: YouGov¹⁰⁶

Figure 19: If average earnings are declining for workers, pension increases are perceived to be unfair by younger people, and fair by older. 

Source: YouGov¹⁰⁷

Wealth transfers from younger generations to older ones have broad, cross-generational support in principle. But economic pressures expose the dividing lines of support and fairness between working-age and older voters. 2021 YouGov polling (pre-cost-of-living crisis) showed that all generations supported the triple lock on pensions.¹⁰⁸ But when asked if it is fair for pensions to rise when working-age incomes are falling, younger voters perceived the policy as unfair, while those over 50 viewed it as fair. Even when younger people say the triple lock is unfair, they still marginally support retaining it.¹⁰⁹ But, younger generations are also less likely than older generations to say that they have an opinion on this question, reflecting in part the lack of political incentive to correct these fairness imbalances.¹¹⁰

Successive governments have allowed this norm of continued transfers to older generations to become entrenched, even as younger people face the reality of falling real incomes and a growing share of the fiscal burden. But governments hesitate to intervene to correct this imbalance, even on the grounds of fiscal necessity, as they fear the consequences of political backlash.

The consequences of this hesitancy is reflected in the Conservative Party’s loss of working-age voters. In 2010, the ‘crossover age’ (the age at which a voter becomes more likely to vote Conservative over Labour) was 35.¹¹¹ In 2024 it was 64, an age demographic that actually fails to form a plurality in any single constituency.¹¹² Reform UK are today polling significantly better among 18-24 year olds than the Conservative Party, particularly among young men.

Figure 20: YouGov latest polling of voting intentions, Jan 2024 to present, highlighting Conservative decline (drop to 4th) in May 2024. 

Source: YouGov¹¹³

Contrary to the myth of the “grey majority,” over-65s do not form a plurality in any UK constituency, according to Onward analysis. This myth has led politicians to believe reform is electoral suicide. But constituency data shows that younger and middle-aged voters remain an important share of the electorate who may vote for change that would impact them. Electoral geography and the distribution of voters offers openings for bold, future-oriented policymaking to renew the social contract. 

But the language of tradeoffs must evolve. Rather than framing change as a loss to older voters, consensus-building must stress shared gains: intergenerational investment, long-term security, and a stronger social contract. Instead of framing transfers away from pensioner benefits as an absolute loss, the state must reaffirm that it is investing in the next generation so they can better support their parents and have more children. British politics must shift from defending current distributions to building mutual, long-term security. 

Rebuilding the social contract requires confronting difficult trade-offs. But these should not be framed as zero-sum losses. Policies including the expansion of homeownership and supporting family formation are not just good for the young – they underpin a more resilient state that can care for an ageing society.

Conclusion

The UK’s social contract is not delivering for an increasing share of citizens, as a generation of working people are being asked to pay more while receiving less. As trust in the state’s ability to deliver recedes, the state is trapped in a pincer of rising costs and shrinking revenues, particularly due to demographic pressures that successive governments have preferred to ignore rather than confront.

Renewing the social contract means having the political courage to rethink where, and in whom, the state is currently investing. It means making owning a home, starting a family, and attaining financial security again attainable for those who are working hard to contribute. It also means not branding older voters as an intransigent obstacle standing in the way of change. Instead politicians must create consensus for change by leading a national conversation about sustainability, reciprocity, and about building a system that will serve their grandchildren and great grandchildren well, while continuing to provide for older people. 

No society can function if its younger people lose faith in the system. And the demographic challenges facing the UK are no passing storm. They are a permanent change in the weather and they demand a political and policy response. 

Endnotes

1. Lloyds Banking Group. (2025, April). First-time buyer market rebounds as deposits fall and numbers rise. Retrieved from https://www.lloydsbankinggroup.com/media/press-releases/2025/halifax-2025/first-time-buyer-market-rebounds.html ↩︎
2. Nationwide Building Society. (n.d.). UK House Price Index – Data Series. Retrieved from https://www.nationwidehousepriceindex.co.uk/resources/f/uk-data-series ↩︎
3. The Independent. (2010, December 30). First-time buyers need average £29,000 deposit. Retrieved from https://www.independent.co.uk/property/house-and-home/firsttime-buyers-need-average-ps29-000-deposit-2171371.html ↩︎
4. Lloyds Banking Group. (2025, April). First-time buyer market rebounds as deposits fall and numbers rise. Retrieved from https://www.lloydsbankinggroup.com/media/press-releases/2025/halifax-2025/first-time-buyer-market-rebounds.html ↩︎
5. Ibid ↩︎
6. BBC News. (2024, February 26). Why is it so hard to get on the property ladder? Retrieved from https://www.bbc.co.uk/news/articles/c704pv1jz5ro ↩︎
7. BBC News. (2024, January 12). The renters giving up on home ownership. Retrieved from https://www.bbc.co.uk/news/articles/c5y547vq9z1o ↩︎
8. SpareRoom. (n.d.). Average Rent UK. Retrieved from https://www.spareroom.co.uk/content/info-landlords/average-rent-uk/ ↩︎
9. Ibid ↩︎
10. The Guardian. (2015, August 19). How rent is rising in London – interactive. Retrieved from https://www.theguardian.com/money/ng-interactive/2015/aug/19/london-rent-rising-interactive ↩︎
11. Property Checklists. (2015, January). SpareRoom Index – January 2015. Retrieved from https://www.propertychecklists.co.uk/articles/spareroom-index-January-2015 ↩︎
12. FTAdviser. (2025, March 24). UK workers save seven years for home deposit. Retrieved from https://www.ftadviser.com/first-time-buyers/2025/3/24/uk-workers-save-7-years-for-home-deposit/ ↩︎
13. MoneyWeek. (n.d.). Mortgage deposits and the Bank of Mum and Dad. Retrieved from https://moneyweek.com/investments/property/mortgage-deposits-bank-of-mum-and-dad ↩︎
14. Public First. (2024). Saving the British Dream: Investing in first-time buyers for economic renewal. Retrieved from https://www.publicfirst.co.uk/saving-the-british-dream-investing-in-first-time-buyers-for-economic-renewal.html ↩︎
15. Office for National Statistics. (2025, May). Average weekly earnings in Great Britain: May 2025. Retrieved from https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/averageweeklyearningsingreatbritain/may2025 ↩︎
16. Office for National Statistics. (2025, April). Private rent and house prices, UK: April 2025. Retrieved from https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/privaterentandhousepricesuk/april2025 ↩︎
17. Legal & General. (2024). Tough choices facing the Bank of Family. Retrieved from https://group.legalandgeneral.com/en/newsroom/press-releases/tough-choices-facing-the-bank-of-family ↩︎
18. Ibid ↩︎
19. Whitestone Insight. (n.d.). Birthgap. Retrieved from https://www.whitestoneinsight.com/birthgap ↩︎
20. Office for National Statistics. (2023). Birth summary tables, England and Wales: 2023. Retrieved from https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/livebirths/bulletins/birthsummarytablesenglandandwales/2023 ↩︎
21. Boom Campaign. (n.d.). Scotland is the South Korea of the UK. Retrieved from https://www.boomcampaign.org/p/scotland-is-the-south-korea-of-the ↩︎
22. Office for National Statistics. (2024, April 8). Milestones: Journeying through modern life. Retrieved from https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/articles/milestonesjourneyingthroughmodernlife/2024-04-08 ↩︎
23. Office for National Statistics. (2021). Childbearing for women born in different years, England and Wales: 2020. Retrieved from https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/conceptionandfertilityrates/bulletins/childbearingforwomenbornindifferentyearsenglandandwales/2020 ↩︎
24. The Telegraph. (2024, February 1). Most British women wait until 32 to have first child. Retrieved from https://www.telegraph.co.uk/news/2024/02/01/most-british-women-wait-until-32-to-have-first-child ↩︎
25. Office for National Statistics. (2023). Live births in England and Wales: 2023. Retrieved from https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/livebirths/bulletins/birthsummarytablesenglandandwales/2023 ↩︎
26. Stone, J. (2023). Postponing parenthood, reduced fertility, or both? Trends in childlessness across cohorts in England and Wales [Paper presentation]. Population and Development Review, 49(S1), 67–91. https://doi.org/10.1111/padr.12624 ↩︎
27. Natalism Survey Coalition UK. (2023). Natalism Survey Results. Retrieved from https://static1.squarespace.com/static/63725a1a981a7861d58633f1/t/654a18c0eeb431132953d7b9/1699354817117/NSCU+Natalism+Survey+Results+FINAL.pdf ↩︎
28. Action for Children. (2023, October). The cost of children crisis: Briefing. Retrieved from https://media.actionforchildren.org.uk/documents/Cost_of_children_crisis_briefing_-_Oct_2023_k4BFayp.pdf ↩︎
29. UK Finance. (2024). Shedding light on rising credit reliance and financial resilience. Retrieved from https://www.ukfinance.org.uk/news-and-insight/blog/shedding-light-rising-credit-reliance-and-financial-resilience#:~:text=Total%20outstanding%20credit%20card%20debt ↩︎
30. StepChange Debt Charity. (n.d.). In work but still in debt. Retrieved from https://www.stepchange.org/policy-and-research/in-work-but-still-in-debt.aspx ↩︎
31. Joseph Rowntree Foundation. (2024, Winter). Cost of living tracker. Retrieved from https://www.jrf.org.uk/cost-of-living/jrfs-cost-of-living-tracker-winter-2024#:~:text=*%207%20million%20low%2Dincome%20households%20(60%)%20were ↩︎
32. House of Commons Library. (2023). Student loan statistics (Research Briefing SN01079). Retrieved from https://commonslibrary.parliament.uk/research-briefings/sn01079/ ↩︎
33. The Guardian. (2000, December 21). Tuition fees “threaten equality”. Retrieved from https://www.theguardian.com/uk/2000/dec/21/education.highereducation ↩︎
34. Belfield, C., Britton, J., & van der Erve, L. (2024). Student loans reform is a leap into the unknown (IFS Briefing Note BN341). Institute for Fiscal Studies. Retrieved from https://ifs.org.uk/sites/default/files/output_url_files/BN341-Student-loans-reform-is-a-leap-into-the-unknown.pdf ↩︎
35. Bank of England. (2024). Mortgage lenders and administrators statistics: Q4 2024. Retrieved from https://www.bankofengland.co.uk/statistics/mortgage-lenders-and-administrators/2024/2024-q4 ↩︎
36. PwC. (2024). Household debt tops £2 trillion for the first time as new data shows borrowing trends. Retrieved from https://www.pwc.co.uk/press-room/press-releases/household-debt-tops-p2-trillion-for-the-first-time-as-new-data-s.html ↩︎
37. Ipsos. (2023). Veracity Index 2023: Trust in professions. Retrieved from https://www.ipsos.com/en-uk/ipsos-trust-in-professions-veracity-index-2023 ↩︎
38. Ipsos. (2024). Veracity Index 2024: Trust in professions [PDF]. Retrieved from https://www.ipsos.com/sites/default/files/ct/news/documents/2024-11/Veracity%20index%202024_v1_.pdf ↩︎
39. NatCen. (2024, June). British Social Attitudes 41: Damaged Politics. Retrieved from https://natcen.ac.uk/sites/default/files/2024-06/BSA%2041%20Damaged%20Politics.pdf ↩︎
40. NatCen. (2024, June). Trust and confidence in Britain’s system of government at record low. Retrieved from https://natcen.ac.uk/news/trust-and-confidence-britains-system-government-record-low ↩︎
41. Ipsos. (2023, December). Veracity Index 2023: Trust in professions (Charts) [PDF]. Retrieved from https://www.ipsos.com/sites/default/files/ct/news/documents/2023-12/ipsos-trust-in-professions-veracity-index-2023-charts.pdf ↩︎
42. UK in a Changing Europe. (2024). Do UK voters feel represented by the major parties? Retrieved from https://ukandeu.ac.uk/do-uk-voters-feel-represented-by-the-major-parties/ ↩︎
43. Ibid ↩︎
44. Onward. (2022). The Kids Aren’t Alright: Democracy. Retrieved from https://www.ukonward.com/reports/the-kids-arent-alright-democracy/ ↩︎
45. Ibid.  ↩︎
46. YouGov. (n.d.). How much confidence do Brits have in police to deal with crime? Retrieved from https://yougov.co.uk/topics/politics/trackers/how-much-confidence-brits-have-in-police-to-deal-with-crime ↩︎
47. Onward. (2025, March). Policing in Peril [PDF]. Retrieved from https://www.ukonward.com/wp-content/uploads/2025/03/Policing-in-Peril-VF.pdf ↩︎
48. Ibid ↩︎
49. Ibid ↩︎
50. Ibid ↩︎
51. Our World in Data. (n.d.). Age dependency ratio – Old (UK). Retrieved from https://ourworldindata.org/grapher/age-dependency-ratio-old?tab=table&showSelectionOnlyInTable=1&country=~GBR ↩︎
52. Office for Budget Responsibility. (2024, September). Fiscal Risks and Sustainability Report – Chapter 3. Retrieved from https://obr.uk/frs/fiscal-risks-and-sustainability-september-2024/#chapter-3 ↩︎
53. Our World in Data. (n.d.). Population by age group (1960–2023, UK). Retrieved from https://ourworldindata.org/grapher/population-young-working-elderly?time=1960..2023&country=~GBR ↩︎
54. Ibid ↩︎
55. Our World in Data. (n.d.). Age dependency ratio of working-age population (UK). Retrieved from https://ourworldindata.org/grapher/age-dependency-ratio-of-working-age-population?tab=chart&country=GBR ↩︎
56. TaxPayers’ Alliance. (2021, October). The tax burden following the October 2021 Budget [Briefing PDF]. Retrieved from https://d3n8a8pro7vhmx.cloudfront.net/taxpayersalliance/pages/17390/attachments/original/1635346382/Briefing_-_the_tax_burden_following_the_October_2021_budget.pdf ↩︎
57. Office for Budget Responsibility. (2020, July). Fiscal Sustainability Report [PDF]. Retrieved from https://obr.uk/docs/OBR_FSR_July_2020-1.pdf ↩︎
58. House of Commons Library. (2023). Tax statistics: a historical overview (Briefing Paper CBP-7903). Retrieved from https://commonslibrary.parliament.uk/research-briefings/cbp-7903/ ↩︎
59. Financial Times. (2023). Britain’s record tax burden fuels political pressure on government. Retrieved from https://www.ft.com/content/3a42a022-a374-4c6b-8dbf-46db9cb7073f ↩︎
60. Institute for Fiscal Studies. (2024). The government’s record on tax since 2010. Retrieved from https://ifs.org.uk/publications/governments-record-tax-2010-24 ↩︎
61. TaxPayers’ Alliance. (2021, October). The tax burden following the October 2021 Budget [Briefing PDF]. Retrieved from https://d3n8a8pro7vhmx.cloudfront.net/taxpayersalliance/pages/17390/attachments/original/1635346382/Briefing_-_the_tax_burden_following_the_October_2021_budget.pdf ↩︎
62. The Economist. (2025, March 26). Who will speak for Henry? Retrieved from https://www.economist.com/britain/2025/03/26/who-will-speak-for-henry ↩︎
63. The Times. (2025). Tax cliff edges for childcare raise doubts on growth strategy. Retrieved from https://www.thetimes.com/life-style/parenting/article/tax-cliff-edges-for-childcare-raise-doubts-on-growth-strategy-bsqsz2spf ↩︎
64. House of Commons Library. (2024). Low growth: The economy’s biggest challenge. Retrieved from https://commonslibrary.parliament.uk/low-growth-the-economys-biggest-challenge/ ↩︎
65. Bennett Institute for Public Policy. (n.d.). How is regional inequality affecting the UK’s economic performance? Retrieved from https://www.bennettinstitute.cam.ac.uk/blog/how-is-regional-inequality-affecting-the-uks-economic-performance/ ↩︎
66. Overman, H., & Xu, X. (2021). Spatial disparities in economic outcomes in the UK: Productivity, employment and inequality. Oxford Open Economics, 3(Supplement_1), i80–i92. https://academic.oup.com/ooec/article/3/Supplement_1/i80/7708134 ↩︎
67. Institute for Fiscal Studies. (2024). The past 15 years have been the worst for income growth in generations. Retrieved from https://ifs.org.uk/news/past-15-years-have-been-worst-income-growth-generations ↩︎
68. Ibid ↩︎
69. Financial Times. (2024). Britain’s pay squeeze persists despite economic recovery. Retrieved from https://www.ft.com/content/8b5d9b7b-9aa5-44c7-97d6-07bd560b9fa6 ↩︎
70. Ibid ↩︎
71. Institute for Fiscal Studies. (2023). How have pensioner incomes and poverty changed in recent years? Retrieved from https://ifs.org.uk/publications/how-have-pensioner-incomes-and-poverty-changed-recent-years ↩︎
72. House of Commons Library. (2023). Pensioner poverty (Briefing Paper SN06077). Retrieved from https://researchbriefings.files.parliament.uk/documents/SN06077/SN06077.pdf ↩︎
73. Onward. (2024). Reality Check: Mapping Britain’s generational divide. Retrieved from https://www.ukonward.com/reports/reality-check/ ↩︎
74. Ibid ↩︎
75. The Migration Observatory. (2022). UK public opinion toward immigration: Overall attitudes and level of concern. Retrieved from https://migrationobservatory.ox.ac.uk/resources/briefings/uk-public-opinion-toward-immigration-overall-attitudes-and-level-of-concern/ ↩︎
76. Lord Ashcroft Polls. (2016, June). How the United Kingdom voted and why. Retrieved from https://lordashcroftpolls.com/2016/06/how-the-united-kingdom-voted-and-why/ ↩︎
77. Home Office. (2024). Immigration system statistics, year ending December 2024. Retrieved from https://www.gov.uk/government/statistics/immigration-system-statistics-year-ending-december-2024/how-many-people-come-to-the-uk-irregularly ↩︎
78. The Migration Observatory. (2018). The fiscal impact of immigration in the UK. Retrieved from https://migrationobservatory.ox.ac.uk/resources/briefings/the-fiscal-impact-of-immigration-in-the-uk/ ↩︎
79. Ibid ↩︎
80. The Telegraph. (2025, May 30). Benefits for foreigners near £1bn a month. Retrieved from https://www.telegraph.co.uk/news/2025/05/30/benefits-foreigners-near-cost-1bn-month/ ↩︎
81. Centre for Policy Studies. (2025, February). Here to Stay: Integrating migrants into British life [PDF]. Retrieved from https://cps.org.uk/wp-content/uploads/2025/02/Here-to-stay-Feb-2025.pdf ↩︎
82. BBC News. (2023, September 19). Net migration: Rishi Sunak says legal migration is ‘too high’. Retrieved from https://www.bbc.co.uk/news/uk-politics-66855830 ↩︎
83. The Migration Observatory. (2023). Asylum accommodation in the UK. Retrieved from https://migrationobservatory.ox.ac.uk/resources/briefings/asylum-accommodation-in-the-uk/ ↩︎
84. The Guardian. (2025, May 7). UK asylum seeker accommodation costs over decade triple to £1.5bn – NAO. Retrieved from https://www.theguardian.com/world/2025/may/07/uk-asylum-seeker-accommodation-costs-over-decade-triple-to-15bn-nao ↩︎
85. Department for Levelling Up, Housing and Communities. (2024). Housing supply: Net additional dwellings, England 2023 to 2024. Retrieved from https://www.gov.uk/government/statistics/housing-supply-net-additional-dwellings-england-2023-to-2024 ↩︎
86. The Migration Observatory. (2024). Long-term international migration flows to and from the UK. Retrieved from https://migrationobservatory.ox.ac.uk/resources/briefings/long-term-international-migration-flows-to-and-from-the-uk/ ↩︎
87. Centre for Policy Studies. (2024, May). Taking Back Control [PDF]. Retrieved from https://cps.org.uk/wp-content/uploads/2024/05/CPS_TAKING_BACK_CONTROL_PDF.pdf ↩︎
88. Centre for Policy Studies. (2024). Taking Back Control. Retrieved from https://cps.org.uk/research/taking-back-control/#:~:text=For%20example%2C%2067%25%20of%20private ↩︎
89. Onward. (2023). The Social Fabric Index 2023. Retrieved from https://www.ukonward.com/reports/2023-social-fabric-index/ ↩︎
90. Office for National Statistics. (2023). The changing picture of long-term international migration, England and Wales: Census 2021. Retrieved from https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/internationalmigration/articles/thechangingpictureoflongterminternationalmigrationenglandandwales/census2021 ↩︎
91. Ibid. ↩︎
92. The Telegraph. (2025, March 21). Jenrick: Failed integration, mass migration, and British identity. Retrieved from https://www.telegraph.co.uk/news/2025/03/21/jenrick-failed-integration-mass-migration-british/ ↩︎
93. BBC News. (2016, May 10). EU referendum: Key arguments for and against. Retrieved from https://www.bbc.co.uk/news/uk-politics-eu-referendum-36258541 ↩︎
94. BBC News. (2016, June 24). EU referendum results. Retrieved from https://www.bbc.co.uk/news/uk-politics-eu-referendum-36616740 ↩︎
95. Reuters Institute. (2024). Digital News Report 2024 – United Kingdom. Retrieved from https://reutersinstitute.politics.ox.ac.uk/digital-news-report/2024/united-kingdom ↩︎
96. House of Commons Library. (2024). The UK’s changing population. Retrieved from https://commonslibrary.parliament.uk/the-uks-changing-population/?utm_source ↩︎
97. More in Common. (2024). Change still pending [Insight Brief]. Retrieved from https://www.moreincommon.org.uk/latest-insights/change-still-pending/ ↩︎
98. Ibid. ↩︎
99. The Guardian. (2024, July 29). Reeves moves fast to tackle £22bn budget shortfall “covered up” by Tories. Retrieved from https://www.theguardian.com/politics/article/2024/jul/29/reeves-moves-fast-to-tackle-22bn-budget-shortfall-covered-up-by-tories ↩︎
100. UK in a Changing Europe. (2024). How bad is fuel poverty in England? Retrieved from https://ukandeu.ac.uk/how-bad-is-fuel-poverty-england/ ↩︎
101. More in Common. (2024). Budget Report 2024 [PDF]. Retrieved from https://www.moreincommon.org.uk/media/cgadp4rg/more-in-common-budget-report-2024-3.pdf ↩︎
102. The Guardian. (2025, June 9). Winter fuel payments threshold to rise to £35,000, Rachel Reeves announces. Retrieved from https://www.theguardian.com/society/2025/jun/09/winter-fuel-payments-threshold-to-rise-to-35000-rachel-reeves-announces ↩︎
103. Full Fact. (n.d.). What is the ‘dementia tax’? Retrieved from https://fullfact.org/health/what-dementia-tax/ ↩︎
104. Ibid. ↩︎
105. HM Government. (2021). Build Back Better: Our plan for health and social care – Adult social care charging reform: Further details. Retrieved from https://www.gov.uk/government/publications/build-back-better-our-plan-for-health-and-social-care/adult-social-care-charging-reform-further-details ↩︎
106. YouGov. (2021). Britons wouldn’t ditch pensions triple lock rule. Retrieved from https://yougov.co.uk/economy/articles/37456-britons-wouldnt-ditch-pensions-triple-lock-rule ↩︎
107. Ibid ↩︎
108. Ibid ↩︎
109. Ibid ↩︎
110. Ibid ↩︎
111. Onward. (2024, September). Breaking Blue: General Election 2024 [PDF]. Retrieved from https://www.ukonward.com/wp-content/uploads/2024/09/Onward-Breaking-Blue-General-Election-2024-4.pdf ↩︎
112. Ibid ↩︎
113. YouGov. (n.d.). Voting intention tracker. Retrieved from https://yougov.co.uk/topics/politics/trackers/voting-intention ↩︎

The post The Anti-Social Contract appeared first on Onward.