Higher taxes and rising deficit to come from an ageing population time bomb

 
Julian Harris
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AN AGEING population will impose higher taxes and a rising deficit on the UK unless radical changes are made to the government’s entitled programmes, the think tank Reform will argue today.

The pensioner population will experience its fastest growth for the whole century ahead during the current parliamentary term, the group has calculated. By 2016 the over-65 population will jump by 1.4m.

Under current policies, an extra £32bn per annum will be spent on pensions by 2041, while the NHS will see its budget rise by £40bn per annum by the same year.

The number of workers for each pensioner will plummet from 3.9 this year to 2.5 in 2041, Reform has found.

“As a result, the deficit will begin to rise quickly in the next parliament, despite steadily rising taxes,” the report states.

“The resulting impact on the public finances will swamp the current plans for ‘consolidation’.”

Reform will use the findings to urge the government against adopting expensive changes to funding for elderly care, when the Dilnot Commission reports next week.

“The dismal fiscal outlook means that the government must hold firm on reform to public sector pensions,” Reform added. “If ministers act soon, the costs to the taxpayer will be relatively low and there will be few people who lose out from any changes.”