The great rebalancing

The UK, like most of the developed world, is caught in a fiscal pincer movement that will cast a long shadow over politics for the coming decades. On the one hand, we face sharply rising public spending from both an ageing society and a rising social security bill, while, on the other hand, 50 years of below-replacement fertility rates mean we are left with a shrinking taxpayer base to pay those bills and a crashing dependency ratio.

The demographic dividend provided by the Baby Boomer generation joining the workforce in their millions in the sixties, seventies and eighties helped to drive growth under the Governments of Thatcher, Major and Blair. This dividend, however, has now expired. We are left with a demographic deficit, much higher expectations of what the state should provide and smaller, weaker families – the combined result of which is that ever more care is delegated to the state and market.

Though there is no way of avoiding this coming crunch, there are many ideas about how to mitigate it; from further increases to the retirement age, radical cuts to public spending and more selective — that is, economically productive — immigration. 

All of these, and more, may be required in some form, but I want to highlight the need for a broader rebalancing of energy and resources from the realm of production to the realm of reproduction. The one-sided focus on GDP growth in recent decades — including the movement of women from the home into part-time and then full-time work — has blinded us to the erosion of the taken-for-granted preconditions for growth found in the domestic realm: above all, the need for something close to replacement rate fertility and relatively stable family life.

Consider it an investment problem. How can we invest enough in what we say we still want — having and caring for children, decent care for the disabled and the growing army of the elderly — while honouring the newly acquired freedoms and choices of recent decades, especially for women? This is what I called in my last book the “care dilemma”.

Women’s autonomy and financial independence is the biggest step forward in freedom since 1945. But the fact that both men and women are now primarily focused on the “GDP economy”, along with a more general relaxation of constraints on personal behaviour, has had unintended consequences for family life and the non-GDP “care economy”.

The ever-rising cost of the social state; the mental fragility epidemic among young people; the recruitment crisis in face-to-face care jobs, thanks to the low status of emotional labour; and the fall in fertility to 1.4 children per woman: each of these problems can be traced back to the undervaluing of the reproductive realm. 

There is no golden age of family to restore, and very few want to return to the old breadwinner-homemaker model. But, similarly, few people welcome the fact that by their early teens nearly half of children in the UK, and mainly poorer ones, no longer live with both biological parents.

Family policy should look to actually support the family

We are among the family breakdown and single parent family champions of Europe. Our current Treasury model is designed to maximise workforce, GDP and tax income today, at the cost of making it harder to raise the families of the future. Yet our employment rate at 75 per cent is already high by both historical and international standards.

Family policy should look to actually support the family rather than just channelling people more swiftly back into the GDP economy workforce.

To do this, we should build a family-friendly, part-time work culture during the reproductive years in which both parents, with the help of grandparents and state-supported nursery care, could combine childcare with varying levels of paid work, keeping career progression alive. Welfare reform plays a key role in that.

Yes, men need to step up more, and should be encouraged to do so with paternity leave of three months — rather than today’s two weeks — and miserly maternity pay needs upgrading too. The family should be properly recognised in the tax system and the two-child limit in the welfare system removed, in both cases bringing us into line with other rich countries.

But the best idea for reducing stress in the early years of parenthood, when relationship breakdown is so common, is to make it easier for one parent – mother or father – to stay at home supported by a Home Care Allowance (HCA), as in Finland. By re-directing childcare subsidies, set to total over £9 billion a year by 2026, directly to families, and front-ending child benefit in the early years, we could produce an HCA of almost £10,000 a year.

Such a programme would be popular. Around two-thirds of working mothers with pre-school children say they would like to work fewer hours if they could afford it and one-third say they would not work at all. Only 9 per cent of the public support both parents working full-time when children are pre-school, even though more than one third of couples are doing so. 

You might not be aware of this data because support for the domestic sphere represents one of the biggest divergences between the priorities of the average voter and the public realm-focused professional class; a class that not only runs the country but also dominates the public conversation.

The family also needs attention in order to play a vital role at the other end of life. There will be an additional 3.3 million people over the age of 65 in the next ten years, needing an extra 430,000 full-time care workers, and by 2030 two million of the over-65s will be childless. The over five million informal family carers, who now help to keep old people out of the care system, are already saving the state billions a year, and they need more formal recognition.

A more supportive family policy for the beginning and end of life may be popular, but it is also expensive

A more generous carers allowance for the three million who care for more than 35 hours a week, along with raising the threshold of what they can earn elsewhere, is a necessary investment. Making it easier for families to house elderly relatives in “granny annexes” and providing more specialist housing close to families would also help to reduce the burden on the taxpayer. 

A more supportive family policy for the beginning and end of life may be popular, but it is also expensive. An HCA can be paid for largely by redirecting existing subsidies, but that still leaves tens of billions of savings needed to fund the rest of the family programme. 

There is only one place that this money can come from: better-off pensioners. As the former Conservative MP Miriam Cates puts it, “Britain has socialised the cost of old age, we have privatised the costs of having children”. The triple lock must end and a wealth-related social care levy must be imposed on the over 40s, as in Germany and Japan.

The levy should fund a care system analogous with the pension system – a decent basic provision for everyone, but topped up with private funds from those who have benefitted from the great uplift in property prices over the past 50 years.

A levy could fund a more generous means test for basic care support and a special higher minimum wage for care workers. Social care, in alliance with families – where they exist – has an ongoing and intimate relationship with the old and disabled, unlike the more transactional NHS, and needs to be rebranded as “the preventative service.” The NHS should fix you and get you out of the back door of the hospital as quickly as possible. The job of social care is to stop you entering the front door in the first place.

The rhetoric around the social care sector is too pessimistic, reinforced by the constant postponement of central government reform. The introduction of private equity entrepreneurial know-how into care home chains is almost universally viewed negatively, and unduly so. It is true there has been some profiteering, especially at the higher end, but it is also introducing greater efficiency and better use of digital technology than in most of the NHS. 

A final point. To reinforce this rebalancing we must re-think GDP. We are fixated on a metric that is increasingly distorting our decisions and priorities. In an ageing society, more and more productive and demanding care work is happening outside what the GDP measures. We must find ways of capturing this, as well as the productive work of raising stable, well-balanced young children who represent the GDP of tomorrow.

Imagine you are in your late fifties in a well-paid job, earning, say, £80,000 a year, but you decide to go part-time to look after your elderly mother who desperately does not want to go into a care home, and you now therefore only work half of your previous hours. You are increasing your mother’s wellbeing, and quite likely your own too, and maybe saving the state the cost of domiciliary care. Yet, by virtue of you having done so, GDP falls by £40,000. This is not uncommon. A 2023 Opinium and Centre for Social Justice survey found that 400,000 people gave up work completely in 2021-22 to care for elderly relatives.

Our politicians have long been averse to talking about the family. They have assumed that reproduction can look after itself. The result is that, with the single exception of childcare subsidies, we have the most miserable family policy in the rich world. Where does this come from? Maybe it has roots in our Protestant individualism combined with a kind of male-default feminism. In the shorter term, it is linked to a reasonable desire on the part of politicians, many of whom have even more chaotic private lives than their voters, not to be hypocritical when talking about the importance of stable families. 

Yet something is shifting. Nigel Farage used to echo the whole political class in regarding the family and relationships as something beyond politics. In a conversation with Jordan Peterson at the 2025 Alliance for Responsible Citizenship (ARC) Conference, when pushed on the topic, he insisted: “I can’t go there, I’m twice divorced.”

Then, suddenly, later that same year, with his acute nose for a political opening, Farage changed his mind and decided his divorces should not prevent him addressing our family instability crisis. Reform UK now has the best family policy of any party. It wants a transferable tax allowance for those bringing up children together, it is proposing to front-end child benefit so couples can use the money when they most need it and it wants to remove the two-child benefit cap. There is a decent chance that other parties will follow this Reform lead before the next election.

To her great credit, Bridget Phillipson MP, the Education Secretary, recently became the first senior British politician in decades to say something mildly pro-natalist: “I want more young people to have children, if they so choose; to realise the ordinary aspiration so many share, to create the moments and memories that make our lives fulfilling”. The Conservatives should echo this sentiment.

It is obvious that having children is a public as well as a private good

Left-wing liberals, irrationally terrified that The Handmaid’s Tale dystopia might become a reality, often tend to conflate the reasonable idea that the modern state should not tell you whether to have children, or how many to have, with the unreasonable idea that the state has no interest at all in society’s fertility level. In a society with decades of sub-replacement fertility — and the terrifying fiscal pincer movement I mentioned earlier — it is obvious that having children is a public as well as a private good, and something that the childless too have an interest in. 

If it became common for British politicians to assume, like Phillipson and politicians in France and elsewhere, that having children is a good thing — and even something to be encouraged — it would represent an important first step towards embracing some of the pro-family ideas sketched out here.

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This essay was republished from Mending the Net: A new centre-right approach to social security, a new book of essays from Bright Blue.