Andy Burnham will officially be the head of the United Kingdom on Monday, 20 July, and will be expected to face a trifecta of problems—weak growth, an ageing population and an increasingly sick citizenry. These problems compound to a loss of about £330 billion every year for Britain, according to think tank Resolution Foundation
'Britain has been hit by a triple whammy of weak growth, rising ill-health and an ageing population over the past 20 years. Collectively, these three hits are costing £330 billion a year and are being paid for by more borrowing, the highest tax burden in 75 years, and huge cuts to public services,' said Senior Economist Simon Pittaway of Resolution Foundation.
Fresh Start for New PM
With a new prime minister, the left-leaning Resolution Foundation said the UK economy could have a fresh start. But incoming PM Burnham needs a stern hand in dealing with how taxes and pensions are implemented.
Reform Foundation published a report titled 'The Great Escape—Why Britain Is Stuck in a Fiscal Funk and How We Can Break Free,' which explained Britain's £330 billion fiscal hole and recommendations on how to solve it. One of the recommendations read: 'Address inherently unsustainable policies: replace the State Pension triple lock with a smoothed earnings link, and set out a beefed-up plan to fully replace Fuel Duty receipts as electric vehicles hollow them out.'
What Is the Triple Lock Program?
The Triple Lock is a UK government scheme that ensures the state pension increases every year based on three metrics: average wage growth, inflation or a 2.5% flat rate. This way, pensioners will not be heavily affected by inflation. For 2026 to 2027, the Triple Lock will cost the UK government around £12.6 billion.
'The Triple Lock should be replaced with a smoothed earnings link,' the Resolution Foundation report stated. The alternative notes that pensions must be adjusted based on average earnings growth for a number of years. Pittaway added: 'An incoming PM and Chancellor offer the perfect opportunity to start afresh. But they will need to level with the public that popular policies like the Triple Lock ratchet are simply unaffordable.'
Triple Whammy of Problems
The report summarised UK's issues as a trifecta of weak growth, rising ill-health and an ageing population that is interconnected. An ageing and sick population will shrink the labour force, hence weakening growth.
According to the Resolution Foundation's report, UK economic growth has been stagnating since 2007. Some £450 billion of potential annual tax revenues were not realised.
The Centre for Ageing Better reports that around 40% of the population in England is aged 50 and above. Those who are aged 65 and over represent 20% of the total English population. Resolution Foundation estimated that the ageing UK population resulted in a £50 billion hit through increased care demands, shrinking tax base and pension payments.
Regarding the UK health issue, a report from the Health Foundation said that UK people are spending fewer years in good health compared to a decade ago. Health experts noted that Britain is 'going backwards' in terms of health. Resolution Foundation estimates that the UK health issue costs the government £1 for every £4 non-interest spending.
