By Richard Johnstone | 4 June 2012
UK public spending must start addressing the future impact of the ageing population to avoid ‘an unsustainable squeeze’ on the finances, the government was told today.
A joint report by the Institute for Public Policy Research think-tank and the CBI business group warned that without a shift to preventative health spending, public spending could outstrip revenues by 2030.
The number of people aged over 85 is set to more than double over the next 25 years and almost half of men and 43% of women could be obese, according to the report, Long view. These trends could add billions of pounds to the cost of the health service, it said.
Speaking as the report was launched, the CBI’s director for competitive markets, Matthew Fell, who contributed to the analysis, said the government must lead an open debate now about how to respond.
The report concluded that this should include a greater emphasis on prevention, as the vast bulk of public services are reactive, responding expensively to social problems once they have occurred.
Greater priority should also be given to capital spending to help the UK to compete in the global economy. ‘We could shift housing expenditure away from revenue spending on housing benefits and towards building more affordable homes, boosting construction and helping to rebalance the housing market,’ the report stated.
Fell said that the government could no longer tinker around the edges, but had to take major strategic decisions to keep the books balanced and meet social needs.
‘Politicians and the public are rightly focused on the immediate economic challenges facing the UK, but in dealing with the crisis we must also think about the long-term challenges,’ he said.
‘We cannot afford to bury our head in the sand on public services reform, otherwise when the UK emerges from austerity it will face a double whammy of rising pressures on public spending and falling tax receipts.’
He called for government to expand its open public services programme to ensure best use was made of private and voluntary sector expertise.
‘The CBI strongly believes that opening up public services to a diversity of providers can drive improvements in the quality of service that people receive, and deliver significant savings to the taxpayer,’ he added.
