Famously, you can see the divide between North and South Korea from space. The South is a thriving democracy with a booming economy, exporting smartphones and catchy K-pop. The North is a land of food rationing and desperate despotism, producing what limited electricity it has by burning old car tyres.
Yet bafflingly, the North may end up as the winners in this competition.
For South Korea is an extreme example of the demographic challenge facing most countries in the world. On present trends every 100 South Koreans alive today will have just 15 grandchildren. Having so few kids will create a form of extreme degrowth in the coming decades. The population pyramid is already inverted: a wobbling demographic Jenga tower, with a shrinking number of young people supporting an ever-growing number of oldies.
South Korea is extreme, but not alone. This week the Office for National Statistics announced that the fertility rate in England and Wales was the lowest since 1938. That more and more people are unable to build families matters hugely for individuals, but also for our whole culture, with dramatic social and economic consequences.
Yet when Keir Starmer was asked about the issue on his recent trip to Washington DC, he was dismissive, replying that he wasn’t going to start “dictating” to people whether they should or shouldn’t have children. Asked whether it would be a good thing if the birth rate went up, the Prime Minister ducked the question.
But Starmer’s framing is wrong. In the UK surveys show the average woman would like 2.35 children, but the fertility rate is just 1.44. The challenge is not to make people do something they don’t want to do, but to help people achieve their own dreams.
Around the world more and more countries are switching towards policies to help people have more children.
Earlier this year, President Macron announced policies to begin what he calls France’s “demographic rearmament,” arguing that “France will be stronger by boosting its birth rate”. Macron’s militaristic language masks sensible, straightforward policy to make it easier for French people to raise families: better parental leave and greater access to fertility treatment.
French women already have more children than those in any other European country because parents benefit from an extremely family-friendly tax system in place since the 1940s. The “family quotient” system has meant millions of extra French people alive today.
Our French friends aren’t alone. The South Tyroleans have more children than any other part of Italy. In the 1980s South Tyrol introduced a policy programme explicitly aimed at better supporting parents, including a monthly €200 child benefit payment for each child aged under three, and a generous childcare system. There’s even a “Welcome Baby” backpack for every newborn. Outside Europe, the English-speaking world has examples too such as Australia’s successful Baby Bonus.
Demographers say young people being forced to live with parents is one of the worst things for birth rates. Perhaps the UK needs to adopt Germany’s “Baukindergeld” programme, which gives parents a grant of £10,000 per child to buy their first home.
But creating a pro-parent culture isn’t just about pounds and pence, but culture too. In 2009 Georgia’s religious leader – Patriarch Ilia II – responded to his nation’s declining birth rate by taking matters (literally) into his own hands. He announced he would not only personally baptise any child born to parents with more than two children, but carry out the baptism in Tbilisi’s magnificent cathedral, and himself act as the baby’s godfather. As of this year, Patriarch Ilia has more than 47,000 godchildren with the effects of his intervention clearly visible from a spike in birth rates.
Contrast South Korea: it’s not just that it’s densely populated, and the most expensive place in the world to raise a child (mothers face huge income penalties). The culture also suffers after-effects from a concerted three-decade programme to persuade citizens to have fewer children. Many K-Pop stars are contractually obliged to stay single, to avoid spoiling their image, meaning there are few role models.
The UK is an outlier in a different way. Our tax system is exceptionally family-unfriendly compared to most countries, making no accommodation for the extra costs parents bear. At the New Deal for Parents campaign hosted at Onward, we argue in favour of a new child tax allowance system that would reflect the pressure on working parents and see them keep more of their own money.
Can we afford to do this? In the long term we can’t afford not to.
Bad demographics set up a fiscal car-crusher, with rising spending on old people on the one hand and falling tax receipts on the other. The effects are massive. If you go back 20 years and apply today’s patterns of spending and tax to the demographics of 2004 then tax receipts would have been so much higher and spending so much lower that the chancellor would have £84bn a year extra to play with, enough to cut the basic rate of tax by about 13p in the pound. Roll forward 20 years from now and you get the same thing in reverse. Gulp.
Although the social and economic consequences can’t be ignored, the real reason for us to follow other countries in becoming more parent-friendly is personal.
We all know people who are trying to have kids – for many of them that is their biggest life priority. Or people who would like to have more kids but can’t afford it. For many of them it’s their biggest regret.
This isn’t about “dictating” to people – as worries Starmer – it’s about helping people do something central to the lives of so many people: start families.
[See also: Labour has imposed a £19.5bn stealth tax]
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