Select Committee on Economic Affairs Fourth Report

CHAPTER 1: Scope of the Inquiry

1.1. One of the greatest achievements of the past 150 years has been the increase in average length of life. In the middle of the nineteenth century, average life expectancy at birth in England was just 42 years, by 1911 it was over 50 years, and today it is over 75 years for men and 80 years for women.[2] Not only do we live much longer lives than our forebears, but we also live healthier lives, and today the majority of people aged over 65 are healthy, fit and active.

1.2. This remarkable improvement in the life chances of British citizens is one of the most obvious benefits of the economic growth and scientific progress of the past two centuries. Our society has adjusted readily and enthusiastically to the new opportunities and challenges offered by longer and healthier lives, and it seems reasonable to believe that we will continue to adjust successfully to future increases in life expectancy which will occur in the 21st century.

1.3. Our society has also adjusted to a fall in average family size, as women have chosen to have fewer children. Women born in the mid-1930s had, on average 2.45 children, but those born in the mid-1950s had on average 2.03 children, and for women born in the mid-1970s it is expected that average family size will fall to around 1.74 children.[3]

1.4. This fall over time in fertility, together with the simultaneous improvement in mortality, has reduced the relative size of the child population, and increased the relative size of the pensioner population. This upward shift in the age structure of society is what is meant by the term "ageing population". The ageing of the population has enormous economic implications; indeed, it has the potential to have an impact on all sectors of the economy and all aspects of economic activity.

1.5. We recognised at the outset that it would be essential to focus our inquiry, and a strategic decision was taken not to examine the issues of long-term care and health, which have recently been the subject of investigation by the Royal Commission on Long-Term Care and the Wanless Report.[4] We decided to concentrate on the issues of employment and income, in particular in relation to length of working life and the position of women, and to focus on the fundamental principles involved. In our consideration of income in retirement we have chosen not to examine in detail the operation of the current pension system, which is an issue that has recently been reported on by the House of Commons Work and Pensions Committee.[5] Instead we have directed our attention to the general principles and structure of the UK pension regime.

1.6. The inquiry was formally launched in December 2002 with the issue of the call for evidence reproduced in Appendix 4. We received written evidence from a wide range of sources, which are listed in Appendix 3. The written evidence was complemented by oral evidence received at 21 public hearings between February and October 2003. The oral and written evidence is published in volume II. We are extremely grateful to all those who provided us with evidence.

1.7. Our Specialist Adviser was Professor Paul Johnson, AcSS, Professor of Economic History at the London School of Economics and Political Science. He contributed to all aspects of the inquiry and the final report. We are especially grateful for his assistance in eliciting and evaluating our evidence.

2   Government Actuary's Department, National Population Projections, 2000-based (TSO, 2002), p 22 Back

3   GAD, National Population Projections, 2000-based, p 18 Back

4   Royal Commission on Long-Term Care, With Respect to Old Age (1999) (CM-4192-I); Derek Wanless, Securing Our Future Health: Taking a Long-Term View (2002) Back

5   Work and Pensions Committee, 3rd Report (2002-03): The Future of UK Pensions, (HC 92-I) Back

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