The past several decades have seen a decline in many of the expectations and norms surrounding family life, with Britain seeing increases in single-parent households, divorces, and instances of child neglect. But underneath all of this is an even more disturbing trend – an outright demographic collapse, in which Britain’s workforce is too small to maintain a competitive economy, the welfare state, and social protection for the elderly.
Since a peak in the 1960s the British birth rate has been in continuous decline towards 1.6 children per woman. This is well below the amount of births needed to avoid population decline – the “replacement rate” – of 2.1 children per woman. Ultimately, the result over the course of decades has been that the workforce has dwindled, while the non-working population continues to grow.
Without intervention, this demographic collapse is set to be one of the biggest crises facing our country. It threatens to totally undermine the ability of British society to provide prosperity, a safety net, and a decent standard of living to all.
Why has this happened? One of the biggest reasons is that child-rearing has become nigh unaffordable to many working people, who simply do not have the time or the financial stability to comfortably sustain a larger family with both parents in work. Amid surging house prices and stagnant wages many younger couples are now encouraged to delay having children, as the trade-off between financial security and family grows ever-more harsh.
So far successive governments have handled this issue by simply kicking the can down the road indefinitely, or relying on labour substitution by way of mass immigration. But whereas birth rate increases provide clear long-term planning indicators for new housing, healthcare, education and transport infrastructure, huge influxes of working-age migrants in short periods do not and place huge strain on infrastructure and social services.
There is a radical solution to this crisis: pay married couples to have children. Specifically, Britain should pay married couples £500 per month per child under the age of 18. This move would not only make having multiple children financially viable to many whose dream of family life is now unreachable, but also totally reshape our relationship with work and address many of today’s most pressing social issues.
A family income will dramatically change economic life for families. It would serve to reduce the trade-off between child-rearing and earnings from employment for parents, which has a direct effect of making it much easier for couples to choose to have a child in the first place. However, this is but the tip of the iceberg.
At a macroeconomic level, a family income will serve to drive up wages across the board. This is because many families will be able to afford to reduce their participation in the labour market to care for their children, with some parents dropping out entirely to move towards a single-breadwinner model. This represents a drop in the labour supply available to industry, which means that to compete for the smaller pool of workers businesses will have to push up wages, along with conceding other improvements to working conditions.
This, in turn, will drive a positive feedback loop across the economy: workers will earn higher wages, which in turn will make it much more affordable for families inclined to do so to cut their total hours in the labour force. Indeed, a family income will help all workers through bringing an end to the all-too-common low-wage, high-hours model of employment faced by many workers.
In addition, a family income will also make for happier and healthier families. This is because the condition that a couple must be married to receive a family income will provide an incentive for families to raise children in a two-parent setting.
Study after study has demonstrated that children raised in two-parent households tend to enjoy much greater educational attainment, have lower rates of criminality, and improved mental health, and so encouraging the two-parent model should have a robust knock-on effect for child welfare. Research has also shown that married couples with children tend to be substantially happier than the general population, so long as they’re financially stable.
What’s most surprising about a family income is how affordable it is. If we assume for argument’s sake that every one of Britain’s 15.2 million under-18s is eligible, a cash payment of £500 per month per child would cost the nation £91.3 billion annually. While this is a large outgoing, most of the funding can come from efficiently reallocating current spending.
For example, family benefits, income support, and tax credits cost the state £46 billion per year – these can be totally phased out and replaced by a family income. Housing benefit, which costs the Treasury £25 billion per year, can also largely be replaced by a family income, and the government’s £35 billion annual budget for personal social services and other benefits will also be able to shrink as a family income will reduce the number of claimants.
This means that, potentially, a family income may break even in the long-run through replacing much of the social protection budget. In this way, a family income will actually serve to make our welfare system more affordable, efficient, and responsive to the needs of individuals – taking responsibility and power away from state bureaucracy, and giving it to individual families.
At the heart of the family income proposal is a challenge to radically rethink our social fabric, to place a family back at the centre of our way of life, and to give everyone greater freedom to pursue the best ends they can in life. A family income will rejuvenate our human capital and fix the birth-rate crisis, but it will also make us a healthier and more prosperous society.