Britain’s economic decline is being driven by family breakdowns

The blind pursuit of productivity ignores the real cause of the UK’s problems

Miriam Cates

The search for economic growth is becoming increasingly desperate. As health and welfare spending soars and public debt mounts to unprecedented levels, the Chancellor is betting the house on boosting productivity rates to stave off economic collapse.

But according to an illuminating new report, the Government is barking up the wrong tree. In a research paper for the Alliance for Responsible Citizenship (ARC), economist Philip Pilkington argues that economic growth stems from a combination of three factors.

These are: the number of people who are employed in an economy; the extent to which those workers are contributing to the maximum of their abilities; and productivity.

Pilkington says that models for measuring growth have long neglected the importance of the first two elements, being fixated instead on “productivity”, a somewhat mystical variable, consisting of whatever is “left” after labour force growth has been accounted for.

UK productivity is often compared unfavourably to the US. But over the last half century, US population growth has been far more significant than productivity gains in driving GDP growth, contributing on average 2.11pc to economic growth per annum, compared to a productivity growth contribution of 1.55pc.

In contrast, since the 1970s in Britain, population growth has added just 0.62pc a year to economic growth, while productivity has grown by an average of 1.51pc each year. This means that British productivity growth has been roughly equal to American productivity growth. Almost all of Britain’s postwar economic underperformance can be attributed to its inferior demographic picture.

After 50 years of below-replacement birth rates, Britain has very little left in the tank. In the 1970s, there were four people of working age to every pensioner; yet by 2050 the ratio will be just two to one. If you think taxes, inflation and waiting lists are too high in 2025, you ain’t seen nothing yet.

Mass immigration has given the illusion of economic growth (though not on a per capita basis), but each new wave brings only a short-term superficial boost to HM Treasury bean counters. Unless birth rates increase, the OBR estimates that 350,000 new immigrants will be needed each year just to stave off stagnation.

Miserable economic growth rates are not just the result of a failure to replenish ourselves numerically. Britain, and now the US too, is seeing an alarming increase in economic inactivity, with millions of people too mentally ill, physically sick or emotionally demotivated to work productively or indeed at all.

In the last 15 years the number of people claiming disability payments has increased by 1.5m, while the number of pensioners has risen by 2.5m. The scale of productivity growth that would be needed to compensate for such a sharp decline in both births and economic participation is the stuff of fiction.

Pilkington argues that, if we are serious about generating economic growth, we should focus instead on improving home-grown labour force growth and reducing inactivity. We have an existing institution whose role it is to produce and nurture our future workforce; that is the family.

It is the family into which children are born, and the family that has the potential to shield the individual from mental illness, crime and dependency on the state. Dwindling birthrates and rising inactivity have together strangled economic growth; both have been directly caused by the decline of the family.

Birth rates track marriage rates, and marriage rates have collapsed. Britain has become the family breakdown capital of Europe, with nearly half of children experiencing parental separation. Family breakdown has a long tail; from poor mental health to drug addiction to crime to poverty, the cost to the state – not to mention the individual – is extraordinary. Welfare, health and social care now account for 50pc of government spending.

Putting all our efforts into driving up productivity is a shot in the dark. But we know exactly how to increase labour force growth and participation – we must restore the family. At present, the British tax and welfare system are stacked against couples who want to have children, and there is next to no fiscal recognition of marriage even though this is demonstrably the most beneficial structure for raising children.

We have socialised the cost of old age – everyone is entitled to pensions and healthcare, regardless of whether they have “replenished” the economy by having children of their own – but privatised the cost of parenthood, removing entirely the link between bearing children and future economic security.

Today’s young adults are now heavily indebted, face eye-watering housing costs and have been raised in a culture that attributes more status to owning a dog than to marriage and parenthood.

Better family policy may be expensive and will take time to achieve results, but it’s a much more certain bet than chasing “productivity”, the economic equivalent of searching for a pot of gold at the end of a rainbow.

Strong families are the foundation of economic growth, but the family is not merely a vehicle to deliver productive units to the labour force. The purpose of family is as a place of belonging, nurture, safety and meaning for all of us.

For 2,000 years, the three “pillars” of the Western family – a belief in the sacredness of children, marriage as the norm and a respect for parental authority – supported the replenishment and growth of our civilisation.

Yet these pillars are crumbling, leaving us lonely, sick, childless and economically choked. There is a route back to growth, but we won’t find it in new runways or housing targets.

More and stronger families – and the policies and principles we need to grow them – are the closest thing we have to a silver bullet.