Do we need an intergenerational policy institute to strategically shape society through the generations?
03 Oct 2017 - Estimated reading time: 5 minutes
Last month we held our Better Futures conference to debate three big themes that will shape our future: the rise of AI; an ageing society and a severe lack of savings. Some may ask, ‘why group these three issues together?’ But they are all very much interlinked and they all demand urgent attention. If we don’t start planning for them now, our society, and particularly future generations, could pay a hefty price.
Some say the rise of Artificial Intelligence could lead to 1 in 3 of today’s jobs being automated. If these jobs are not replaced, that could lead to retirement shortfalls of £2.3 trillion, or one year’s current UK economic output. In that scenario, it won’t just be pensioners affected: the income shortfall below state pension age, relative to the living wage, would be another £1.25 trillion.
At the same time, AI is anticipated to increase GDP growth by 10% (PWC estimate) over the medium term. So, the question then moves on from whether retirement income shortfalls are affordable, to what fiscal or other policy developments are required to ensure the benefits of more money in the economy are being shared? Otherwise, with the potential for job scarcity over the longer term, we risk an increasingly economically unequal society with heightened intergenerational unfairness.
Tough choices in the years ahead
In the short to medium term, given the lack of individual savings and the demise of DB benefits, the Government, employers and individuals face very difficult decisions. Adjusting is going to take some doing, particularly in a way that leads to better retirements and is fair across generations. It is much more than just a question of savings or the state pension age. And it requires political bravery. But ‘brave’ politicians that take a long-term view often risk their own political longevity. Brexit also means that these issues are unlikely to get the attention they desperately need as there just isn’t enough political bandwidth.
Looking even further ahead, AI could change society and the economic landscape beyond recognition. While we can’t be certain about the specifics, we can be certain that change is on its way and arguably is already underway. But again, politicians are woefully underprepared.
There’s much we don’t know, but we do know that the following should be political priorities today:
Creating a stable long term savings platform
With proper long term leadership from Government, rather than continual tinkering, individuals and their employers could be encouraged to save more. That requires stability in the system, which has been woefully lacking.
Preparing for and better supporting longer working lives
As well as creating a stable long term savings platform, we need to do more to help individuals live healthy lifestyles, so that they are able to work longer and to help mitigate costs of remedial medical work by the NHS. As a society we also need to be prepared to work for longer – on the assumption there are jobs – and to retire when we can afford to. We also need to encourage life-long learning to ensure people have new and economically useful skills in the face of ever more jobs being automated.
Building a framework for funding long term care
A joined up solution for long term care for the elderly and a framework for funding that is desperately needed. We’re already seeing a social care crisis unfold, and it’s only going to get worse. But again the decisions that need to be taken will be politically unpalatable.
Providing better support in the transition to ‘retirement’
Individuals need much better support both when saving and transitioning towards retirement to make better decisions. Leaving the labour market too early, or spending pensions too quickly, can lead to years of regret. It would be much better to find new roles where individuals can work part time for a while than have them forced to find a new job after several years or more in retirement. This will make much better use of their skills.
Preparing for a future where not only our muscles but also our brains can be replaced by machines
The only thing we can be certain of is that the future is uncertain. We need to begin pondering the answers to difficult questions around how to prepare for a future of relentless advances in technology.
But can we realistically expect Government to tackle all of this?
Given Brexit, and given current political governance systems, arguably it is completely unrealistic to expect Government to take meaningful steps to solving these issues.
Should we create an intergenerational policy institute?
Looking into the future the burden on future generations looks heavy. So now is the time to create a separate independent commission to tackle the following issues: long term savings, long term care, long term financial independence and harnessing AI – all of which require a view that stretches beyond political time horizons. This should include the best and brightest from fields, including economics, politics, sociology, anthropology, computer science and futurologists. But how do we ensure that the policy objectives set by such a body are taken on by the government of the day and passed on through multiple elections?
And look to establish the ‘AI Paris Accord’…
Looking even further into the future, given the potential existential risks to humanity, we now need global cooperation on how to deal with the rise of AI, and to ensure it is harnessed for the greater good. Unless there is universal agreement on how to govern the issue, solutions that lead to a better future will be difficult to come by. Should we, for example, approach AI in the same unilateral way as the Paris Accord on Climate Change?
To secure a better future we need change. Any solutions to funding an ageing society and ensuring the benefits of AI are shared across society may take many years to bear fruit, so we need to act now. And we need to ask ourselves, can the difficult decisions that need to be made and which require a long term view be left to the vagaries of politics? And if we agree ‘no’, how do we evolve our political systems and approach?
We’re keen to hear your views. Our main takeaway from our Better Futures conference was that it’s vital we have these conversations and take action now to secure a better future for future generations.
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