What’s behind the fertility decline? How did we end up in this situation? And what can be done to help our economy escape this demographic crunch?

• Centre for Progressive Policy research shows that the Conservative government austerity program directly affected the trend in fertility rates in the UK, with a 10% higher annual rate of fertility decline in deprived areas than their affluent counterparts.
• Since 2011 the total fertility rate (TFR) in England and Wales fell to its lowest level ever recorded. [1]
• The drop was particularly sharp for the UK.

• Policies adopted by high-income countries – such as Austria and Canada - can boost fertility and include a mix of cash benefits, tax support, early childhood education, parental leave allowances, childcare provision and flexible work arrangements.[2]

Centre for Progressive Policy Research Analyst and report author Tanya Singh said:

 "Low fertility leads to an aging population, which is projected to put a lot of pressure on the public finances. Our research points the finger of the UK’s current demographic state in part to the conscious policy choices of the Conservative Government back in 2011 and its austerity plan. The good news is that with the right planning and policy mix the results can be ameliorated to some extent through state action. Doing nothing will only increase the UK’s economic challenges."

The Centre for Progressive Policy (CPP)has argued for some time that an ageing population leads to strains on pensions, health systems and the public finances. This challenge will be intensified by a falling fertility rate which, in England and Wales, is at its lowest level in two decades.

New CPP research on the UK’s Fertility Puzzle answers some significant questions and attributes the decline to historic conscious policy choices attributed to the Conservative Government’s programme of austerity. CPP argues UK policy makers must now make a systemic plan to grapple with falling fertility rates or face a similar trajectory to those well reported in South Korea and Japan. Now is the time to look at the important drivers of inclusive economic growth that can alleviate the pressures of demographic change including greater gender equality in the workforce, access to affordable high quality childcare, and non-transferrable parental leave. Without sufficient policy action, even more significant economic challenges will lay ahead.

The Centre of Progressive Policy has taken a data-driven approach to the fertility trends of the last decade, discussing the role of policy in action and drawing on international evidence. Public policy has an important role to play in boosting fertility across economies.

It makes the following recommendations to local, regional and national government:

1. Childcare should be seen as just as important as investing in roads or railways within national public spending frameworks so that governments can borrow to invest.

2. Local and combined authorities should explore how they can drive an increase in local state run
nurseries in areas with a low density of childcare places.

3. The government should enact policies to extend statutory paternity leave to a minimum of 6 consecutive weeks, ensuring it is universally accessible to all fathers and partners. This leave should be paid at a rate of 90% of their income to facilitate greater involvement of fathers in caregiving responsibilities during the early stages of a child's life.

4. The government should require all employers to consider flexible working arrangements for all new applicants; compel job advertising sites that host at least 20,000 job adverts per year to include options for flexibility as a prompt during the design stage of the job adverts; and expand access to training and development for management and leadership teams to help them understand how to positively respond to flexible working requests and foster a culture where flexible working is more normalised.

5. HM Treasury should consider the impact on fertility rates of public services when it estimates benefits-in-kind, as part of the distributional analysis conducted for the Budget.[3]

These recommendations build on previous research reports by CPP: Growing Pains and Leave in the Lurch.

The UK saw one of most dramatic turn arounds in total fertility between 2002-08 of all countries in the European Union [4] due to Labour Government reforms to the income tax system and increased child benefit. This elevated incomes of the most economically disadvantaged families by up to 10 percent [5] and boosted fertility by as much as 15 per cent among the group affected.[6]

However, since 2011 the total fertility rate (TFR) in England and Wales fell to its lowest level ever recorded.[7] This trend in fertility is common among many European countries such as France, Italy, and Sweden, as well as in the United States, but the drop was particularly sharp for the UK.

The argument that this is due to more women going into higher education and entering the workforce [8] doesn’t explain why fertility has declined for all groups in the past decade, irrespective of education level [9].

Centre for Progressive Policy research shows that Conservative government austerity program directly affected the trend in fertility rates in the UK, with a 10% higher annual rate of fertility decline in deprived areas than their affluent counterparts.

Reduced public spending had a significant role to play. It was the reduction particularly on benefits and non-statutory services delivered by local councils such as youth and family service which reduced resources available to families. High housing costs and the recent period of high inflation will only add to these pressures with the rising cost of living, keeping incomes down and – we’d expect – reducing fertility.[10, 11, 12] Our analysis suggests this will hit households on lower incomes harder.[13]

Policies adopted by high-income countries can boost fertility and include a mix of cash benefits, tax support, early childhood education, parental leave allowances, childcare provision and flexible work arrangements.[14] Examples in Austria show a doubling of paid maternal leave from one year to two years had a large positive effect on the likelihood of a woman having a second child. Similar effects were seen after the introduction of child benefits in the Canadian province of Quebec with other studies showing the relationship between lower child benefit spending and lower fertility.

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