Why it’s young people moving out, not retirees moving in, that’s a burden on Wales

This is an article I wrote that was published by http://www.Nation.Cymru on 04 Aug 2019. At the time I was less aware of the issues of homes being bought to be used as holiday cottages and B&B’s and it was very much before the “Hawl i fyw adra” campaign. The discourse at the time surrounded an urban myth that English retirees were placing a financial burden on the Welsh public purse. The point of the article was to address the facts and point out that there were other economic factors of far greater significance that the #indyWales movement should address.

There’s no avoiding it. An ageing population is costly. Countries such as Japan have struggled with rising government spending because of its changing demographics.

Other countries have sought to plug the gap with in-migration of younger working-age people. So when people in Wales say the net inward migration of pensioners from elsewhere in the UK is a burden on the Welsh budget, they’re probably right, yes?

Well, this is an issue I’ve been grappling with for a while. I’m aware that there is a risk here of those who have concerns on this issue being portrayed as anti-English. So, I really felt the need to get under the skin of this claim and look at what the data told us.

To begin with, let’s look at the claim that there are now more English-born over 65’s in Wales than Welsh-born. It was Martin Johnes the historian who was able to point me in the direction of reliable data via nomisweb.co.uk.

Here are the population figures according to the 2011 Census:

From 2011 UK Census.

This table shows the population in Wales of those born in England and Wales. From the figures above there were 149,133 English-born over 65’s and 386,816 Welsh-born over 65’s living in Wales.

So, it is clear that the claim that there are more English pensioners than Welsh living in Wales is wrong.

Budget

What it does show, however, is that there is a skew in the demographics. Welsh-born over 65’s account for 17.4% of the Welsh-born total. English-born over 65’s account for 23.4% of the English-born total. That’s a difference of 6%.

This confirms the suggestion that many English folk are choosing to retire to Wales.

So my next question was “what cost does this occur on the Welsh budget?”

At this point it’s worth noting that the data doesn’t differentiate between English folk born in England or Welsh folk born in England so I have to be careful to point out that what follows is an estimate, taking the population figures at face value.

We should also take into account that Welsh folk also move in the opposite direction.

According to the 2011 Census data, there are 506,619 Welsh-born people living in England. This gives a net movement of people from England to Wales of 129,647.

Next, I looked at the numbers of Welsh-born over 65’s living in England which comes to 142,609.

So there is a difference of only 6,524 in the number of English-born over 65s living in Wales and Welsh-born over 65s living in England.

We can estimate the cost of this to the Welsh budget. According to fullfact.org the average person costs the NHS roughly £2,200 a year. The Nuffield trust gives a median cost for the over 65 of circa £6,000 per year. The maximum state pension is £8,767 a year. The winter fuel allowance is from £100 to £300 per year.

There are other services provided such as prescriptions and bus passes but going on the figures above we can estimate a cost per person of approximately £13,000 per year.

Multiplying this with the net increase in over 65’s gives a total estimated additional cost on the Welsh budget of £84,812,000.

So, a relatively small additional cost. On first sight it is clearly not a major percentage of the Welsh Government budget.

Welcoming

So what is really driving this line of argument that inflow of English over 65’s is incurring a significant cost on the Welsh Government budget? I’d argue that it is really about frustration at young folk being priced out of certain areas and fear of losing the Welsh language.

There are better ways of addressing the language issue. That’s a matter of doing more to help people integrate into their new communities, rather than stopping them coming in the first place.

I note that the recent news report on the Syrian refugee Mohamad Karkoubi achieving a Welsh learner award was much lauded in Welsh Twitter spheres. In my humble opinion, it is no different for any person choosing to live in Wales.

People wanting to retire to Wales can’t be blamed. Who can blame people for wishing to take advantage of lower living costs and a beautiful location in their retirement?

Rather than fretting it would be better if we welcomed our new neighbours and introduced them to our culture and language socially.

I came to the conclusion that the argument that English people retiring to Wales creates a financial burden on the Welsh Government budget to be a fruitless one. Not only is there the danger of prejudice inherent in pursuing that course, it entirely misses what is the greatest factor in Wales’ revenues and spending.

That is that our economy has structural weaknesses that motivate young Welsh people of working age to move elsewhere to pursue more rewarding careers. Altogether this has left a gap in tax revenues and workers in the 30-50 bracket that is costing Wales £billions.

For added context let’s consider the 2019 GERW report, which in chapter 2.1 p.20 states:

“Wales considerably lags behind the UK average in revenue per person from the major direct taxes including Income Tax, National Insurance contributions and Corporation Tax. Revenue raised per person through Income tax and National Insurance contributions was £1,690 lower in Wales in 2017-18. If revenue per person from these taxes in Wales matched the UK average, it would yield £5.3 billion in additional revenue.”

2019 GERW Report, Wales Governance Centre.

This is clearly a very significant figure in the context of the Welsh Government budget. £84 million is very small by comparison.

Later in chapter 5.4.1 p.75 of the 2019 GERW report, the subject of Wales’ demographics is addressed. The graph shows a lower percentage of Wales’ population being of working age particularly in the critical 30-50 age bracket. The report states that:

“If Wales’ population were to be distributed across individual age groups in the same way as the UK average, total expenditure would be over £1 billion lower and tax revenues would be nearly £500million higher.”

2019 GERW Report, Wales Governance Centre.

The total expenditure looks a great deal higher than £84 million. Even if we very crudely apply a multiplier for the proportion of English over 65’s we have a figure circa £200+ million. This is still far lower than the £5.3 billion figure GERW gives as a consequence of our underperforming economy.

It is decades of Unionist Conservative and Labour government economic policy with regards to Wales that has failed. That should be the focus for the Indy Wales movement.

Correcting the weaknesses in our economy should be the prime focus of independence as that is what will have the greatest positive impact on people’s lives and making our communities and country financially sustainable.

But in the meantime, we should stop saying retirees moving to Wales are a burden on our economy.