Why Aren’t People Having Kids?

It’s the economy, stupid.

by Aaron Bastani

13 July 2022

Britain’s birth rate has fallen over the last decade. Suzanne Plunkett/Reuters

“Why are we so surprised our teenagers are having babies?”, blasted the Daily Telegraph in 2009 alongside a picture of Alfie Patten, a 13-year-old schoolboy and recent father. The article insisted that stopping the likes of Patten and the child’s mother, then 15, from having children demanded a punitive approach; namely, “remov[ing] all benefits from teenage mothers”. 

While the explicit target was adolescents, the subtext was clear: the state shouldn’t ‘subsidise’ people, specifically women, to have children. This rationale would go on to shape government policy, with George Osborne announcing cuts to child benefit and child tax credits in 2010. The reason? An “explosion in welfare costs”. 

Britain’s baby shortage.

In recent months, however, the media appears to have performed an extraordinary about-face. “Britain’s baby shortage is everyone’s problem”, opined The Times. “British ‘baby shortage’ could lead to economic decline”, announced The Guardian. “How do you convince people to have babies?”, queried the BBC. A few weeks ago we even saw the Sunday Times tout a tax on “the childless”. The objective might have changed since 2010, but the reflex of stick rather than carrot remains.

While some of the more wacky proposals should be mocked (the same article also proposed a letter from the Queen for every third child), this shift was predictable. Birth rates continue to fall across much of the world. Every country in the EU has a fertility rate (the number of children per woman) below 2.1 – the level required to maintain a stable population without immigration. In the US, that rate is 1.7, in Britain it is 1.6. Eastern Europe has lost 6% of its population since the 1990s, while Russia has four million fewer people. Indeed, the greatest obstacle to the Kremlin’s geopolitical ambitions isn’t technological, or even political – it’s demographic.

It’s worse in Asia. Singapore’s fertility rate is 1.0, South Korea’s is 0.9. Japan’s rate of 1.3 recently led Elon Musk to muse how the country “will eventually cease to exist”. On present trends, 23 nations, including Japan, are expected to see their populations halve by 2100.

These trends aren’t new, of course. As a country becomes wealthier, and women gain access to contraception – which correlates with higher levels of freedom and education – they have fewer children. Like rising life expectancy, or urbanisation, this appears to be an iron law of social development. 

But once societies fall below a fertility rate of 2.1, which is now the case for around half the planet, the argument changes. In the absence of immigration, this means a shrinking population, labour shortages and a declining pool of workers to support an ageing society. So while it’s a good thing that birth rates have fallen, there’s an interest in keeping fertility rates close to 2.1. 

It’s the economy, stupid.

So why aren’t people having more kids? Given the long-term and global nature of the issue, a comprehensive answer is difficult. Wealth is part of the puzzle, of course, but that fails to explain how Israel has a higher fertility rate than India (ultra-orthodox communities, if you’re wondering), or why France is having more babies than neighbouring Italy or Spain. What’s clear, however, is that something has changed dramatically in Britain over the last decade. 

At the end of the 20th century, as New Labour oversaw a major expansion of the state and the economy boomed, something strange happened in the UK: the fertility rate went up. When Labour came to power in 1997, the rate was 1.7. The fact it remained as high as 1.9 until 2012 shows how important government policies – and economic conditions – are for whether or not people have children.

Though Tony Blair and Gordon Brown never articulated overtly ‘pro natalist’ policies, successive Labour governments introduced free nursery education, child tax credits and Sure Start centres. By the mid 2000s, free part-time nursery education was available to all three and four-year-olds, while tax credits played a central role in lifting a million children out of poverty. All of this incentivised people to start families. 

This changed in 2013, however, when Britain saw the biggest dip in births since the 1970s. At the time, the Office for National Statistics pointed to benefit cuts and a less stable, well-paid jobs market as a key factor in the decline. 

There are other factors that have led to falling birth rates too – not least the extraordinary cost of childcare in the UK. The OECD estimates that working parents on an average wage in Britain spend 29% of their income on full-time childcare – almost three times the average for advanced economies. Elsewhere, a TUC poll of working parents with preschool children recently found that 32% spent more than a third of their wages on childcare. 

Then there’s the housing market. Those between their mid 30s and mid 40s are three times more likely to rent than 20 years ago. This matters because home owners are more likely to have children than renters. A study in 2017 found that house prices play a role as to why: a 10% rise in house prices was found to have led to a 2.8% rise in births among homeowners, but a 4.9% dip among renters – meaning a net fall across England of 1.3%. Rising house prices don’t just drive inequality, they also impact whether and when people start families. 

Then there’s the range of dysfunctional policies which punish women who want children. Student loans penalise those who take longer to repay their debts (something women invariably do as they take time out of work to have children). Remarkably, the government’s latest reforms, which will be implemented next September, will make this even worse

That’s before mentioning the gender pay gap, or the professional discrimination women face if they want to have children. While the UK’s statutory maternity leave arrangements appear progressive, the opposite is true. Although a woman can take a year of maternity leave, and get paid for 39 weeks, only the first six weeks are compensated at 90% of her salary. This then drops to £156 per week – an income below the national minimum wage. By contrast, mothers in Croatia are entitled to six months of what the TUC considers ‘decently-paid’ maternity leave.

On childcare, benefits, housing, maternity leave and their working lives, women in Britain get a terrible deal. This, alongside wage stagnation, is the reason the country’s fertility rate has fallen over the last decade. The state shouldn’t interfere in matters of bodily autonomy, but it makes sense to provide incentives to have children when the birth rate is below 2.1 and falling. Right now, incentives only work in the other direction – to have fewer children, if at all, and later in life. This needs reversing, but given the state of British politics and the media, that may take some time. 

Aaron Bastani is a Novara Media contributing editor and co-founder.

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