2. Will the Cabinet Secretary make a statement on the implications of the Office for National Statistics forecasts for the working age population of Wales? OAQ52911

I thank Dawn Bowden for that. Across the United Kingdom, the proportion of the population of working age is projected to fall. The Office for National Statistics' work in this area does not provide forecasts in the conventional sense. The figures simply project into the future the patterns of the past, without any reference to new challenges or opportunities.

Thank you for that, Cabinet Secretary. The chief economist's report, which accompanies the Welsh budget, highlights the risk to the Welsh tax base if the working-age population continues to decline in Wales, especially when compared to the forecast rise of this age group in England. The chief economist's report goes on to say that this could mean £150 million a year less in the Welsh budget by the end of the next decade, and the problem of course grows in each year throughout that period. To what extent can the devolution of Welsh taxes help us to offset this position and to ensure that our Welsh tax base can continue to deliver the public services that we require?

I thank the Member for that. She makes a very important point in linking working-age population projections with the impact on the Welsh tax base and, indeed, on the block grant adjustment that affects the amount of money we get annually from the Treasury. The important point here, Llywydd, is the one that I mentioned a moment ago—that these are straight line projections from the past into the future. And there are many factors that can affect the comparable working-age population changes in different parts of the United Kingdom. Indeed, at a sub-Welsh level, there are variations. In Merthyr Tydfil, for example, the sub-national projection shows a smaller decline in the population aged 16 to 64 than across Wales as a whole. The point that Dawn Bowden quoted from the chief economist's report is this: that if our working age population grew more slowly than other parts of the United Kingdom, that could easily translate into a smaller tax base and that would affect the funding we get from the UK Government. There are many things outside our own control that will have an impact on those figures in the future, as there are things highlighted in the Welsh Governance Centre report that show the things that we can do ourselves to make a difference in that area, and, by taking those actions, we can mitigate the problems that Dawn Bowden identified. 

But, of course, one of the keys to growing our tax base is ensuring that, one, we get more people into work, and, two, that they are able to earn a better standard of living, a better wage, so that they can then put that back into the economy. That, in turn, generates the cash for us to spend on health, education and all the other myriad public service requirements that we have. And, so, the working base is actually picking up quite a hefty burden.

So, my question to you, Cabinet Secretary, is, as we need that working base to grow, and we need them to be able to earn more and better money, what assurances can you provide that that taxes proposed in your leadership manifesto will not disproportionately hit Welsh businesses, and thereby hamper economic growth, because those businesses need the cash within the business to employ more people and to expand their businesses.

Well, I understand the point that Angela Burns makes about the need to make sure that as many people as possible in Wales are in work and earning good wages. But she will understand as well that the question raised by Dawn Bowden was: what if there are fewer people of working age in Wales in the future? Even if all those people are working and all earning good money, if there are fewer of them, then the implication of that is that that would lead into a smaller tax take in the future. A strong economy is really important, but so is the number of people we have of working age. That's what the population projections focus on. 

I agree with the more general point she made, that, as we think of using our fiscal powers for the future, we need to do so in a way that supports our economy and finds ways of helping that tax base to grow. 

Cabinet Secretary, the Office for National Statistics' forecast for the working-age population of Wales presents a real challenge for us. By 2035, the proportion of adults living with a limiting lifelong condition is expected to increase by 22 per cent, while, at the same time, there will be 48 people over the age of 65 for every 100 people of working age. Cabinet Secretary, what steps is your Government taking to ensure that Wales can afford to care for its ageing population?

The ratio of people of working age to people who have retired is a very important one for all western economies. The Member will I'm sure be aware that, 50 years ago, people drew attention to this issue and said that the ratios were moving in the direction of there being more people of retirement age. There were five people of working age to every retired person 50 years ago; we're now closer to a ratio of 2:1. And, yet, we have managed to create an economy that allows us to celebrate the fact that people are living longer and that we are able to go on supporting them. So, the problem is not insurmountable. There are ways in which we can continue to grow the size of the economy, albeit that there are fewer people of working age within it, in a way that allows us to go on providing for that higher number of people in the population who will be beyond working age. There is a whole series of ways in which we've succeeded in doing that over the last 50 years and we must take some confidence from that, challenging as the issue is, that we will find ways of continuing to do that into the future.