Hamish McRae: Can we prove Shakespeare wrong and find ways for the old and young to live together?

People selling goods and services to the elderly so often seem stuck in a time warp

Shakespeare believed that crabbed age and youth could not live together, but we do - and politicians have to try to cope with the tensions this creates. To get elected they have to appeal to the young, without turning off the old. And, in power, they have to balance the fact that it is mostly people between the ages of 20 and 60 who do the work - and pay the taxes - while it is the young and the old who rely on them for education, health care and pensions.

You can see all this in the efforts of David Cameron. Quite aside from his own youth, he has sought to rebrand the Tories as the party of the future, hence his "You were the future once" jibe to the Prime Minister during one of their early exchanges. But this week he has moved to recognise that demographic power is shifting to the soon-to-be 60-somethings, the baby-boom generation born just after the Second World War. The demographic balance is tilting towards older people, not just because people are living longer, though that is part of it. It is tilting also because so many babies were born 60 years ago.

But David Cameron, like anyone trying to sell a product to the old, has a problem. It is to try to understand what the old want. The "new old" are different from the "old old". The "new old" were the youth of the 1960s, that great watershed in British social attitudes. It was the time of the pill, early Stones, student riots - utterly different from inter-war mass unemployment, the war itself and post-war reconstruction.

People selling goods and services to the elderly so often seem stuck in a time warp. You can see this in advertising, where the elderly are either patronised as vigorous crinklies or jeered at as Colonel Blimps. You could even catch some of this dissonance in a picture of David Cameron visiting the Age Concern centre in Hackney where he made his speech about the elderly on Monday. He was watching elderly people doing a Tai Chi class. I suspect that most of the elderly in Hackney would rather that they lived in a less dysfunctional borough than spend their time doing some odd Asian exercise programme.

All right, that is a bit unfair, as the two are not mutually exclusive. You ought to be able to have exercise programmes and lower crime at the same time. But the bigger point surely stands. Next time you see a product or service advertised for the elderly, just filter it for any hint of condescension or worse, sneer.

The problems that thirty-something advertising executives have in getting in tune with this "new old" is mirrored in the difficulty of a just-40-year-old party leader. But his problem, and of course that of the present Prime Minister and Chancellor, is compounded by the adverse fiscal maths. The resources available will tend to decline, while the demands will tend to rise. Managing and, where possible, mitigating this tension will be the key task for European politicians for the next 30 years.

You can see this tension more starkly in France than in Britain. The elderly there benefit from extensive public services, early retirement and pretty good public pensions, while those already in jobs have considerable security of employment. But the young, even the well-qualified young, are shut out. This is not just a taxation/public spending issue. It is also a regulatory one. If it is hard to get rid of staff, you try not to hire new ones if you can help it. Qualifications help a bit but not much. Half the students with masters degrees from French universities are unemployed a year after graduating.

So people move. Elderly Britons move to France to retire, while young French come to Britain to work. I think we get the better side of the bargain.

But if we have, in some measure, managed to curb the tension between young and old, partly thanks to our flexible labour market, we have to do much more to make sure that an ageing population is indeed an opportunity rather than a threat.

A big part of this is keeping people in some form of economic activity. Lots of things are happening already: supermarkets staffed by over-50-year-olds, companies offering more part-time shifts for older people, the anti-ageist legislation and so on. More controversially, for many older people the carrot of additional earnings is being backed by the stick of uncertain or inadequate pensions. Something close to half of the additional supply of labour in the UK is coming from older people returning to work or staying in jobs after normal retirement age - much of the rest, of course, is immigration from the new EU member states.

The obvious line for policy is to figure out ways of pushing this further; nearly always, the policies that are successful are those that reinforce an existing trend. We should remember, too, that much of the contribution of older people to the workforce is in the form of voluntary work. The fact that people are not being paid does not mean the jobs they are doing are not worthwhile: sometimes very much the reverse.

Technology helps too. The obvious fact that anyone with internet access can slot into a company system ought to make it easier to buy intellectual piece-work. You buy in the skills from wherever they happen to exist, rather than having to have on-site staff to do the work.

But the truth is that we are in the very early stages of this shift to the workforce being not just older, but having to operate in a much more flexible manner. We don't know the limits to these new work practices, or the extent to which some will be excluded. For example, close to 12 per cent of the workforce in London and the South-east is a teleworker, either working from home on-screen or working from a variety of locations using home as a base. As broadband becomes almost universal I suspect that trend is growing very fast and it is a pattern of work that ought naturally to suit older people. But we don't know whether in 20 years' time, when demographic pressures are much more extreme than they are now, whether this will be 20 per cent or even 25 per cent. Nor do we know what proportion of the population will want to join in but are excluded because of a lack of skills. In fact, we don't even know what skills we will need: all we know is that older people will have to be retro-fitted with whatever skills the market then demands.

We also know that the more successful we are in keeping older people in some form of economic activity, the less the heat will be on the young to pay for their welfare services, pensions and other needs.

Finally, although this is certainly a political and economic issue, it is not just about politics or economics. What really matters is not just that older people are successfully encouraged to work longer so that young people do not have to pay additional tax. It is about how different ages interact happily with each other. It is about balance in society. It is about encouraging not-quite-so-crabbed age and youth to live together. It is about proving Shakespeare wrong. Big task.