There are reports today that an independent Scotland would face a ‘timebomb’ from increasing numbers of older people. Scotland on Sunday mangled the figures when it reported that “an independent Scotland would have to increase the proportion of GDP spent on welfare from the current level of 14.4 per cent to around half.” That would be three-and-half times current spending. This is obviously wrong, but I’m not going to criticise – one of the hard lessons I’ve learned from writing this blog is that it’s all too easy to jumble figures from different calculations before hitting the ‘send’ button. (And yes, I confess, I just did that again on the first version of this very post.)
The actual increase that’s being reported is that the ratio of pensioners to workers will double, going from 25.8 pensioners per 100 workers to 51.7 by the year 2060. (The figure for the rest of the UK is 45.9). If that is translated into public expenditure at current rates – which probably won’t happen – it implies that two workers will need to pay for pensions what four workers pay now. As pensions currently cost half the ‘welfare’ budget, that implies a 50% increase in that budget, not a 250% increase. There’ll be increased calls on health and social care, too. These are contingencies that need to be planned for, but none of them is catastrophic.
I’ve previously considered the general principles of managing the costs of an ageing population in this blog.