EDINBURGH – Scotland’s ageing population is set to place “significant and growing pressure” on public finances over the next five decades, with health and social care forecast to consume more than half of the devolved Scottish budget by the 2070s, according to a stark report from the Scottish Fiscal Commission (SFC).
The independent economic forecaster projected a persistent £1 billion annual gap between funding and spending, driven largely by an accelerating demand for healthcare and stagnant trends in public health.
Unless healthy life expectancy improves markedly, the SFC warned that the combination of a rising median age, declining population health, and rigid fiscal constraints will make the current funding trajectory unsustainable.
A long-term crunch
The SFC’s 50-year fiscal sustainability study painted two diverging futures: one where public health improves and budget pressures ease slightly, and another where life expectancy stalls or declines, leading to spiralling health costs and deeper spending cuts.
“Scotland faces a real challenge in terms of its overall fiscal sustainability because of this twin challenge of an ageing population and also an unhealthy population,” said Prof Graeme Roy, chair of the Commission.
Under current projections:
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Health and social care spending, now around 40% of devolved public spending, will grow to just under 55% by 2074–75.
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The median age will climb from 43 in 2029–30 to 49 by 2074–75.
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The £1bn annual fiscal gap, equivalent to 1.2% of GDP in 2024–25 prices, will persist unless policy changes are made.
Migration offsets decline, but not enough
Contrary to earlier projections, Scotland’s population is now expected to increase steadily until 2050, due to higher-than-expected inward migration. This growth will delay — but not prevent — the challenges associated with a rising proportion of older, more care-dependent residents.
Despite migration gains, deaths are still projected to outnumber births, and life expectancy has stagnated since 2012. More worryingly, healthy life expectancy (HLE) — the number of years lived in good health — has been declining since 2018.
Two futures, one tough choice
The report models two key health scenarios:
| Scenario | Key Outcome |
|---|---|
| Improved Health | Health spending still rises, but budget gap narrows. |
| Declining Health | Wider funding shortfall, deeper pressure on all other public services. |
The Commission cited rising mental illness, deepening regional health inequalities, and socioeconomic divides as major risks. “Health inequalities in Scotland remain wider than in England,” the report noted.
Political and fiscal repercussions
With no power to borrow for day-to-day spending, Holyrood will have to either cut services or raise taxes, warned the Commission. That message was echoed by David Phillips, head of devolved finance at the Institute for Fiscal Studies (IFS), who said Scotland was heading toward a fiscal trade-off:
“Households are likely to face a choice between higher taxes or a state investing less in public services,” he said.
Even Scottish independence, he added, would not insulate the country from these challenges.
Government and opposition respond
Health Secretary Neil Gray said the government was “cognisant” of the long-term demographic shift and pledged to strengthen the NHS through improved access to treatment and increased investment.
But opposition parties seized on the report as a warning signal:
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Alexander Stewart, Scottish Conservative finance spokesperson, called it “another damning verdict on the SNP government’s inability to live within its means.”
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Jackie Baillie, Scottish Labour’s health lead, said the report showed that “18 years of SNP complacency is leading our NHS and social care services towards disaster.”
