The latest report from the Scottish Fiscal Commission, led by economist Graeme Roy, offers one of the clearest warnings yet: demographic change, rising health costs, and faltering productivity are aligning into a slow-motion disaster. Add to that a political class more interested in managing headlines than balance sheets, and the conclusion becomes unavoidable—Scotland’s devolved spending model is broken.
Mild voices, loud warnings
Roy, alongside Stephen Boyle, the Auditor General for Scotland, represents the country’s unofficial fiscal conscience. Their offices are tasked with producing cold, impartial data—numbers, trends, projections. Yet their findings, particularly over the past five years, have grown louder and more urgent.
The recent 50-year outlook on public finances from Roy’s commission paints a bleak picture. It’s not just that spending pressures are rising—it’s that the structural ability to meet them is eroding, year after year.
“If these reports could speak,” one insider quipped, “they would produce one long scream of alarm.”
The demographic crunch is here
The numbers are stark:
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Scotland’s population is now expected to grow, not shrink, over the next 25 years—but it’s aging fast.
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The 75-84 age group will increase by 26%.
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The 85+ cohort is expected to almost double—up 95%.
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Meanwhile, the working-age population (16-64)—the segment that drives most tax revenue—is set to decline.
This shift will increase demand for health and social care, while simultaneously reducing the number of taxpayers who can fund it. And since a key portion of Holyrood’s budget is derived from income tax revenues, the implications are profound.
The NHS and the fiscal elephant in the room
Scotland already devotes more than 40% of its total resource budget to health and social care. That figure is only going in one direction. Unless major changes are made, health spending will crowd out other public services: education, infrastructure, housing, local government—all at risk of terminal underfunding.
There is no credible plan to address this. Instead, ministers continue to make short-term decisions that deepen long-term vulnerability. While life expectancy in England is rising, it remains lower in Scotland—and even more troubling is the decline in healthy life expectancy, particularly in deprived areas.
A 12-year gap now exists between the most and least affluent communities. That’s not just a health crisis. It’s a policy failure with massive fiscal consequences.
Dependency ratio nightmare
What worries analysts like Roy and Boyle most is not just the aging population, but the dependency ratio—the balance between those who contribute and those who draw from public services. In Scotland, that ratio is tipping dangerously.
As the working-age share of the population shrinks, fewer people will be left to support pensioners, children, and those with long-term health conditions. The result is a triple pressure:
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More people needing care.
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Fewer people paying for care.
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And a political system unwilling to confront the trade-offs.
The Barnett problem
Compounding the issue is Scotland’s fiscal arrangement with Westminster. The Barnett Formula, which determines much of the devolved block grant, is sensitive to Scotland’s share of the UK population. That share is falling.
If future UK governments impose another round of austerity—or if tax receipts fall across the UK—Scotland’s share of a shrinking pie will shrink further. It’s a precarious situation, especially for a government already stretched thin by underperformance across multiple departments.
Political denial and Holyrood’s silence
Perhaps most damning is that these warnings are not new.
Auditor General Boyle has, for years, flagged deteriorating performance across multiple portfolios—health, education, justice, transport. Audit Scotland’s reviews have shown declining outcomes despite rising inputs. Yet Holyrood’s scrutiny structures remain anaemic, with parliamentary committees often cowed by political majorities.
A culture of deflection dominates. For the SNP-led Scottish Government, criticism is often brushed aside as politically motivated. For opposition parties, the temptation is to exploit rather than collaborate. Meanwhile, the numbers get worse.
Time for a Thatcher—or a Blair?
What Scotland appears to need is a moment of political reckoning—one that cuts through consensus and forces reality back into policymaking.
In the 1980s, Margaret Thatcher confronted Britain’s structural economic decline with brutal clarity. In the 1990s, Tony Blair reshaped Labour to match fiscal credibility with social ambition. Scotland may not need their politics, but it needs their courage.
Someone must level with voters: the system cannot go on like this. A fundamental rethink is needed on how public services are funded, how priorities are set, and how delivery is held accountable.
Until then, Roy and Boyle will keep issuing their warnings. And Scotland will keep drifting toward the edge.
