The world's most-read Scottish politics website

Wings Over Scotland

Can we afford old people?

Posted on October 19, 2012 by

Scotland has been aflame with talk in recent weeks of whether universal benefits are sustainable or not, and in particular those which apply to our elderly. But there’s an enormous falsity at the heart of the position taken by the Unionist parties, because they refuse to consider independence as a possible solution and base their argument on the premise of a bankrupt UK constantly slashing the Scottish Government’s block grant for the forseeable future under a programme of savage austerity (which would be the same regardless of whether the Tories or Labour were in charge).

There is, of course, an alternative. By most sane assessments, an independent Scotland’s economic starting position would be pretty similar to that of the UK. Both sides of the debate quibble over a percentage point here or there, but the reality is that at least to begin with the amount of money in the pot would be more or less the same.

(Move a few decades into the future and an independent Scotland will either be drowning in wealth from a world-beating renewable energy industry, or crushed by debt because all the oil’s run out, depending on your ideological persuasion.)

The point the No camp must doggedly and repeatedly turn a deaf ear to, however, is that while an independent Scotland might not have vastly more money to spend than it does now, it wouldn’t have to spend it on the same things.

By almost any account you care to seek out, Scotland as a part of the UK vastly overspends on defence. Or at least, the UK vastly overspends on its behalf. Two different independent reports in the last year have concluded that were Scotland to control its own defence budget and spend similar proportions of national income on it to comparable countries, it would save around £1.5bn a year.

(This in itself seems quite a conservative estimate and allows for a considerably larger armed force than many Scots believe would be necessary for a small country with no pretensions of “punching above its weight” on the world stage, but we’ll stick with the neutral figures to avoid any arguments.)

How, then, might this impact on the affordability of universal services for the elderly? Let’s focus on the most expensive – free personal care. The media has been full of horror stories for some time about the rising cost of this policy, which has rocketed since its introduction in 2002, though nobody seems able to say by exactly how much. The BBC story linked in that last sentence claimed a 150% rise in seven years – from £133m in 2003/04 to £342m in 2010/11 – but Community Care put the 03/04 figure at £194m, which would mean the increase was only half as much (76%).

But to keep all the gloom-and-doom-mongers happy (if that’s not a contradiction in terms), we’re going to investigate the worst-case scenario. If we strip out the effects of inflation to get to the real-terms increase, the figures quoted by the BBC represent a rise of 11% a year. So what happens if the cost of free personal care continues to soar on that trajectory for the next 20 or 25 years?

(It won’t, because the population isn’t going to increase and age infinitely – we’re not going to suddenly start living to 180 – and the cost of care actually FELL by £16m from 2009 to 2011, but remember we’re painting the bleakest picture possible here.)

The extra cost of free personal care for the next two decades would come out like this:

2012: £38m
2013: £79m
2014: £126m
2015: £177m
2016: £234m
2017: £298m
2018: £368m
2019: £446m
2020: £532m
2021: £629m
2022: £736m
2023: £854m
2024: £986m
2025: £1132m
2026: £1294m
2027: £1474m
2028: £1674m
2029: £1896m
2030: £2142m
2031: £2445m

So to pay for free personal care over the next 20 years assuming those worst-case 11% annual (and compound) rises, then, we’ll need an extra £17.53bn. That sounds like a lot of cash to have to find – until you remember that in our independence scenario we’ve also saved £30bn over the same period from the defence budget.

In other words, even if we take the gloomiest figures available, and project a staggering, extremely unlikely cost increase of 11% every single year, an independent Scotland could afford to fund universal free personal care for the elderly for the next 20 years and still be a minimum of £13bn in profit.

(Which would, as it happens, be more than enough to also cover similar increases in prescription charges and bus passes, with billions still left over. And remember, that’s from defence savings alone, without increasing a single tax.)

Nobody thinks costs will actually rise that much in reality. Earlier this month, in a study widely reported as an apocalyptic warning, former Auditor General Robert Black suggested that costs of health and social care – a statistic that includes far more than just free personal care – for Scotland’s over-65s might rise to £3.6bn by 2030.

Based on the official Scottish Government stats for 2006-07, that’s a far lower figure than the one we’ve calculated above, which gets to £2.8bn on personal care alone. (With social care included too it’d be more like £4.6bn.) Yet even under our far more pessimistic formula the policy is still eminently affordable.

(And this entire analysis ignores the fact that personal care aimed at keeping people in their homes is actually cheaper than looking after them in hospitals, and saves lives by freeing up beds, and that any introduction of means-testing will mean spending money on bureaucracy that could have been used for healthcare. We’re keeping the maths as simple as possible for the benefit of any Labour front-benchers reading.)

It may well be the case that Scotland can no longer afford to look after its old people if it stays in the Union. We’re happy to take the word of the Unionists on that – they should know, after all. But then, we don’t have to stay in the Union.

In 2014, we’ll get to choose between using our money to care for our own people or usng it to drop bombs on other countries’ people. Is that really, as Johann Lamont and chums would have it, a “tough choice”? Not from where we’re sitting it’s not.

Print Friendly, PDF & Email

23 to “Can we afford old people?”

  1. James T

    OAPs should be looked after. It’s morally correct. We should nationlise the Energy industry up here. The audience on Question Time certainly want that. Cheaper energy bills would most certainly help the OAP’s.
    As to QT itself…at only one point did I see Nicola Sturgeon in real trouble (the releasing of the advice from the EU on Scotlands position with ‘joining the EU’). Margaret Curran got battered. Ruth did all right, but still took the odd hit. But it was the Union Leader, Sawortka (is that how you spell it?)…I thought he was excellent. spoke a lot of sense. And he’s seems in a very quiet way to be saying that he would advocate Independence (even if it means splitting the union in the UK) if Scotland did create a fair and social country instead of the Neo-Con Liberal society that we have the now. 

  2. James T

    In fact, if the SNP made it one of their vanguard policies in saying that they would nationalise the power companies in an Independent Scotland, then the SNP would walk the Referendum!!

  3. Scott Minto (Aka Sneekyboy)

    Dont worry Rev,

    I was talking to best friend of the brother of a dog walker who works for one of the dinner ladies that serves the PA to Jeremy Hunt, and I have it on good authority that they have planned for this…

    The Condem back up plan is to release a new strain of Spanish Flu so as to curb the plebs population…

    They will knock out the Elderly (saving on benefits) and the young (saving on education costs). And anyone of working age that dies will be freeing up a job for one of the pleb benefit scroungers…

    Honest… 8)

    And with contacts like that we could probably call it “a source within the government” if we were a Unionist rag.

  4. Doug Daniel

    That last article you linked to reminds me that, no matter how ugly Holyrood can get sometimes, it’s still an infinitely better place without that moron, Andy Kerr. He was my favourite Labour ousting of the whole 2011 election.

    James T makes an interesting point. If the SNP came out and said “under independence, we will NATIONALISE ALL THE THINGS” (to use a meme all the hip youngsters use these days), this would put the frighteners on the business leaders etc that the SNP have so far been trying to reassure about independence, but could it be the killer policy that sees undecided voters switch to independence? Two of the biggest gripes people have these days are public transport ticket prices and energy bills, and it’s the one policy that seems like a complete vote winner which none of the neoliberal parties will touch with a barge pole.

  5. panda paws

    Sorry James T to be pedantic but we need be careful how we phrase things or cyberbritnats will pounce. The SNP aren’t contesting the referendum, it’s not a party election so they can’t “walk” it.  
    While I know what mean too many “flamers” are already talking about “SNP dictatorships” and so forth. This week a woman I know said she’d leave Scotland if “Alex Salmond got his way”. (No not Michelle Mone!)
    The referendum is about whether Scotland chooses it’s government or whether they get a government choosen by the English majority in the UK. The “flavour” of that self government is a related but separate matter.  Not getting at you, but the Guardian website comments this week has illustrated how important it is to not give them a stick to beat you with.

  6. Christian Wright

    Scott Minto (Aka Sneekyboy) : “.  . the Condem back up plan is to release a new strain of Spanish Flu so as to curb the plebs population… They will knock out the Elderly (saving on benefits) and the young (saving on education costs). “

    Ironically, and alas alack, that dastardly fiendish plan is doomed to failure since it is a (near) unique feature of Spanish Flu that its victims are predominantly young healthy adults of working age. Old fogies and juveniles remain relatively unscathed.

  7. Scott Minto (Aka Sneekyboy)

    You are right there PP.

    The debate level has dropped due to deliberate flaming on the issue.

    They are trying to disrupt the discussion and muddy the waters.

    Why listen to answers when you can post 50 questions and then answer every reply with insults and subsidy junkie claims…

    It is getting very tiring, but we cant let them get to us!

    Just keep posting the facts and hope that you can even make one person lok at the situation and see that the Unionist version doesnt add up.

  8. Scott Minto (Aka Sneekyboy)

    @Christian Wright

    Since when have any of the coalition plans done anything other than the opposite of what they intended?

    Oh well, I’m sure they will come up with something and no doubt but a homeopathic “cure” from a tory donor for the NHS in England.

  9. Arbroath 1320

    Sorry Stu I’m O/T here, I meant to post this story yesterday but forgot.
    This morning Guido has gone one stage further and has started to name the first of the Westminster “troughers” who are behaving in this underhand and despicable way.
    As he says there are a lot more names to come.
    I find this attitude by M.P.’s utterly disgusting.
    These are people who are, allegedly, elected to look after the interests of their electorate. Instead of which they are looking after themselves, sod the electorate!
    How many elderly people will have to go without proper care to ensure that these money grabbing ******** get away with this latest form of financial fraud. As Guido says, if you or I were to do such a thing we’d be behind bars, but because these “individuals” are M.P.’s they, quite literally, get away with murder.
    Utterly disgusting!
    Rant over, normal service will now be resumed. 😀

  10. David Smith

    “This week a woman I know said she’d leave Scotland if “Alex Salmond got his way”.

    Isn’t she being a little presumptious in assuming AS would find her attractive? 😉

  11. Arbroath 1320

    Just a quick update to my last post.

    From the Telegraph’s article it would appear that there are at least 27 M.P.’s involved in this disgusting underhand way of increasing their financial income from Westminster. Whilst the Telegraph says that the M.P.’s concerned are not actually doing anything wrong that still does not make it right either, particularly on the moral front.
    Working from the Guido and Telegraph articles I reckon that these “troughers” are pocketing between £27,000 and 81,000 amongst themselves. That’s £324,000 to £972,000 per year. Now some one pleaser tell me that this money could be far better spent looking after our elderly!

  12. Cathy Mcrorie

    I wish Scotland had its own news programme on TV in order to counteract all the scare stories from Unionist & MSM. Twitter & Facebook are great but not everyone uses them for info.The challenge for Independence is how do we inform  the minds of a brainwashed population. without a media forum

  13. Juteman

    Maybe the Labtories are planning to turn the Olympic village into a camp?
    If you concentrate all the old folk and spongers in one place, you could give them some useful work to do to earn their keep. 

  14. james morton

    Yeah tough choice – pay for old people to be treated with dignity or spend it on two aircrat carriers you can’t afford, but will build because it would be to expensive to cancel them. Not that it matters as we don’t have any aircraft to go on these carriers nor will we have servicemen to crew them. But if we’re to be seen as a serious nation & have a place at the top table we need to have the trappings of power, even if we actually can’t afford it.

    What complete and utter tosh

    I really can’t wait to be rid of westminster

  15. An Duine Gruamach

    Doug –  I believe noises were made in that direction regarding the railways.

  16. Lewis MacKenzie

    There is indeed an enormous falsity at the heart of this debate, but I don’t think it’s strictly the one you point out. The question of whether or not we will be able to furnish our seniors with a decent standard of living in future years is not a question of whether or not we will have the money to do so (assuming an independent Scotland does the sensible thing and institutes its own currency, it will always have the power to purchase anything offered for sale in that currency), but whether or not we will have the real resources. It’s therefore a question of ensuring that future generations of workers are productive enough to supply the goods and services that that will deliver that quality of life for our auld codgers in the future. Of course if we follow the “prosperity-through-impoverishment” strategy of austerity and mass youth unemployment that the three major Westminster parties favour, that isn’t going to happen: Long term youth unemployment impacts negatively on young workers throughout their entire lifetimes and is transferred through the generations onto their children, too. The key to ensuring that we can continue to “afford” to have old people in the future is therefore to enact full employment policies now.

  17. panda paws

    David Smith – brilliant!

  18. YesYesYes

    Another excellent post.
    Could I throw something else into the mix which doesn’t get the attention that it deserves. We know that since the late 1970s, successive UK governments have squandered oil resources (not my words, but the words of Nobel prize-winning economist Joe Stiglitz). We also know that, since 2006, the UK has been a net oil importer. But why has this happened?
    We often hear a lot about the ‘economies of scale’ that Scotland allegedly enjoys by being part of the UK. What we don’t hear so much about are the diseconomies of scale that Scotland suffers from as a consequence of being part of the UK, and the oil balance is a good example. To understand why the UK has seen such a spike in its demand for oil and why oil reserves have increasingly been exhausted by UK governments over the last 40 years, we need to look at the comparative population changes in Scotland and England in this period.
    England 1971: 45.9 million – 2011: 53.0 million

    Scotland 1971: 5.2 million – 2011: 5.3 million
    In the 40 years between 1971 and 2011, England’s population has increased by 7.1 million (15.5%), while Scotland’s population has increased by only 100,000 (1.9%) in the same period. In other words, in the last 40 years, in per centage terms, England’s population growth has been some eight times the population growth of Scotland. Numerically, though, the growth of England’s population has been 71 times higher than the growth in Scotland’s population.  And it’s this increase in England’s population that helps us to explain why the UK is, today, a net oil importer. For virtually all of the UKs increased demand for oil in the last 40 years has been caused by the (comparatively) huge increase in England’s population in the same period.
    The problem for an energy-rich country like Scotland is that, if we remain part of the UK – and with England’s population projected to increase even higher than Scotland’s in the future – we are going to pay increasingly higher costs for our oil as the price of oil imports increases in the future. An independent Scotland, on the other hand, even on present oil reserves, would not need to import any oil and so would not pay any higher costs for imported oil. On the contrary, even on present reserves, an independent Scotland still has enough oil reserves to not only be self-sufficient in oil for the next 40 years or so, but to also be a net oil EXPORTER, a period when energy security is going to be one of the most critical political and economic issues in the twenty-first century.
    One final thought. Look at the data again for the comparative changes in Scotland’s and England’s population between 1971 and 2011. What this tells you is that Scotland urgently needs to have its own migration policy, particularly as the population of old people is projected to increase in the first half of this century. But the only way that Scotland can have its own migration policy is with independence. If we remain part of the UK, then England’s population is going to increase further while Scotland continues to see no or little growth in its population. A situation that can only continue to impoverish Scotland further if it remains part of the UK after 2014. 

  19. ronald alexander mcdonald

    Old people-kill them off!

    Seriously, this is where we can win the referendum. If we consider free university tuition fees, free personal care for the elderly, free prescription charges and free bus fares for the over 60’s. In total costs circa £800m a year, in todays terms. Alllready been costed, and relatively trivial when you consider the total annual budget.

    We can save £1.5bn a year on defence. If we restricted tax relief on pension contributions to basic rate tax we would save £500m a year (source HMRC-2011). That’s £2bn a year.

    We could e.g. provide a fuel allowance of £200 a year for EVERY scottish household, to pay £50 per month (mid nov-mid march) to tackle fuel poverty.   How many households in Scotland- 2 milliion? Total cost circa £400m a year.

    That would leave us with an extra £1.6bn a year to Invest in capital projects , that could create an extra 100,000 jobs? ALL that without borrowing any extra money, in todays terms!



  20. squidge142

    Thanks for that – clear and unambiguous – more economics pieces like this would help me massively

  21. james morton

    @ Lewis MacKenzie yes – good point well made. It’s not enough to ditch westminster, it has to be a complete break from the business as usual mentality. A fresh start and whole new approach as to how we do things.

  22. James T

    Panda Paws.

    I know mate.  No offence taken. Just bloody annoyed. I actually had just watched Question Time first thing this morning before going to work. As I said, I thought the Union boy was good. Spoke a lot of sense.
    In my own opinion, if Scotland did become Independent, it would be one of the first things I would do…nationalise all those things that were privatised.

    I bet you the Norwegians never privatised half of their industries.

    Bloody Thatcher……      

  23. john king

    Ronald Alexander McDonald says
    “We could e.g. provide a fuel allowance of £200 a year for EVERY scottish household, to pay £50 per month (mid nov-mid march) to tackle fuel poverty.   How many households in Scotland- 2 milliion? Total cost circa £400m a year.”
    Wow the energy companies would LOVE that, £400m of free money?
    they would just put their prices up to absorb that little windfall.

    No the previous poster who said re nationalize got it right, stop spending money for these companies to take it abroad, and provide power at an affordable price,
    unlike railways, everyone needs power so its only right all should share in the cost/benefit.

    Power is probably the easiest thing to make totally democratic, the more you use the more you pay, and not this horrible attitude current providers take against the poorest people in society that if they cant afford their ridiculous prices then whats the answer?
    yes lets make it even more expensive by imposing power card meters on them,
    only in power rich Scotland sheesh!

Comment - please read this page for comment rules. HTML tags like <i> and <b> are permitted. Use paragraph breaks in long comments. DO NOT SIGN YOUR COMMENTS, either with a name or a slogan. If your comment does not appear immediately, DO NOT REPOST IT. Ignore these rules and I WILL KILL YOU WITH HAMMERS.

↑ Top