Dose of reality needed over ageing population

ALL EYES at Holyrood are on the independence referendum. Yesterday, the sparring continued as pro-Union figures began a weekend’s campaigning out in the community.

At the Scottish Government, say insiders, the entire machine is preparing for the One Big Thing.

However, with MSPs preparing to head back to the Scottish Parliament next week after their summer break, other issues are also rearing their head. The parliament’s mostly unwatched finance committee is currently leading an inquiry into the ­issues raised by demographic change. Last week, a series of papers from leading ­players in the NHS, local government and the rest of the public sector were made public, for MSPs’ consideration. They ­reveal another side to Scotland’s political battleground, and one that cannot be ­ignored as the country decides its constitutional future.

The committee’s inquiry centres on the well-known fact of Scotland’s ageing population. Like most other developed nations, Scotland is getting older. The baby boomer generation is now reaching retirement and is happily living longer than previous generations. The papers handed to the ­finance committee provide a glimpse of the challenge. The National Records of Scotland believes that while the working population will increase by 7 per cent up to 2035, the number of pensioners will go up by 26 per cent. The ­really big increase is over-75s, whose ­numbers will rise by 82 per cent.

While estimates vary on what the impact of Scotland’s greying will be, they have one thing in common: everyone thinks it will be massive. “Monumental”, is how East Ayrshire Council describes the change. “Spectacular,” declares Improvement Scotland (IS), an influential local government body set up to examine better ways for public services to be run.

Others offer some tangible examples of what will be required if NHS Scotland carries on in its present form, happily scooping up our ailments and problems, and parking them in the nearest hospital. “If hospitals continue to admit over-75-year- olds at current rates we will need twice as many hospital beds in 20 years,” says NHS Ayrshire and Arran. “The number of people with one or more long-term conditions [in old age] could increase from around 289,000 to just over 519,000 individuals in 2035,” adds the Royal College of Nursing.

None of this is especially new, but what has been seen largely as a theoretical problem is about to get very real. The submissions also point to the two big ­extra factors which are making this demographic time bomb particularly explosive.

First is the crisis in the public finances. Last week, it emerged that far from paying down the UK debt, Chancellor George Osborne may have to borrow £10 billion more this year than last for welfare and departmental spending, with the hoped-for upturn in the economy having failed to materialise. The fact the Government cannot afford to pay on its own for the cost of the state means it has little choice but to demand further cutbacks in order to convince investors that it isn’t going the way of Italy or Spain. A new spending review has being scheduled. IS declares in its submission that, for the Scottish Government, it may be that those extra cuts, due in 2014 or 2015, will shave a further £1bn off their £30bn pot.

Secondly, there is the fact that Scotland’s public sector is automatically geared to become more and more costly every year. The boom years of the noughties allowed the new Scottish Parliament to splash out – spending cash on generous pay deals and a series of free entitlements to people across the country. Combine this system with the demographic changes above, and you get cost squared. The bill for pledges such as free personal care and concessionary travel are going through the roof. As we report today, the Association of Directors of Social Work reckons that social care spending on older people will double over the next 20 years. It also provides new Scottish Government figures which show that the cost of health and social care will need to rise by as much as £600m by 2015, compared to the 2010 figures.

The unaffordability of this system has been well analysed. An independent review of public sector spending headed up by the former chief executive of Scottish Enterprise, Crawford Beveridge, declared: “While this expansion could be accommodated when budgets are rising, it is ­unsustainable in the face of projected significant budgetary cuts.” He wrote that two years ago, when an upturn in the economy was still expected. Two years on, how are we placed? And what is being done?

SNP ministers insist they are planning for the crisis. Short-term, Finance Secretary John Swinney has already put the brakes on, having implemented a pay freeze for the last two years (although he has already said that “we may be able to see modest increases” from April next year). Targets on efficiency savings have also been pushed through. In the medium-term, the SNP Government is also acting on recommendations to integrate hospital and social care services so they work better together – by, for example, ensuring that an elderly person in hospital quickly moves back to less costly community care rather than “blocking” a bed.

Furthermore, for the long-term, and to try to reduce that crippling extra demand which will fall on services, Swinney has allocated £500m over the next three years to pay for new “preventative” schemes. This is the government equivalent of a regular service of the family car – the theory being that by spending money now when things are working, the taxpayer will save in a few years’ time when things don’t break down. Ideas include better home care for elderly people which helps them to steer clear of unnecessary and expensive hospital care, or more “early years” support, so that troubled 0 to 5-year-olds are given special attention in the hope of getting them on the right track, or even health checks for 40-year-olds, designed to correct poor health habits before they turn into long-term ill health at 60.

But, if the papers handed into the ­finance committee are anything to go by, it is not nearly enough. A cursory reading reveals the growing scepticism across the public sector about Scotland’s readiness for the coming storm – both in the short and long term. As noted above, ministers agree that the long-term problem – the enormous extra burdens soon coming on the system – require a complete change in the way the system works. The problem is, according to some of the submissions, that hospitals and councils are too busy fire-fighting today’s problems to worry about tomorrow. “The key issue,” notes Edinburgh City Council, “is how to free up funding for investment in prevention to reduce future increases in demand when available budgets are under pressure to meet existing levels of demand.” It is not optimistic of its chances.

Swinney has put up £80m this year into a “Change Fund”, a pot of cash designed to smooth the path for reform. But, says ­Edinburgh, that is “too small to fund the double running costs involved in developing prevention at the same time as meeting existing priority needs now.” NHS Greater Glasgow adds that the costs incurred by an older country mean, inevitably, that preventative efforts will be thwarted. “By responding to demographic changes by extending current models of health care to more older people with long term conditions it is unlikely we can realise aspirations to shift resource to preventative spend and early years,” it declares.

So the attempt to prepare for the long-term challenge facing Scotland – which everybody agrees is there – is already struggling. Unfortunately, the documents published last week show that people have little faith that even the “fire-fighting” ­efforts to support the system in the short-term are enough. The submission from Improvement Scotland (which begins with a quote from Keynes declaring: “In the long-run, we are all dead”) warns that the short-term funding crunch confronting Scotland has basically been ignored. It is as if the country is planning for the consequences of global warming, without bothering to think about the asteroid about to strike.

And IS says ministers can no longer ignore the costly policies that are sucking cash out of the system – starting with all the freebies and entitlements devolution has provided. Free personal care and free travel for older people should be the first to be examined, the IS paper says. “The argument is not with these policies and all other things being equal: they were introduced at a time when public budgets were growing at 4+ per cent per annum and were quite proper for their time. The question is their sustainability and priority in a period where budget will decline in cash and real terms.”

Contentious? Yes, of course. But then so is the alternative. Even without independence, it is just four years, notes IS, until Scottish ministers get substantial new powers to raise or lower income tax, when new Scotland Act powers kick in. Keeping the universal freebies for the over-60s, IS notes, would mean “increasing taxation of working age people with low incomes to fund free entitlements for older people with higher incomes”. That may well be a choice that people in Scotland will back. But shouldn’t there at least be a debate? The trouble is, as IS notes, all the political parties at Holyrood are signed up to such popular policies. At a time of unprecedented austerity, that needs to be re-examined.

Peter MacLeod, the president of the Association of Social Work, adds: “Free personal care is quite correctly described as a flagship policy. But there is a question of affordability because it is not means tested. My opinion is that where people can afford to pay then we should consider that as a way of assisting with the wider cost pressures.”

MacLeod believes it is time for the Scottish Government to copy the UK Government by ordering a wholesale review of the funding of care and support as has already happened in England. That review south of the Border, led by Andrew Dilnot, recommended that people should pay £35,000 and no more to the cost of their care. The figure is set both to protect individuals from losing all their savings as they struggle in old age, and to protect the taxpayer from utterly unsustainable costs.

In response, Scottish Government officials insist that, no matter the problems ahead, their reforms and efficiency savings mean it can continue to afford the entitlements. The weight of evidence handed to the Parliament’s finance committee last week would suggest the opposite. A paper from GPs urges ministers to consider “honest, accurate and realistic forward planning not planning based on un-evidenced based magical thinking”.

It has been a magical summer of games. But, if the finance committee’s evidence is anything to go by, a dose of realism is required from the politicians this autumn.