Scottish Fiscal Commission - Fiscal Sustainability Report - April 2025

8th April 2025

The Scottish Fiscal Commission has today said that the challenges in funding healthcare will become more acute over the next twenty‑five years leading to significant pressures on Scotland's fiscal sustainability.

Health is the largest area of spending in the Scottish Budget and it is projected to grow faster than any other area. This is because of an ageing population, growing demands as society becomes wealthier, less scope for saving on labour in the health sector than in the wider economy, and a rise in the prevalence of long‑term health conditions.

The fastest demographic growth in Scotland will be in the older age groups, with the population aged 85 and over projected to almost double over the next twenty‑five years. Since health‑related spending increases with age this will result in higher healthcare spending.

This ageing in Scotland over the next twenty‑five years will be earlier than in the rest of the UK. As a result, we project Scottish Government spending across all areas will exceed funding by an average of 1.6 per cent each year between 2030‑31 and 2049‑50.

The Commission's Chair, Professor Graeme Roy, said:

"Our assessment suggests that future Scottish Governments will face significant challenges funding devolved public services as a result of an ageing population and rising health pressures.

"The Scottish population ageing earlier than the rest of the UK will result in health spending over the next twenty‑five years growing faster than the funding provided through the Barnett formula.

"Improving the underlying health of Scotland's population would lead to benefits to the public finances through lower spending and higher tax revenues and help to address the long‑term fiscal sustainability challenges."

Rising health costs and an ageing population are not unique to Scotland, and also affect the UK public finances. The Office for Budget Responsibility has shown that the long‑term path for the UK public finances is not sustainable. The Scottish Government's spending would be far greater than their funding if the UK Government were to take action to reduce its debt. The projected difference over the period 2030‑31 to 2074‑75 would increase from an annual average of minus 1.2 per cent to minus 11.1 per cent.

Read he full report HERE
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