Tory policy is priming Scotland’s demographic timebomb
We have long argued that one of the benefits of Independence, or full fiscal autonomy, is having a government that makes decisions tailored to deal with the reality in Scotland, in contrast to the current ‘broad shoulders’ approach whereby decisions are made for the benefit of the UK as a whole. This is because each region of the UK has a different set of problems to solve and advantages to capitalise on.
A particular problem that is greater here than it is for the UK as a whole is one of demographics. In short, the amount of pensioners we have is growing much faster than the amount of working people we have. This is a major issue as, contrary to how some may understand the system, the government doesn’t save and invest our money for us so that we can collect it when we retire. There is no pension pot. The money to pay current pensions comes from the National Insurance contribution of current workers.
The number of people of pensionable age and over is projected to increase over the next 25 years by 300,000 to reach 1.36 million.
Over the same period, the working age population will only increase by one per cent – about 40,000 – to 3.42 million.
It means the dependency ratio – people aged under 16 and of pensionable age and over, to those of working age – is projected to rise from around 58 dependants per 100 working population in 2014 to 67 per 100 in 2039
According to the UK government the problem will increase much more dramatically in Scotland. Their solution as detailed in this report is that we can pool and share resources.
Pensioners make up 19.8 per cent of the population in Scotland compared to 19.2 per cent in the rest of the UK. By 2032, based on Office for National Statistics population projections, this gap will have doubled, with Scotland’s pensioners making up 22.0 per cent of its population compared with 20.8 per cent in the rest of the UK. The UK’s broad tax base will help to mitigate the challenges from an ageing population in the decades ahead
One government policy that is just about to come into effect is going to exacerbate the problem further in Scotland. From April, non EU foreign workers are going to be deported if they earn less than £35,000 a year. It is a deliberate policy to try to reduce migration which the government feels is too high. However, higher migration, especially of skilled workers is exactly one of the things Scotland needs to solve its demographic problems.
The policy is going to force the exodus of many valued workers, as despite what the Tories may think, most people earning less than 35,000 are not a burden on society. This is a decision that will affect teachers, engineers and health workers.
Retaining skilled non EU foreign workers was already made more difficult due to the recent changes making it harder to obtain a graduate work visa.
Now, from a Unionist perspective these changes may make sense for the UK as a whole. National Insurance deficits in Scotland can be made up by higher taxes elsewhere in the UK. However, with this and many other issues, I would like to see bespoke Scottish solutions and this requires much more power than we currently have. Not only could a more fiscally responsible Scotland set conditions for favourable levels of skilled immigration but we could also choose to increase our National Insurance payments. Or we could change the whole pensions system and shake up the way we collect for our retirement.
Many would say that an Independent Scotland would be incapable of doing better than the current UK system. However, given that UK pensions are the worst of any major economy, I think this opinion shows a lack of ambition and imagination.
The way Scotland’s economy is performing currently within the UK leaves us with two choices: we either carry on the way things are with no solution to the mess we are in but with the rest of the UK supporting us. Or we take control of our own affairs and implement policies which resolve our unique problems.
Please comment below and enter an email address to receive notifications of new articles. Also, if you enjoy our content you can support the site for less than one pound per month by clicking here.