2.2 Economic implications

It is argued that the ageing population has already had a financial impact in Scotland with local authority’s needing to prioritise service provision, redesign services to maximise efficiencies or externalise work to obtain services at more competitive rates. However, many local authorities have failed to increase spending on social care in line with demand (ADSW, 2013). The challenge for the local authorities is to balance competing community priorities at times where the overall funding arrangements see little or no growth. Consequently, the introduction of initiatives designed to minimise increases in demand are now at the forefront of policy thinking (Christie Commission, 2011). Increases in expenditure are central to this debate and there is one argument that is consistently applied, as Lloyd suggests:

…linked with the rising numbers of older people and anxieties over containing the cost of care, the moral message of health ageing is sharpened so that even though the outcomes of a healthy life may be the enjoyment of a longer life, the primary purpose is to ensure that older people make minimum claims on the public purse.” (Lloyd, 2012 p23).

The economic and financial implications of the ageing population are a well-researched field on an international, national and local scale. A report by the International Monetary Fund in 2008 stated that:

… the major threat to long-term fiscal solvency is still represented, at least in advanced countries, by unfavourable demographic trends.

From a Scottish perspective, much of the literature highlights the importance of this issue. The Office for Budget Responsibility in its fiscal sustainability report of 2011 stated that:

…demographic change is a key source of long-term pressure on the public finances and policymakers and would be policy makers should certainly think carefully about the long-term consequences of any policies they introduce or propose to introduce in the short-term” (Extract from Scottish Government Finance Committee, 2013, p1)

The Association of Directors of Social Work (ADSW) in response to the Scottish Government inquiry into the impact of demographic change and an ageing population (Scottish Government, 2013) provide a detailed cost analysis of the financial burden over the next twenty five years and reported that social care spending on older people would have to double between 2010 and 2035 based on current service models and rates of provision (ADSW, 2013). This figure is corroborated within the Christie Commission report (2010) which suggests that spend on social care currently at £4.4billion will need to increase by £1.1 billion by 2016 and £3.5 billion by 2031.

The Association of Directors of Social Work (ADSW) in response to the Scottish Government inquiry into the impact of demographic change and an ageing population (Scottish Government, 2013) provide a detailed cost analysis of the financial burden over the next twenty five years and reported that social care spending on older people would have to double between 2010 and 2035 based on current service models and rates of provision (ADSW, 2013). This figure is corroborated within the Christie Commission report (2010) which suggests that spend on social care currently at £4.4billion will need to increase by £1.1 billion by 2016 and £3.5 billion by 2031. Audit Scotland (2013) reported that the Scottish Government funding settlement to local authorities for 2013/14 is £9.9 billion, representing a decrease of about 0.2 per cent in cash terms or 2.2 per cent in real terms. Consequently, the actual amount of money councils receive has been cut and the challenge then for local authorities is to balance their funding agreement against competing departmental pressures. ADSW (2013) report that despite this growing consensus that more investment is needed on a scale that will make an appreciable difference, the current budgets that the public sector bodies have are under so much pressure to meet existing levels of demand there is not the scope to develop initiatives further. The growing gap between needs and resources has led to a tighter rationing of care by local authorities, with 85% restricting publicly funded care to those with substantial and/or critical needs (ADSW, 2013). Consequently, social care resources are being directed towards high acuity and relatively expensive services, despite promising evidence of earlier interventions securing better outcomes in the long run (Humphries and Curry 2011). The net result of these trends is that the publicly funded system is becoming more narrowly focused on those with the highest needs (Ham, 2013). Consequently, as a result of the increased demands resulting from demographic change and a decreasing funding settlement, local authorities and their partners are now required to consider different approaches to the management and delivery of health, care and well-being.

Leave a Reply

Your email address will not be published. Required fields are marked *