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Ageing population will cause economic burden for Scotland

AN INDEPENDENT Scotland should not rely on oil and gas revenues to offset the economic burden of an ageing population, a think tank has warned.

A presentation in Edinburgh today will highlight the challenges posed to the public purse of a working-age population which is estimated to shrink 3.5% by 2037. It is the largest percentage fall predicted for any of the UK nations, with England's working population in contrast expected to grown by 5% over the same period.

The population studies think tank, International Longevity Centre-UK, warns that Scotland's comparatively poorer health record means policymakers north of the Border must work harder to improve the nation's health in order to ensure that Scots are fit to work longer as the population ages.

A report launched by ILC-UK at its 'Population Patterns' event today warns that Scotland should not seek to rely on the revenue from oil and gas to fund the costs of ageing as this is anticipated to fall from an historic average of £5.5 billion per annum during the years 1980-2013, to around £2bn during the period 2014-2041.

The figures are based on the most recent long-term projections by the independent fiscal watchdog, the Office for Budget Responsibility (OBR).

The report, entitled 'Scottish Independence - Charting the implications of demographic change', adds that the combination of an ageing population and declining revenues from oil and gas extraction is likely to put government spending under pressure and force taxation increases.

It highlights figures from last year's Office for National Statistics (ONS) bulletin which predicted that Scotland's working age population will be 3.5% smaller in 2037 than it was in 2013, in comparison to a 5% increase in England.

This is partly driven by poorer life expectancy among Scottish males, who are expected to live on average two years less than a typical UK male. Their disability-free life expectancy is also below State Pension age and four years below the UK average. Over the next 20 years, the ratio of non-working age to working-age people in Scotland is expected to increase by 40% compared to 30% for the UK as a whole, according to the report.

David Sinclair, Assistant Director, Policy and Research at ILC-UK added: "The demographic challenges facing Scotland are similar to many other nations. But some of the challenges are starker than for other parts of the UK. Against this backdrop, economic policy will need to incentivise longer working lives and policymakers will need to deliver increased investment in capital to improve the productivity of the workforce and drive economic growth. Policymakers must ensure that significant attention is paid to improving health in Scotland."

The two-hour conference will be held at The Dome in New Register House, with talks from Tim Ellis and Kirsty MacLachlan, respectively the chief executive and head of demography for the National Records of Scotland, as well as Stirling university economist, Professor David Bell, and Carol Jagger, professor of epidemiology of ageing at Newcastle university.

Also speaking is Richard Willets, director of longevity at Partnership, a specialist insurance firm sponsoring the event.

Mr Willetts said: "It is vital that [longevity] becomes part of the general discussion when independence is considered and positive steps are taken to deal with demographic challenges such as the falling working-age population."

A Goverment spokesman said: "The Scottish Government is taking a number of actions to improve health and ensure people can live longer healthier lives through programmes such as detect cancer early, support for healthy eating, action to reduce alcohol consumption and to promote exercise.

"Countries throughout the developed world face demographic challenges and Scotland is no different. Nonetheless, for the next 15 years, Scotland will be in a more advantageous position than the rest of the UK, and with independence we will be able to take the most important steps to address this challenge for the longer term.

"Increasing the working age population requires not just improving life expectancy, but encouraging more women into work, attracting skilled workers and ensuring that young people remain in Scotland by building an attractive economy and increasing the opportunities for employment - all of which will support ­Scotland's public finances."

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