Yesterday the Scottish government confirmed that plans for a National Care Service (NCS) in Scotland have been scrapped in favour of an advisory board and smaller, more targeted reforms. The decision came after months of declining support from key organizations and stakeholders including COSLA, key trade unions and representative bodies for social care providers in Scotland.
Beyond the wavering support for the NCS plans, there is clear support for social care reform, particularly in enhancing access to and the quality of services.
Our interest in the National Care Service, and wider social care reform stems back to 2022, in which we conducted analysis of the NCS bill published in June of that year. Following this work, published in August 2022, we engaged with a number of stakeholders across the private, public and third sector.
Among concerns around governance and funding of the NCS, one of the key concerns from stakeholders we engaged with was the lack of good quality and timely data that is crucial to ensuring that any reforms to social care are well informed. In particular, the need to better understand what future levels of social care demand might be, the workforce requirements to accommodate this, and the associated expenditure on social care.
Our concerns about the lack of investment in social care research were highlighted in our response to the Wave 2 consultation. The Scottish Government has not commissioned any work in this area, and we have not been able to find independent funders willing to fund work of this nature in Scotland.
It is our view that projections of demand and cost of the current service, and any future reforms, is urgently required.
New labour market data published this week
The latest data on the labour market in the UK was published this week. There are many documented issues with the data at the moment due to the challenges faced by the Labour Force Survey, which means the headline figure are no longer considered accredited Official Statistics.
If you can set that aside for a moment, the headline results show on the surface a strong Labour market in Scotland, with high employment (74.1%) and low unemployment (3.8%). Inactivity rates remain slightly higher than the UK at 22.9%.
There are a number of other data sources published alongside the LFS data which is used to supplement our understanding of what is going on in the Scottish economy. One of these is the payrolled employment data, known as the PAYE Real-Term Information, which is published every month by the ONS. This draws on administrative records, and so is likely to be more reliable in terms of employment (although, of course, tells us nothing about unemployment or inactivity).
This data shows that payrolled employment is almost 3% higher in Scotland than pre-pandemic levels. However, we had a look at replicating the sectoral breakdowns in this interesting piece by think.ing, which looks at government-dominated sectors vs the rest.
Chart: Payrolled employment in all sectors, government dominated sectors (public administration, health and education, and total excluding government, Scotland, January 2020=100
Source: ONS
This shows that once the government dominated sectors are excluded, payroll employment has been falling since March 2024, and is now almost back at the levels seen in January 2020. In contrast, government dominated sectors are 8% about pre-COVID levels.
Given some of the challenges facing the private sector in the first half of 2025, including large increases in employer National insurance contributions which will come in in April, the trend in private sector employment is concerning, and points to a weakness masked if we just look at employment in total. However, it is worth emphasising again that this is just payrolled employment, and does not cover self-employment.
Authors
Mairi is the Director of the Fraser of Allander Institute. Previously, she was the Deputy Chief Executive of the Scottish Fiscal Commission and the Head of National Accounts at the Scottish Government and has over a decade of experience working in different areas of statistics and analysis.
Emma Congreve is Principal Knowledge Exchange Fellow and Deputy Director at the Fraser of Allander Institute. Emma's work at the Institute is focussed on policy analysis, covering a wide range of areas of social and economic policy. Emma is an experienced economist and has previously held roles as a senior economist at the Joseph Rowntree Foundation and as an economic adviser within the Scottish Government.
Ben is an Economist Fellow at the Fraser of Allander Institute working across a number of projects areas. He has a Masters in Economics from the University of Edinburgh, and a degree in Economics from the University of Strathclyde.
His main areas of focus are economic policy, social care and criminal justice in Scotland. Ben also co-edits the quarter Economic Commentary and has experience in business survey design and dissemination.
Sanjam Suri is a Knowledge Exchange Fellow at the Fraser of Allander Institute. Sanjam works closely with internal and external partners specializing in business and economic analysis. Sanjam also lead's the Scottish Business Monitor publication. Prior to this, Sanjam was the Lead Country Risk Analyst at Export Development Canada in Ottawa. Sanjam has also worked as an Economist and Senior Economist at the Bank of Canada in Ottawa. Sanjam has an undergraduate degree in Mathematical Economics from Trent University (Canada), and a Masters degree in Financial Economics from Western University (Canada).