One of the fundamental themes of my submission to the Dilnot Commission (see Commission on Funding of Care & Support dated 6 February 2011), is that in the years ahead, most older people will have to pay for their care by using their house as an asset. This is not a welcome prospect because as a society we have come to expect that health care is free. Alongside that idea, the inflation of house values over the last 30 years has led the elderly and their relatives to believe they will leave a significant legacy when they die.
I believe these two related myths are holding back the elderly from securing a better future for themselves. In this new area of austerity, is a bubble that needs to burst but no political leader wants to be the first to break the bad news. In the financial press recently were some guesstimates that illustrate the scale of the issue:-
People over 65 own £763 billion of un-mortgaged property;
In 10 years this will have risen to £1 trillion;
800,000 people will reach 65 next year;
On average they will live for 23 more years.
So what are the barriers to this happening? Insecurity is the key issue. In later life few people want to step into the unknown, and yet lifespan and health are two unanswerable questions. The fear of not knowing how much you will need to look after yourself is what leads many people to hoard what they do have. This is reinforced by the justifiable view people have, that long term care is not only very expensive but often very poor quality.
For the Government to unblock this situation they need to remove the barriers that they can influence:-
Make equity release a more reasonably priced option so that people can more easily access the hidden savings they have in their homes;
Stimulate the retirement housing market to encourage people to move and downsize their homes;
Offer long term care insurance to give people more certainty over future health care costs;
Dramatically improve the quality of health care for older people by restructuring NHS provision.
These moves will hopefully be captured in the recommendation of Andrew Dilnot’s report. A trillion pounds would go a long way to reviving our ailing economy and would enable older people to secure for themselves a brighter vision of later life.