Social care funding – Housing to the rescue!
By: Jim Boyd
Finding a solution to adult social care funding is complex. As our population ages, with our very oldest among our fastest growing cohorts and most in need of care – it is also one of our most pressing domestic issues.
However, housing wealth is often overlooked despite property often representing the largest asset people hold. The average UK house price is £251,000 (Feb 2021) and must play a valuable role to address the often eye-watering costs of residential care homes (these range from £27,000 to £39,000 annually and £35,000 to £55,000 if nursing is required).
Part of the reason is that politicians have learnt to their cost the consequences of surprising voters with ‘mansion’ or ‘dementia’ taxes without proper political or national engagement. We also know that an enduring solution which is fair requires potentially unpopular decisions to be made about the allocation of assets across generations.
Policy makers should note that the Equity Release Council’s research demonstrates an important attitudinal shift by consumers is taking place to the use of property to fund their needs in later life. 51 per cent of homeowners aged 45+ see money invested in property as part of their later life plans. Specifically, 37 per cent of people aged 65+ see the money invested in property as part of their plans to pay for care if needed (1).
In addition, research conducted by Dr Louise Overton challenged the notion that the use of housing equity to fund care costs is prohibited by people’s strong attachment to their homes either for inheritance purposes or for cultural reasons. Instead, a sense of unfairness arose from people’s sense of being betrayed by political rhetoric, having been encouraged to behave responsibly throughout their working lives by saving and investing in housing (2).
It is also evident that the pandemic is impacting public thinking about the role of homes and care, with Council research showing that 67 per cent of over-50s are determined to remain in their own homes if they ever need care in future. Indeed, 60 per cent of over-50s are now fearful of having to move into residential care (2)
The benefits of housing wealth as a tangible and practical solution to meeting care needs are clear, supporting those who wish to live longer independent lives in their own homes (and in cases fund residential and nursing care needs).
By complementing other sources of funding to meet at-home care needs, the £4 trillion in property wealth in Britain’s homes can mitigate and delay the need to seek residential care by enabling people to fund care services in their homes or make adaptations to their properties so they can live there independently for longer. For example, moving a wet-room or bathroom downstairs, adding stairlifts, handrails or adapting household gadgets and equipment to help people cook, clean and get dressed.
In addition, the ability to change the home environment to meet changing care needs supports Government thinking to focus on preventative solutions – not least only a minority of Local Authorities now pay for people with low and moderate care needs. The ability to fund the time of a care worker to come to a citizen’s own home to provide help and care might in turn reduce growing levels of unmet need, preventing escalation to more substantial or critical needs.
A mature debate with broad political consensus is now required and a solution which is understood and considered to be fair by citizens, particularly those with modest savings who are most at risk of depleting their asset prematurely and falling back on the state, now must take place.
Chief Executive, Equity Release Council
Jim Boyd was appointed CEO of the Equity Release Council in June 2018. He joined from Reform think tank, where he was Deputy Director and Head of Research. Prior to this he was an Expert Adviser at the Department for Work and Pensions, initially supporting Lord Freud, then Welfare Reform Minister.
Jim has extensive experience of retirement and social care funding having led the Corporate Affairs functions at specialist life assurers Britannic Retirement Solutions, Just Retirement and Partnership Assurance. He is an adviser to the Intergenerational Longevity Commission-UK, a leading longevity, ageing and population change policy unit. Jim is a former tax and trusts lawyer.