Ageing

An age-old problem                                                        

It will be hard to reconcile increased longevity with public spending cuts

    GROWING old may be preferable to the alternative but it is not without its problems: greying Britain will have increasing numbers of elderly, needy people to look after. On gaining power last year, the coalition government set up an independent commission to identify how to make long-term care affordable. Just as the commission is due to report, the problems it set out to solve are becoming more acute: another official body has called for the aged and frail to be given new rights to receive help, and cuts in central-government funding are forcing local councils to reduce the services they already provide.

    Earlier this month the Law Commission, which helps Parliament tidy up legislation, recommended that councils be given wide-ranging new obligations to provide care to vulnerable adults, replacing the current, patchy set of entitlements. Fine in principle, but where will the money come from? A survey by the Association of Directors of Adult Social Services, published the following day, showed that councils in England intend to cut spending on adult social care by 7% this year, although they hoped to achieve much of that reduction in outlays through efficiency measures rather than service cuts.

    The Law Commission report adds urgency to the quest for new ways to pay for care. At the moment, if a doddery old man is poor and has no family or friends to help out, the state will provide help at home free of charge; but if he has the means, he must pay for it himself. Should his health deteriorate to the point where he can no longer make a cup of tea, he will be encouraged into residential care. Again, if he is poor, it is free; if he is not, he must run down his savings and sell his home.

    Most Britons would find it a wrench to give up the home they spent much of their working lives paying for. Indeed, in the run-up to last year's election the Conservatives provoked a frightful row when they exploited such fears by portraying Gordon Brown's suggestion that long-term care could be paid for from the estates of wealthy recipients as a “death tax”. So the independent commission, headed by Andrew Dilnot, an economist at the University of Oxford, was asked to identify how people who had acted responsibly, saved money and bought property might be protected from financial ruin should they need expensive long-term care.

    His report is likely to suggest some sort of insurance scheme. At present only a small proportion of people take out such policies: 7% in America, 5% in Japan and less than 0.05% in Britain, according to the OECD, a think-tank. To boost take-up, the state would probably have to underwrite any new scheme.

Insurance is not the only solution. The Joseph Rowntree Foundation, a charity, reckons that around 1m elderly homeowners have at least £100,000 locked up in the value of their houses, but have incomes so low that they qualify for means-tested benefits and are struggling to get by. It has piloted a scheme with three local authorities in which such people—typically former tenants who bought their council-owned houses decades ago—can sell a stake in them (which the buyers would reclaim after their death) to pay for modifications, such as a walk-in shower, that would help them remain in their homes rather than go into a care home.

    Take-up has been modest so far, says Clare Henderson of Islington Council in north London, which is participating in the pilot project. She expects demand to grow as people develop more confidence in such schemes. However, pensioners may take some convincing, given the widespread mis-selling of similar “home income plans” to elderly people in the 1980s.

    With the proportion of Britons aged over 65 projected to grow from 16% in 2009 to 23% by 2034, the need to find alternatives to taxpayer funding for social care will only grow. On May 23rd the OECD said that if health, pensions and social care were to keep pace with current provision, spending on them would have to increase from 15% of GDP to almost 19% between 2010 and 2050. Worry enough to turn any politician's hair grey.