London's 25% jump in over-65s increases demand for care payment solution: Just Group

London is set for the biggest rise in the number of over-65s of any English region putting increased pressure on health and care systems, according to new analysis of official population statistics byJust Group.

Related topics:  Retirement
Amy Loddington
27th July 2018
carer care elderly pensioner old

The number of over-65s living in the capital is predicted set to grow from just over a million in 2016 to 1.27 millionby 2026, a rise of nearly 25% which is higher than anywhere else in England.

“London is in the eye of the storm when it comes to care funding because of the rise in the number of pensioners and the high cost of care in the capital,” said Stephen Lowe, group communications director at Just Group.

“While it is easy to see this problem coming, finding a solution is proving more difficult. Plans to introduce a cap on care costs which were due to come into force in 2020 have been scrapped and the current Government’s new proposals are now expected in the autumn after several delays.”

He said that London faces particular problems meeting future care demand because high property prices crowd out care home development resulting in the number of care beds available in relation to the age adjusted population at just 70% of the UK average, and more beds being lost than created.

“Many people don’t understand that under the current system people have to pay their own residential care costs unless a means-test shows they qualify for local authority funding,” he said. “London has the highest cost of residential care in the UK at £741 a week or £38,532 a year for a single room on average and popular care homes can charge much more.”

He said that the Government’s policy green paper on social care, delayed until the autumn in order to integrate it with its new plans for the NHS, needs to be clear about how people’s personal wealth – and in particular property wealth – is treated in the new social care funding rules.

“High property prices in London mean that the over-65s have about £250 billion tied up in their homes and the average house price of £491,000 is enough to pay for nearly 13 years of care,” said Stephen Lowe.

“The problem is that forcing people to sell homes to pay for care is a very emotive issue and doesn’t even guarantee people can afford the care they want. The solution probably needs to include property wealth in some way that is palatable to the general public and still protects them from what can be catastrophic costs.”

He said one option could be for homeowners to be incentivised by government early in retirement to ‘pledge’ part of the value tied up in their property to be used for their care but only if they need it by offering, for example, tax breaks or some type of matching scheme on any money used for care.

“This would help people plan for potential care costs without impacting on their disposable incomes in retirement. It would also give peace of mind that the money was available if needed, but that should the costs escalate the State will step in with taxpayer support. And if they don’t need to pay for care, then any money will be returned.

“Our research shows a growing recognition among the over-45s that the State will not pay for their care. Views on whether the State should pay for people who could use their savings or property wealth are more divided with about one-third agreeing but another third disagreeing and the rest unable to say.

“There is a widespread feeling the State has a role to play in tackling the lottery of care funding by limiting the overall costs for someone who needs many years’ care. “It’s easy not think about care funding until you have to, either for an elderly relative or for yourself. But we would urge Londoners to actively engage in the debate because, with its ageing population and high home values, the capital has a lot to lose or gain from the changes.”

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