Duncan O’Leary is Research Director at Demos.

All blogs are the views of the author, and do not necessarily reflect the views of Independent Age.

Britain will be a great place to grow old if we want it to be. The private sector will need to adapt; the public sector will need to make the right investments; civil society will need to play its part. But perhaps most importantly, we will need a step change in the way each of us plans ahead for our own futures.

In particular, more thought needs to be given to encouraging people to put money aside for social care. Between 2005/06 and 2009/10 demand for social care outstripped funding by 9 per cent. This funding gap goes some way to explaining the problems with standards in the care sector. Last year, a record number of care homes were issued with official warnings by the Care Quality Commission.

The reforms to the care system, which build on the Dilnot review, have two core elements: first, a means test to provide a safety net for those who have very little and, second, a ‘care cap’ to protect people from catastrophic care costs in old age. The missing third element is encouragement for those willing to plan ahead to cover care costs up to the level of the cap, rather than fall back on the government means test.

The recommendation from a recent Demos/Cass Business School report, is that the government should look at a ‘pension-like’ system for social care funding. The report proposes the idea of ‘care accounts’ in which individuals would store wealth, in the form of savings or housing equity. The funds in care accounts would be reserved specifically for covering care costs and could not be withdrawn without a financial penalty after a set age in people’s lives, such as age 70.

The incentive for people to store funds in these care accounts would be that a proportion of the funds in the account would be disregarded in the means test for state support. This would encourage people to put money or assets aside for the future, rather than spend them on the present and rely on the government to pay for their care.

The truth is that many people have proven unwilling to make sacrifices to their current standard of living to cover against the possibility of care costs in the future. Faced with other demands, such as mortgage payments and pension contributions, alongside day-to-day living costs, people have tended to take their chances with care costs. By storing housing equity as well as savings in care accounts, people could make commitments ahead of time, without sacrificing their standard of living in the present. Those aged over 65 now hold an estimated £750 billion of unmortgaged housing equity. It is in everyone’s interests for the government to examine ideas that which encourage that wealth to be used wisely and responsibly.


What do you think needs to happen to make the UK the best country to grow older in?

What concerns you most about growing older and why?

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