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Care crisis tipping point within a decade

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We face a care crisis tipping point in the UK.

With an ageing population, local authorities are increasingly struggling to finance adult social care in various parts of the country.

And now a new report suggests a complete collapse of Government-funded care within the next decade.

According to the study by Irwin Mitchell and the Centre for Economics and Business Research (Cebr), the UK’s ability to support tens of millions of older people will collapse by 2029 unless the Government takes decisive action.

The report also calculates that, if left too long, the care crisis will become impossible to fix.

Within the report, several contributing factors were identified, including current care home capacity, state funding levels and pension wealth. These factors will lead to a shortage of supply in residential retirement homes by 2029 at the latest.

With the Government failing to act on social care reform in recent years, delays could be amplifying the care crisis.

Kelly Greig, head of later life planning at Irwin Mitchell, said:

For years now we have been raising awareness of the impending care crisis the UK is facing. The fact that we now know the elderly care system will collapse at the end of this decade is a stark warning of what is to come.

It’s now been 10 years since funding levels for social care were adequate, and the cracks are turning into chasms. A decade on we have less people eligible for funding support, more families taking on unpaid labour to look after their elderly loved ones and workers needing to save unsustainable levels of money into their pensions just to afford care in later life.

We have a new majority government and the first post-Brexit budget coming up. While they have promised a cross-party solution we need a bold and fast-acting plan before it is too late. The elderly care sector is already on its knees, and continuing to ignore the issue would be a disservice to the tens of millions of people that will be reaching old age in the next twenty years.

The report shows the care funding shortfall is predicted to rise from £1.5bn for 2020/21 to £3.5bn in five years, a 57% rise.

Also within the report are startling statistics around dementia, with the ageing population leading to a dramatic rise in diagnosis rates.

The Alzheimer’s Society predicts one million people will have dementia by 2025, doubling to two million by 2050.

Following the introduction of workplace pension automatic enrolment in 2012, many pension pots still fall short of the amount required to fund later life care.

Funding this pension and care shortfall would require a significant increase to pension contributions.

Another contributing factor to the care crisis is a widening wealth gap which risks creating a tired later life care system. Only the top 10% of retired households by income can afford to pay for their care from income.

Care home capacity is also an urgent issue. There are 460,000 beds available in the UK this year, but the pressure of the ageing population is soon expected to squeeze capacity.

The UK is forecast to experience a shortage in the supply of beds in residential care homes by 2029.

Josie Dent, Senior Economist at Cebr, said:

The elderly care sector is desperately in need of reform in order to avert the imminent crisis.

Only around the top 10% of retired households by income can afford to pay for nursing homes from their income, and with the cost of care set to rise, many more elderly people will find themselves using up their wealth, or turning to local authorities for support to pay for care in the future.

With care providers being increasingly stretched, the government needs to increase its efforts to prevent the crisis from reaching a tipping point.

Baroness Ros Altmann, former Pensions Minister and a leading independent expert on the UK’s later life issues, said:

Almost no-one has planned for long-term care. Despite growing numbers of frail, older people in our society, neither central nor local Government has a sustainable plan to pay for care and there are no incentives for private individuals to set aside funds to meet later life care needs.

Pensions are designed to support independent living, not the sharply higher costs of care. This important report uncovers many of the consequences. There are many aspects to this massive policy failure, which has been left unaddressed by successive Governments for so long that there is no silver bullet solution.

The sooner we all start planning for care, the better. There are measures families can take, but there are also important policy reforms which could help alleviate this crisis. The recommendations of this report should be taken seriously by Government.

While the report paints a fairly bleak picture for the UK care crisis, some steps can be taken to prepare today for the future.

By thinking about care fees planning along with other big financial priorities, including mortgages and pensions, there are steps you can take to get ready for future care costs.

The information contained in this blog post does not constitute advice or recommendations. You should seek independent financial advice before acting on any information on this website. 

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