Milestone birthdays have a tendency to get the mind racing. When I turned 40, I had a bit of a wobble. I remembered my mum’s 40th and now here I was, the same age, and all I had to show for it was a middle-aged paunch and a geriatric cat. Or so I thought, anyway.
This week my dad celebrates his 70th. He’s lucky in that he still has his health, still works (his choice) and still enjoys a (relatively) active life. And he owns his own home.
That last one, though. What if, god forbid, he needs social care at some point in the future? How will we pay for it? Will the house have to be sold? Will that be enough?
A new report out today makes for bleak reading. According to Royal London, the cost of an average stay in a residential care home can eat up more than half the value of an individual’s house.
The analysis shows that the typical person entering residential care will face total bills of between £50,000 and £93,000 depending on where they live. For residents in the North East of England, where the average house price is just under £129,000, an average stay of 30 months in a residential home costing £554 per week would swallow 56 per cent of the value of their home.
By contrast, for those living in London where the average house price is around £484,000, 30 months of average residential care costs of £666 per week would only account for around 18 per cent of the value of that property.
Consider though that the length of time someone stays in a residential home can vary widely. For those with the longest stays, the total bill can exceed the value of the typical house in several parts of the UK. Based on academic evidence which shows that 10 per cent of residential home residents have a stay of 6.5 years or more, for residents of Wales, Northern Ireland and four English regions (North West, North East, Yorks and East Midlands) such long-stayers could face a total bill in excess of the value of the average home.
Needless to say, the system is a lottery. And if you agree that the housing market itself is broken, then social care is on its knees. Just today a BBC investigation found that care firms have cancelled contracts with 95 UK councils, saying they cannot deliver services for the amount they are being paid.
An ageing population and historic under-funding have contributed to this crisis. And it’s unlikely that Philip Hammond’s extra £2 billion for social care for English councils over the next three years, announced in the Spring Budget, will be little more than a sticking plaster.
Steve Webb, director of policy at Royal London (and a former pensions minister), said: ‘Successive governments have failed to grasp the nettle when it comes to care costs. For over 20 years we have had a series of Royal Commissions, expert reports and policy papers, but little has changed. With an ageing population, more and more of us will have loved ones needing long-term care, and we could see a large part of the value of our family home taken up in care costs. The government’s plans for yet another discussion document on social care later this year are far too slow. We need urgent action to address this funding challenge.’
I agree. Over to you, Mr Hammond.
Helen Nugent is Online Money Editor of The Spectator