For years now, both government and the financial services sector have struggled to make progress in addressing the UK's care funding crisis but, asks Bill LeGrys, could the answer lie in the nation's property wealth?
The 18th Century French philosopher Voltaire held the view that no problem can withstand the assault of sustained thinking - and, if he was right, clearly this is a principle that needs to be applied to the UK's care funding crisis.
For more than a decade, successive governments have kicked the can down the road, periodically throwing token sums of cash at the problem. Yet they have made little progress in addressing what is now an urgent societal need.
The financial services sector must also bear some responsibility for not innovating and responding quickly enough to the increasing need for products that help fund long-term care. The worrying thing is, of course, the longer we take to find a solution, the worse the problem will get.
The Local Government Association, which represents councils, predicts an extra £3.5bn is needed by 2025 just to maintain current standards of care. So, what are the options available?
The government spent £21.2bn on adult social care funding in 2016/17, according to the Institute for Fiscal Studies (IFS), and it estimates 34% of spending on public services goes towards health and social care.
Despite announcing a £20bn increase in NHS funding recently, there was little mention from the government of extra cash for care provision. On top of that, recent press reports suggest the government's pledges on social care funding reform may have to be shelved as a result of Brexit.
Some advocate increasing income tax or National Insurance, or even creating a new tax altogether to fund care - a solution that seems unlikely given the current climate. And so, for the time being, it seems as though the onus to pay will have to fall to the individual.
Still, given the average care home charges £32,344 a year, according to PayingForCare, that is no easy task. And, unfortunately, it means many people who need care are forced to sell their homes, with current rules stipulating that, with some exceptions, the state will not assist people with assets in excess of £23,250 (England) or £40,000 (Wales).
That is why it is vital that there are a wide range of products available to help people fund care in their later years. It is also imperative that these products address the needs of people who need urgent care.
In recent times, some commentators have proposed the introduction of a Care ISA that would allow people to save towards their future care costs. Yet, as it it is, it is a struggle to persuade people to save for their future, let alone encouraging them to save for care they may never need. Figures from HM Revenue & Customs show that, as things stand, fewer than one in four take advantage of the full annual ISA allowance.
What does that leave us with? For us, the answer lies in what the Office for National Statistics has estimated to be the UK's £4.5 trillion of property wealth. That is why Shaw Insurance designed the Care Property Bond the way it did, allowing applicants to bridge the gap between an applicant's income and their care fees without having to sell their home. This is done by using the equity in their property.
This would help tackle the rising issue of so-called ‘bed blocking' - a situation that sees patients in hospital stay there as long as possible for fear of having to sell their homes to fund the care they have been told they now need.
As such, it is vital people have access to a wide range of products to help them fund their care fees without having to resort to selling their property.
The Care Property Bond is one small innovation from our world-class financial services sector aimed at easing our social care crisis yet there ought to be more focus on the elderly and vulnerable in our society. The issues are too big to ignore.
Bill LeGrys is head of marketing at F2 Capital Ventures LLP, which promotes the Care Property Bond in the UK on behalf of Shaw Insurance
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