Point Of No Return For Care Crisis Is Imminent Without Urgent Action

• Care system to run out of beds by 2029
• Social care funding gap to increase to £3.5bn in 2024/25
• 45% of councils have not sufficiently planned for where elderly people in their communities will live
• Workers need to save hundreds more each month into pensions
• Only the top 10% of households can afford nursing from their income

The UK’s ability to support tens of millions of elderly people will collapse by 2029 unless the government takes decisive action, a new report warns.

The new study by Irwin Mitchell and the Centre for Economics and Business Research (Cebr) also predicts that if left that long, it will be too late to fix the problem.

Several factors make up the report’s tipping point calculation including current care home capacity, state funding levels and pension wealth, and the signs point to the UK reaching a shortage of supply in residential retirement homes by 2029 at the latest.

The Government has failed to act on social care reform in recent years, with the long-awaited green paper promised since 2017 put on hold indefinitely last year. In the latest Queen’s Speech the new Conservative-majority government promised reform, so “no one who needs care has to sell their home to pay for it”.

Expert Opinion

“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.” Kelly Greig - Partner

The report reveals some shocking statistics around the crisis, highlighting the urgent need for action amidst an ageing population and growing levels of dementia diagnosis rates. The Alzheimer’s Society predicts one million people will have dementia by 2025, doubling to two million by 2050.

There is already a funding shortfall which is anticipated to increase to £1.5bn for 2020/21. Looking at current spending predictions, the report has found this shortfall will increase by a massive 57% in just five years to hit £3.5bn.

The report also found even with the auto-enrolment pension scheme introduced in 2012, many will still find their pension pots lacking enough funding for care. The report advises that at present, workers will need to save hundreds of pounds more into their pensions each month in order to cover the shortfall.

A worrying wealth gap is forming that may create a tiered elderly care system, with only around the top 10% of retired households by income can afford to pay for nursing homes from their income.

Care home capacity is also an urgent issue – while there are 460,000 beds available this year, the pressure of the ageing population are soon to squeeze availability. If capacity is not increased, then the UK will reach a shortage of supply in residential 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 reflects the ticking time bomb the UK elderly care sector is facing, later life planning experts at Irwin Mitchell say there are ways workers and families to prepare and plan today.

Kelly continued: “All of the problems the elderly care crisis is facing can begin to be addressed in the next nine years, providing we look for effective solutions right now.

“The future does not have to be so bleak: there are steps families can take for their futures by considering care home fee planning alongside those other major financial commitments such as pensions and mortgages. Proper tax planning and mitigation can also go some way to help the public prepare for later life regardless of what Government is doing.

“Treating later life planning as a financial priority will go a long way in making sure the British public are prepared for the realities of paying for elderly care.”

Read the Elderly Care Crisis report