28 November 2008
By Vivienne Russell
State-backed housing equity release schemes could be used to pay for long-term care, researchers have said.
Following a year-long research project into funding of care for elderly people, the Resolution Foundation has called for a new long-term settlement to replace what it describes as the 'unfair and inefficient' current system. The foundation, which examines policy problems from the perspective of low earners, will publish its research findings in full in early December.
Speaking to Public Finance, Resolution Foundation chief executive Sue Regan said: 'In the long term, we're going to have to pay more both… as taxpayers into some sort of collective fund… and as individuals.
'If you look at demographic change, it's really dramatic how much extra money we're going to have to pay to support the ageing population's care and support needs.'
Regan said the current older population tended to be income- poor and asset-rich but the wealth tied up in their housing stock could not be ignored. Equity release schemes were not popular and did not work well – but could be made to do so if the state came on board.
'Having something that is state-supported, whether it is by a local authority or endorsed in a national way, changes people's perception of it. It's not then a pure financial services product,' she said.
'We feel that if there were state-supported equity release schemes, they would work, particularly for low earners, but would also improve the perception of equity release and would lead the private market in equity release products to grow as well.'
Regan's call came as the Department of Health's six-month consultation on the future of long-term care in England drew to a close on November 28. Ministers have promised that feedback from the consultation will inform a long-awaited green paper, expected to be published early next year. Regan said there was a need to take action in the short term because some people could not wait up to five years for the government to pass legislation. 'Equity release is one area where you could make progress now,' she said.
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