The report entitled “Ready for Ageing?”, by the House of Lords Committee on Public Service and Demographic Change, is extremely readable and has two elements: diagnosis of the forthcoming longevity crisis and some solutions to this crisis.
The report acknowledges that there are critical questions of intergenerational fairness. It says, “We have to be wary of shunting too many costs onto younger and future generations… the property boom has led to a very large transfer of wealth to older, better-off homeowners, which has increased housing costs substantially for younger generations. Younger generations… may often have poorer pensions.”
The report explains how the ageing of our population between 2010 and 2030 will be brutal. By 2030 there will be:
- a 50% increase in the number of people over 65
- a doubling of the number of people over 85
- 80% more people with dementia
Long-term medical conditions, social care and Dilnot’s reforms
This “Ready for Ageing?” report makes fairly short work of Andrew Dilnot’s proposals and it says that the £75,000 cap on spending for elderly care will have the effect of protecting older people’s housing wealth. Lord Filkin (chair of the Committee) and his colleagues do agree with Dilnot that the UK’s health and social care provisions need merging into one unified service – they are already inadequate with every prospect of becoming a disaster area. Anecdotal evidence supports this gloomy view, but there are also some disturbing hard numbers: looking after people with long-term medical conditions now takes up 70% of health and social care budgets, and the number of people with long-term conditions is rising very rapidly. For example, the “Ready for Ageing?” report predicts that in England the number of people with three or more long-term conditions will increase by 50% between 2008 to 2018.
Many parts of the cure offered by this House of Lords report are eminently sensible, such as: the need for people to be able to choose to work beyond state retirement age; raising the state retirement age more quickly; more flexibility in pension drawdown; and facing up to the challenge of savings rates that are simply too low. They also recognise how low pensions will be for most of those in defined contribution pension schemes and they want the financial services industry to make it clearer to people how low their pensions will be if they don’t save more.
Impact on younger generations
However, several of the recommendations show that this was a report concentrating on the hardships of older generations and only paying lip service to the way increased longevity threatens to impoverish younger people. For example, the “Ready for Ageing?” report advocates improved equity release mechanisms so that older people can stay in houses and spend the value locked up in their homes. This takes little account of the extent to which older generations are contributing to the housing crisis and “bedroom blocking”: many people want to encourage downsizing so that family houses are released.
A better solution might be to encourage downsizing by older people to suitable properties or encourage more home sharing. Lodgers are a good source of income for older people, as well as offering company and, in many cases, a degree of support.
Whilst the noble and aged Lords and Baronesses acknowledge the burden on younger people and observe that their pensions will be even worse, the report doesn’t question the legitimacy of existing pension promises. These look increasingly unaffordable and were made in such a way that the costs of increased life expectancies will fall quite disproportionately on the younger generation.
The next generation may not be willing or able to make the implied sacrifices in order to carry the older generation on their shoulders.
Will it make a difference?
Longer term (and the report is really all about the long term), the question must be whether this excellent report, now that it’s been published, will do more than just gather dust. Lord Filkin and his fellow peers on Committee will have seen this happen to dozens of other Parliamentary reports, so they are trying to push for their report to be acted on immediately. They also want a new 2015 government to respond to the challenge of a much larger older population, and they are urging political parties to respond to the longevity revolution in their party manifestos.